By Bernard Hickey
Auckland's largest real estate agency group, Barfoot and Thompson, has reported it handled 1,070 sales in March, which it said was its highest monthly sales figure in nearly four years.
Volumes rose 75.7% from February and were up 15.4% from March a year ago.
The average sale price of NZ$581,190 was up 11.4% from the NZ$521,887 reported in February and was up 6.6% from March 2010.
“It was a month’s trading that came out of the blue, and exceeded anything we have ever experienced,” said Peter Thompson, Managing Director of Barfoot & Thompson.
“Buyers in the over NZ$500,000 category appear to have simultaneously reached the decision that now was the right time to buy," Thompson said, adding that this rise in the number of sales of more expensive properties had helped lift the average price sharply.
“What March’s sales activity confirms for us is that the Aucklandmarket is reacting in a different way to the rest of New Zealand," he said.
“The formation of the Auckland region into one city has brought home to people the dynamic growth projected for the region, and the looming shortage of dwellings to house a future population in excess of 2 million people.
“Combined with buyers reaching the conclusion that values are at the bottom of the price cycle, the economy looking likely to rebound in the next 12 months and interest rates at historically low levels, and you have the perfect conditions for people to commit to buying.”
The Reserve Bank cut the Official Cash Rate by 50 basis points to 2.5% on March 10 after the February 22 earthquake in Christchurch. It has pledged to wait before reversing that cut until rebuilding starts in earnest. Most economists expect the Reserve Bank to start increasing the OCR from early next year. Banks cut their floating rates for new borrowers by the full 50 basis points to around 5.75% immediately after the March 10 cut. See all mortgage rates here.
Thompson warned against dismissing the leap in prices as simply multimillion dollar homes distorting the average price.
“While in March we sold 14 homes with values in excess of NZ$2 million, compared to 4 in March last year, if we remove the NZ$2 million homes from the figures totally, the average selling price would still have increased to in excess of NZ$560,000," he said.
“I do not believe we are seeing the start of another housing price bubble."
March may show confidence returning to the Auckland housing market with values stabilising, Thompson said.
“I would expect sales in April will follow the normal seasonal trend of the past few years and be lower in volume and average value than those achieved in March.”
New listings flat, rents up
Barfoot and Thompson said it listed 1,551 new properties in March, in line with the number for February and down 7.2% on March last year.
At the end of March the company had 5,807 properties on its books, down 4.2% from February and 7.3% down from a year ago.
Barfoot said average weekly rentals in March rose NZ$32/week to NZ$434/week, the highest on record.
“When you combine the increase in weekly rents with the rise in property prices, it flags that accommodation availability in Auckland is in short supply," Thomspon said.
“The rental increase also coincides with landlords reacting to the new taxation rules around investment property, and firmly fixing their focus on improving the operating return from rents."
Barfoot and Thompson rented 816 new properties, which was in line with the number rented in February and in March last year.
Regional detail provided by Barfoots here show volumes in the central suburbs and North Shore rose 24% to 489 in March from 395 a year ago. Sales elsewhere in Auckland rose 9.2% to 581 from 532 a year ago.
The number of sales of properties for NZ$800,000 and more was 186, which was up 37% from a year ago.
What this shows is the tax cuts for the wealthy are being reinvested with leverage into expensive homes in and around central Auckland and the North Shore.
Is this what John Key means when he says he wants to transform the economy into an exporting powerhouse by cutting income taxes?
Here's reaction from ASB economist Chris Tennent Brown
March data were unequivocally strong, with seasonally-adjusted turnover lifting 11.4% on February, and in doing so recording the strongest turnover in 15 months.
· New listings lifted a seasonally-adjusted 5.5% in the month, following a 12.3% lift in February.
· Seasonally-adjusted total listings declined 2.7%, from February, and are down 7.3% on year-ago levels.
· Average rents rose to the highest level recorded, gaining 4.7% in seasonally-adjusted terms on the prior month, to be up 8.2% on year-ago levels.
· The average sales price rose to the strongest level recorded, though with the data skewed by a relatively high volume of very expensive property sales.
A lift in RBNZ mortgage approvals data over March had hinted that the property market was showing signs of picking up, and B&T data have confirmed that the market in Auckland was quite buoyant last month.
The average sales price in March rose to a record $581,190. However, the B&T average sales price has always been a volatile price measure, and is skewed by the composition of sales. A high number of very expensive properties boosted the number in March. B&T sold 14 homes valued at more than $2 million in the month, which compares with 4 in March 2010. Furthermore, there were 89 sales over $1 million (unadjusted), which is the highest level since March 2007.
The pool of total listings is actually contracting, and seasonally-adjusted total listings are at the lowest level in six months. This comes despite two strong months of new listings that exceeded the volumes of sales. This supports anecdotes that sellers are withdrawing their property from the market if they cannot get the price they want.
We expect the Auckland property market will tighten further over the year ahead, as the mix of a low level of construction affects supply, and ongoing population growth continues to boost demand. Thecontained level of inventory, as well as the recent drop in interest rates, are also positive for the property market over the year ahead.
The big lift in average rent shows that demand for property to rent is high. The number of properties B&T have let remains high (816 dwellings). The letting figures are steady on February’s level (817 units), and down 0.9% on year-ago levels. We expect that rents will remain high over the year ahead, as demand remains high, and the low level of construction over recent years limits the overall housing stock.
Implications
We expect nationwide prices are troughing out now, and should increase by around 3% over the year ahead. Behind this lift will be a range of experiences, from stronger price appreciation in Auckland, and ongoing weakness in areas where population and income growth are less supportive. REINZ nationwide figures for March are due next week. We expect that the nationwide data will also show a lift in turnover, although we expect a more muted pick-up than the B&T Auckland data have shown.
Here is reaction from Goldman Sachs economist Philip Borkin.
We believe the Auckland housing market is outperforming the rest of the coutnry, with demographic pressures the key driver. Given the housing market's track record as a leading indicator in New Zealand, and the fact that Auckland is more reliant on household consumption than other areas, this could signal the beginnings of an improvement in the consumer spending backdrop.
However, we think it is too early to make a call on this yet given that household behaviour remains one of caution and deleveraging.
While the recent reductions in mortgage rates will be supporting activity and sentiment, we believe the outperformance is more fundamental in nautre. With historically low levels of new building and net migration (while not at strong levels) likely to be more supportive of Auckland housing demand than other parts of the country, we suspect demographic pressures are slowly beginning to surface.
These pressures will be more pronounced in Auckland than elsewhere.
(Adds picture, interactive chart, more detail, quotes from Peter Thompson, ASB comment, Goldman Sachs comment, Interview with Peter Thompson, regional detail)
Barfoot Auckland
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235 Comments
Yes, it must be a lie. Those bastards probably also are the ones that manipulated the RBNZ mortgage approvals just released today. You know - the ones that for the period ending 1 April were the highest since mid december 2009 at 6,076 - 27.8% higher than in the corresponding week last year, and by value 38.6% higher than in the previous week. It also must by why the average value per approval is at a high. And why the trailing data since december points to us hitting an inflection point.
The numbers are what they are. Why get so emotional about it?
It is probably just the same as what happened starting in March 2009 - pent-up demand is now being released into the market. It doesn't mean house prices are going to increase 15%. But it does mean volumes will probably be a good 15-20% higher than they were in the preceeding 12 months.
this comment from BNZ chief economist Tony Alexander says it all
"The average dwelling sale price for Barfoot and Thompson in Auckland over March was a record $581,000.
If one excludes a high number of sales over $2mn this falls to $560,000 which is a rise of 2.8% from a year ago and probably a better measure of price gain than the 6.6% if one uses the $581,000 number."This is awesome news! Now we can go back to borrowing way more than we can afford, and then some other guy will buy our house for way more than he can afford, and the cycle will continue! Property will always be the very best investment for the very discerning and astute investors only. And if you don't own any property, you're second class, not even worth looking at really.
this may be true.. but the increase in the median price is easily explained by the need to sell down for high end property owners to realise cash to maintain their businesses and their lives...i.e. cash strapped in tough times etc
the increase in volume of sales is a great sign as it shows at last , vendors are getting realistic and starting to sell at fair prices.
unfortunately, The Tv and NZHerald will rave about a turn around in the prop. mkt based on these figures and the financially uneducated will just hold out for higher prices which are never coming.
no-one should take much notice of a median price as it is just an amortised average of all sales from high to low...or do they?
Also how do you rationalise this statement just last Friday by realestate.co.nz which is , after all, owned by all RE companies , with Peter Thompsons figures above?
"The property market in March saw a further rise in inventory levels - pushing over the 52 week mark, matched with a further increase in asking price - the market seems active and confident for new listings, however sales results as yet do not match that optimism"
for the rest of thireport just go to realesate.co.nz and read the full report.
Are you referring to the report that also says...
"In total provincial NZ which comprises all of the regions excluding the main centres of Auckland, Wellington and Canterbury reached a record peak of inventory of 76.7 weeks which compares with 36.6 weeks in the metropolitan areas."?
No - you are about to get a whole lot of posts explaining that:
- this is a manipulation of statistics/figures real estate PR spruiking etc.
- this is only because house prices are not high enough and if there was stamp duty capital gains tax, increased GST or anything to make them more expensive then people wouldn't buy them then they would get cheaper.
- this is nothing to do with lack of supply because there are some spare bedrooms in houses just out of Gore and if people would just cram into houses like they did in the old days then there would be plenty of houses.
- in case you didn't get it the first time making it less desirable and more expensive to build and invest in houses will encourage people not to build them, making them too expensive to buy so people won't buy them and prices will drop.
- this is a conspiracy of people selling and buying houses to each other to make it look like they are selling and buying houses.
"Buyers in the over NZ$500,000 category appear to have simultaneously reached the decision that now was the right time to buy.." So who did they 'buy from'? That's right! "Simultaneously"...sellers...who rightly see this as 'the right time to sell'. These guys selling aren't bunnies. They've had the stock for x amount of time, and are now flicking it off to a new set of optomists; and not because they see the prices higher from here on in!
Now what was that book about Jesse Livermore called? The one where he explains how a classic ramp is put together. I seem to remember something about selling on each rebound after the peak as there are always fools who think new highs are just around the corner. That was his method for selling a stock he had ramped. Provide support to pull backs on the way up, sell into rallies on the way down.
Not that any one would ramp the Auckland property market of course.
Oh, wait, just a minute, didn't the bank just put interest rates down.
IT's fabulous being a renter, W! The worst thing that happens if prices go up 50%, and I'm wrong, is that I have to pay twice as much to buy a house, or not, if I wish to keep renting. But if prices fall by the same quantum, 50% , many, if not most , will loose their entire life's capital. And they won't have anything left to buy with...or even rent with, for that matter!
I don't citisize 'property ownership/investment' per se. Just when it doesn't make mathematical sense. And it doesn't now, and hasn't for a while. For heavens sake, haven't we all 'made' millions out of it over the last 30 years! But from about 2002 on, the numbers didn't add up. The cost of 'covering the mortgage' with the receiveables stopped being positive. From then on it became ony a matter of time, and when to time an exit, until financial gravity took over. That's higher rents or lower prices. If you see higher rents into the teeth of unemployment and the financial/natural disaster in the country, and certainly enough to compensate those who have held negativley for many years now...well good luck. As for a house as a home? I'm all for it! As long as one can afford what one buys..and isn't squeezed out by paying for it :)
Mate are you for real ?
The worst thing that could happen is that you rental payments in five years far exceeds your outgoings on a house they you could of purchased five years earlier and you still end up without the security owning a property offers .
the curent average rent will service a 300k mortgage at 6.2% . Its not eactly big dollers for duel income couple on the average Auckland wage
You honestly think thats the worst case senario? ill give you mine, NZ inc goes broke, interest rates go up to over %10, houses collapse in value. The banks facing huge losses fold and we have to implement the deposit guarantee again to stop capital flight, raise interest rates and nationalise the banks like Ireland passing the losses onto the taxpayer. We are in the calm before the storm, for gods sake get a FU fund and do it quick, learn to mange risk.
Last nights Fonterra action was down, export values could be way back next year. Why buy a house in AKL, go to the States and pay bugger all reduce your risk. Inflation is not coming unless you start to see wages rise I dont see that as an option as most businesses are struggling now and it would just create unemployment. Its going to be about energy and we dont have enough clout to insulate us from whats going to happen.
Yep! Your right., Pants Down. That's the 'worst' thing that could happen. And how bad is that, really..! But I would still have whatever capital that I have to do whatever I wish with. Pehaps even buy a house? Or go somewhere els? But if the market falls as I expect, I shall be streets ahead of any people that have property...especially if it is leveraged.
No, there is no security in property ownership....the worst thing is a depression with a 50 to 70% slump ie where you lose a substantial amount of capital....or you go into neg equity with your mortgage which means you cant sell so you cant move to a better paid job in a different town.....if you become un-employed you lose the house and probably get declared a bankrupt? owing the bank many K...
NB Rental cant go above what ppl can pay...
regards
Exactly. It would be funny if it wasn't sad to see the wriggling that the anti-property Hickey followers do to re-interpret / mis-interpret any positive market shift data.
Markets are cyclical. Prices will recover and rise (and fall again, then rise again, fluctuating around a rising trend). Renting or buying is a personal choice and decision, with multiple aspects to be considered.
As to housing "un-affordability", it's all about productivity: NZ is becoming less and less efficient and less productive, with quality of the output leaving a lot more to be desired - not surprising when 60% of the workforce say they do not give a damn about their jobs...
If for one moment I accept the "rising trend" that rising trend has been because fossil fuel production/output has been a "rising trend". from about now (give or take 6 years) that risning oil output will reverse...so this is the second half of a super-cycle.
ie We are going to have or have had a paradigm shift, the biggest ever.......
and no one has ever seen it, ever....
"unaffordability" no its about cheap credit causing a property ponzi scheme that will leave carnage when it bursts/deflates. Those still in this game are blinded by greed and would seem to be not the brightest thing on 2 legs.....never mind, there will be lots of vacancies for farm hands....
regards
We will see who has the last laugh.
See through reading relevant material I have discovered that the 1930's depression didn't start in 1929. No the real pain kicking in at about 1933, a point when all the debt and deceipt the pollies had tried to hide eventaully couldn't be hidden any more.
The similarities of criminal behaviour that caused the problems is almost identical, therefore I would expect a similar outcome. Add in peak oil and perhaps it will be worse.
Dead cat bounce is the term you should become familiar with.
Time frame for GFC part two: September 2011 +/- 12 months. Yep at any time it could be tipped on its ear.
Bernake? Not the same guy who stated in 2007 "There is no way that house prices in the USA are in a bubble, or that there is any risk they will fall"? Or the Bernake that stated that "enterprises that get into trouble must be allowe to fail. The taxpayer must not absorb the moral risk that comes from company backruptcy under any circumstances" or perhaps the Bernake, who in support of the venerable Alan Greespan, advised the Japanese to 'let the banks fail' when they got into throuble in the 90's, only to ignore his own doctrine, when push came to shove! What a hypocrite...
He isnt an expert....beyond the fact that he is one of many and many have differing views...
Just this piece alone shows jsut about every economic scholl had an answer
http://en.wikipedia.org/wiki/Great_Depression#Causes
So he has not ensured that it "will" not happen.....it may not happen but I think its way more likely it will occur. I would say at best he has delayed it and may be successful in continuing to delay it....but I dont think we will be successful....the failure is pretty certian its just when...
regards
I dont think anyone will be laughing except the mad....
"Prehaps it will be worse"....the debt is far far larger (and its still growing) then as you say throw in energy decline, then throw in BBs ie a huge % of the population too old to work., and if it happens I think it will be worse....I cant see how not....but I dont have a crystal ball.
NB In the 1930s the USA was the biggest oil exporter? so not only was there oil they had "spare" so could sell it abroad...today i think they pump 6 and use 22mbpd...
The depression to look at might be the long depression in the late 1800s...plus the GD all rolled into one...
"GFC" doesnt even begin to cover what could lie ahead.
"Australia
Main article: Great Depression in AustraliaAustralia's extreme dependence on agricultural and industrial exports meant it was one of the hardest-hit countries in the Western world.[53] Falling export demand and commodity prices placed massive downward pressures on wages. Further, unemployment reached a record high of 29% in 1932,[54] with incidents of civil unrest becoming common. After 1932, an increase in wool and meat prices led to a gradual recovery."
and NZ differs how?
regards
True re the laughing. But hey you still have to smile sometimes:)
Hey here is an interesting one that I have been pondering for a few days. Also fits in line with your comments.
In the 1930's the US trade imbalance issue was their surplus, this time it is a deficit. Quite a fundamental difference and I wonder about the implications. You are a good thinker on these issues rather than this other bleating on about property values.
Ours and Australia unemployment went well into the 30's percentage wise according to one source I had BTW.
I wish but Im trying to understand.
There are a lot of implications and differences and that all look worse....except maybe Govns have tried to prevent it. maybe also because we are so inter-linked globally....we are supporitng each other....
I guess there are three parts, going in, in there and getting out....
Going in, the similarities between today and 1929 are striking....except its far far bigger in potential....the debt is far worse and the bank fraud mind blowing....so the fall if it happens has to be further and faster to correct to normal....So many ppl who back their comments with data and logic seem to think the chance of it not occuring are at best 50/50.....
Add in that some of the worse things I suspect is that there are hedge funds not only banking on this happening but also trying to make it happen and then clearly there are the investment bankers aiming to get to new highs in profits and hence bonuses, i cant see how that isnt mega risk.....it just looks so bad.
The US even being an exporter didnt get out with normal economics, it took WW2 ie massive Govn stimulus.
The GD is pretty clearly about the worst event so far in several hundreds if not many hundreds of years. The US was a powerhouse exporter then, Obama is counting on exporting, but exporting what? the industrial complex of the great lakes is a wasteland....so what can bring in income? "Intelectual property".....extorton via the likes of the vampire squid? Even being an exporter didnt help....it took massive Govn stimulus to achieve...
The GD ended as govn's ramped up for WW2...as you leave a recession/depression inflation is likely, however for the GD, men were shunted off to war and the excess $ was absorbed with war bonds...and there was simply nothing to buy...
So what will take us out? where is the energy to drive the "what"?
Not nice IMHO.
regards
All they've quoted is an average sale price and an increase in sales volume. Its impossible to draw any accurate conclusions about what occured in the market from just those two stats alone.
You could just as easily suggest that after 6 months of zero interest from buyers many Auckland vendors got sick of waiting to sell their house with an asking price in the $700,000 to $900,000 range and dropped down to a more realistic $500,000 to $700,000 range. Resulting in a big increase in sales as vendors had finally met the market, and also an increase in median sale price as nothing had sold in the $500,000 to $700,000 range for quite some time.
Well my wife and I (mid 30s) have been looking to buy in AKL for the last couple of months.
1) Meadowbank - the first auction I went to the vendor was happy with $660k so it went to auction and sold for $825k. It needed about $50k improvements. Sold to elderly European Kiwi
2) Mt Albert - advertised in the $600s - CV of $650k and it went for $725k. European Kiwis
3) St Johns Park - advertised in the $600s. Needed about $80k work done on it, valued at $750k and went for $825k. Purchasers mid 30s European Kiwis
4) St Johns Park - advertised in the $700s. Sold to new to NZ Asian couple for $925k
So a mixture of selling down, new to NZ and wanting to get on the ladder.
Having been disheartened we went back to our spreadsheet and bumped up our willingness by $100k - and purchased a place just below valuation. Hopefully interest rates stay still for the next couple of years - staying under 7% for the next 3 years (11% following that), our second child arrives in Sep 2012 and we don't get whacked by a levy. Stay away from those student loans too.
A lot of friends have had to revisit their spreadsheets and expectations too. The bank is very willing to give $$
The suburbs in which we were looking were going gangbusters
You really are an optomist, DMode. " ...our second child arrives in Sep 2012.." ! ( I think you mean "hopefully"?). But your figures suggest that you are looking at about $700k and have upped it to $800k? Then that 4% increase in interest rates that you mention will add a further >$600... per week, before tax.. interest to your outgoings. Let's hope you get a $750 per week rise to pay for it with ....because by then your gross interest bill will be..~$1700 per week again...before tax...And add in some pricipal repayment...well...
'our second child arrives in Sep 2012 "...I hope you meant 2011, or your poor wife will be really sick of baking this baby by then :)
Good luck with finding a house but do try not to get into too much debt (just because the banks will let you doesn't mean it's good for you, quite the opposite in fact)... Will it be a first home purchase for you (the figures seem high, but I don't know the Auckland market)? We were able to pay off our first home in 3 years, shortly after baby #1 was born, but found it much more difficult to save when our family kept growing (due to dropping working hours and increased costs, childcare not the least of them). I don't know what matters to you but if you are keen to be able to take time off to spend more time with your family you probably don't want to stretch yourself too much.
I find that quite concerning, DMode, but I know that what you have said is correct. I live in those areas and I have owned my current home for about 20 years and I'm looking to move in the next year or two. Even though I know I will be buying and selling on the same market when the time comes I still dread to think what I will have to pay when the time comes to move. I just don't see houses in this area (with a few exceptions) being worth $1 million dollars yet even in my own street which I consider ordinary, properties have sold for that much and more. It's crazy.
I really don't like how house prices have become so expensive in Auckland but what can you do, it is what it is!
New Zealand (including Auckland) is a low wage economy, and I'd be interested to get yours and others opinions on how the restraint of our low wages will effect house price inflation in the future. Will that ultimately act as a break on house prices because even if supply is limited, the average joe just has no money to pay for ever escalating prices? Or will prices push on regardless?
I'm thinking it's the limited supply. Perhaps low wages will have an impact but there are still plenty of middle-managers & up able to negotiate 5%+ salary increases vs inflation salary increases. I imagine those with the ability to negotiate will have come from parents with money - who won't be far from expiring - so a windfall to them too. I think house prices in our area will continue to climb but those in the outer remain flat. Which again makes it desirable to those on the cusp of being able to afford
Rents went up by... how much? :o
I guess a long-term property investor like me can only be feeling chipper after such a report as Barfoots have delievered.
Now one thing I notice is whenever a property report comes out that is bad, Nick A is all over it.
Yet above this post, presently, there is only one (1) post from Nick A.
Where are you sir? Are you downsizing now, as you say people will do if rents rise?
See you in South Auckland then?
It's just so hard to pick with interest rates, like one of Bernard's earlier articles pre-warned about low interest rates. You put it in your calcs just for a look, next thing you know that's how you base things. Foolish but nature. It ended up being the 'dream house', so I guess we dragged ourselves in - we are currently happy. I'll give you an update in 6mths to see how we're tracking. It could go either way, Donald's or Westminsters - come on Westminster! I'm picking National is less interested in influencing rates to control inflation
uh....if you get inflation interest rates will go up and your payments will rocket....if we get stagnation interest rates will stay low.....ditto deflation but then u lose capital....
Im not so sure its hard to pick interest rates provided nothing goes really really pear shaped (aka wolly)....the best indicator is history in terms of response to events....simply the OCR will stay low because economies are very weak and will be for at least a decade IMHO, thats best for you...If economies recover and strongly then we will have inflation but thats a decade away maybe 2. If things go really pear shaped and we go into a mega depression then the mortgage is based on wholesale rates that the bank buys from abroad....provided those investors still lend at a reasonable rate again thats no biggee....if on the other hand our banks become like Ireland because our property ponzi bursts then they find no one will lend to them except us via the Govn....then I just dont know.....it will be insane. If a bank collapses what happens to the mortgage? the debt still exists....if like me there is a small mortgage and lots of equity then that mortgage should be bought be someone, but no one will buy a neg mortgage...
Maybe a lawyer etc can say what happens in a situation like that....all i can see if the house gets sold from under you, the owner of last resort .ie the receiver does his best....the payout is then fractional....and the investor takes a [huge] haircut. In the US there is jingle mail where a house owner can walk away from neg equity, I like that. Now there appears to have been fraudulant selling of mortgages ie preditory lending, and products sold on max profit for the seller and not the the best for the lender so to me jingle mail protects ppl in that the banks was careless in lending....here we dont have that I wish we did....banks then wouldnt be so silly.
Westminster et al just seem to think property will just keep appreciating for ever, it obviously cant.....
The Q is when does the asset appreciation stop.....if you have or intend to have your house for decades like me, no biggee, beyond you will get back less than you paid or dont realise the make believe profit....but its your home....that for me has a value not measurable in $s.
regards
Trying to help you steven!..." .simply the OCR will stay low because economies are very weak and will be for at least a decade".....in this you are correct but at this point you opt to ignore the reality of massive debts in every friggin western country on the planet...and the paper money printing surge...why do you ignore this?
It is the debt and printing problem that is triggering the higher prices plus the shite going on in the middle east.....
Now start looking at the forest and not just one little bloody tree.
Wolly, I dont, ive considered it and I went looking for an explanation/reasoning....IMHO Im actually looking a several forests where all you can see is a damn wood and from one side.....
The main two are and Ive said this time and time again.
We are up against the zero bound AND the biggest is, the printing of money only matters when there is more active money in circulation AND where ppl are still spending their money, AND debt is increasing ie the private spending AND public spending are both positive and accumulative and increasing.....This isnt the case right now.
A simplfied example, Right now consumerism is up to 70% of the US economy.....lets keep the maths simple, so a roughly $10Trillion USD economy, at 70% consumerism is $7trillion and that part of the economy let alone others bits has practically collapsed ie consumers are not spending. Into this the US Govn has put (say) 1 triilion, but that roughly matches the amount of spending the individual States have withdrawn so give or take a few 100million there is no effect.
So there is a huge hole in private and corporate spending and its been replaced with at best 10% by the Govn....even the wildest estimates say 25%.......so there is a massive NET hole....
When you have a massive NET hole that equals dis-inflation and deflation....watch the data....that is what is happening....
Now NZ isnt as bad as the US, their housing market has collapsed and is collapsing...ours is stagnant....
Zero bound, at the zero bound anything you think is logical is actually conter-intutive....
A classic example of that would be the 1930s....about 33 or 34 the US Govn tried kenyesian stimulus, it started to work then the likes of Hayak got the ear of Govn and stopped it....the recovery died and the US went down hill again.....
Energy is getting more expensive, we are at the limits of food production, US hedge funds and banks etc are borrowing cheaply and pouring it into developing countries trying to make huge profits and yes to top it all the US Govn is exporting inflation....
Massive debt,,, that has to be paid down....aka the Great Depression.....that is what happened and it was dead for a decade except for WW2....so to pay that taxes have to go up.....that will cripple consumers even further....less spending == more deflation pressures.
Printing, it isnt ostly making it out into the real world, banks are keeping it to look solvent....plus businesses are not borrowing at least on the scale before....so if that prinitning isnt circulating it doesnt matter.
Sit back and watch wolly.....we have years, lets see whos right.....
regards
The press release clearly states that the rise in avergage sales price in Auckland is due to increased sales in the upper end of the Auckland market for family houses, properties worth more than $500,000.
The fact is that at the lower end, properties between $200,000 and $400,000, there is alot of stagnating stock, much of it having to be reduced in price to sell.
I wouldn't call houses in Auckland between $500,000-$800,000 the upper end. The upper end in Auckland is 2M+
e.g., the rich part of Parnell. Top sales for 2010 - according to Kellands
$3,100,000 St Stephens Ave (The PM's Street)
$3,490,000 Awatea Road
$3,600,000 Taurarua Tce
$3,700,000 Takutai Street
$4,900,000 St Stephens Ave
I think we all need to remember the source was Barfoot's and leave it at that really......in the credibility stakes their right up there with politicians...used car dealers.....Merchant Bankers....divorce lawyers.......and people who knock at your door looking for Chasa..!
Exactly Christov. A bunch of numbers from one RE company who only deal in a specific range of property is mean't to reflect the whole Auckland market, all at a time when they need as much business as possible. I note that their website mentions they have 1300 hunded salespeople yet they only sold 1070 properties in March and 927 in Feb.
They also had a net increase in listings yet total listings at the end of March are less than Feb. Easy to see how numbers can be spun to read positive or negative.
That's right Meh, the Barfoots stats are quite volatile, before Xmas there figures dropped off a cliff and now they are back up again...also the reported stats are high level & basic, to really make proper conclusions on them Barfoots need to supply more detailed info...many high priced properties could have been reduced and the market has started to clear...which means average values are reducing, but the way Barfoots announce it to the world it appears that they are on the increase...remember fudging is their specialty.
I suspect if Bernard asked a few of the buyers of the top end stuff in Auckland, he would be told they see property as more secure than the NZ dollars. That is not poor judgement. The dollar is heading down in value by 30% a decade at least, while going on past political performance in NZ, property will continue to be protected from a CGT and therefore is going to be better than bank deposits. This is not rocket science. It's just shoddy govt policy.
Regardless of the march sales figures , I suspect that the national house prices in New Zealand will be atleast 3% lower by the end of 2011 compared with the same period in 2010.
As expected there will be some regional variation with Auckland house prices likely to remain flat at best this year . There could be slight price increases in central Auckland , while falling in south Auckland.
With the likely increase in interest rates in 2012 , there could be further downward pressure on the housing market in the short term.
I think you will find that your statement "indicate a strengthening local property market" is interpretation of facts, not facts per se.
Facts: Barfoot stats show average price (poor metric) up, and volume sold up.
Others have already posted above their theories (which often don't involve "strengthening markets") on how this can ocurr. The reality is that both sides won't know the truth about prices until well after the fact.
Why this is absolutely outrageous! Who wrote this crap? Monstrous lies, they’ll do anything to try and talk up this dying market. What we need is a property tax and we need it now to stop the property whores and their real estate alley cats from screwing anymore money out of us. It’s all the banks’ fault forcing us to borrow their money to buy overpriced houses to inflate their fat profits. In fact I’m that outraged I’m writing a five page letter of complaint to the Queen! We all know that New Zealand homes are overvalued 10,000 million bazillion percent and their values are going to collapse. Forever! In fact I know of two houses that sold in Mauriceville for 55% below their CV and it took those 45 months to sell! 45 months! So there’s your proof! You’ve seen nothing yet. Look at Mali! This is just the beginning not the end! Peak oil! Where’s my tin foil hat?
Run for your lives, flee flee, we’re doomed, doomed!
As I have long known, a number of the readers who contribute the more strident comments to this board don’t know what the F they are talking about. Never have and never will.
How nice that you are so concerned about me Westminster...funny you should mention shelter...I'm about to buy a shipping container...they make dam good sheds and cost less than the permit to build a shed!..haha
I shall shelter in it from imported Japanese Tuna and rice...for the next 24000 years.....
Average weekly rent up $32. Not unexpected. The last 2 years have been the best ever for owning rental property in Auckland. Must be the lowest vacancy rate ever and getting lower by the day. One property manager I know has done 74 rentals without having to advertise once.
Yeah this is awesome, watch the middle class squeeze itself into oblivion, awesome. In 10 years time there will be 2 types of people, rich or poor, and if all the middle class is holding residential property what do you think wealthy people are doing? Owning more than one home? I highly doubt that.
Hehe, if things are so rosey are Barfoots, then why did one competitor pick up two new agents from Barfoots last week. That is two different Auckland based Barfoots offices.
Word on the street is that listings were more tight to find last month than in any time since the GFC.
I would say that of the tiresome PI spruikers that post here. I do my research, general economics not just house prices.
Anyway I have sources in the game, and I say game because that is what it is. Hehe.
Demand? Well the demand from agents for listings to sell is high, but as I posted yesterday, March was the worst month since the GFC started. Results in some nasty cat fights. So supply shortage of listings translates in this instance to a shortage of sales, agents move thinking that will improve their prospects. It isn't. Haha.
Wierd thing is that you would think a shortage of listings would force the prices up. It hasn't in the Auckland area I am talking about, in fact not many sales near CV at all.
Maybe we are starting to see the I word appear after all the presses have been running so hot for so long under the QE 1 QE II guises which are no more than what Robert Mugabe did for years.
Gold at an all time high
House prices through the roof
Inflation in the UK > 5 %
Good time to acquire real assets.
Jolly Good Show ol' chaps ..... the lads at Barfoots really know how to trump up the market and "spot on" timing when one of the family is looking to sell their little bach on the cliff at St Heliers :)
I have to hand it to them, they know how to play a great game of whist ol' boy !!
Anyway, I think it is great news for the bourgeoisies ... they will again be pumping up my bank share prices and dividends with those lovely large mortgages and when the interest rates start to rise, more lovely fresh luka flowing to moi ...oh bliss !! ... bless their hearts.
Keep those cash flows filtering up my way ..... that's the only way.
"Trickle down" .... haw haw, now that was a great chortle ..... no such thing, sorry to say ....haw haw
Heading to Honolulu tonight to meet up with a few old banking friends .... I am sure we will have a cracking time ... at your expense :)
toodle pip
Champers Old Thing.....good to see you up and about again after that nasty case of coital gout you suffered from gorging yourself at the Northern Club mid summer...........do enjoy Honolulu and remember most of what you shovel in your mouth will exact a price upon reaching the departure lounge......
Good luck as always ya scamp.
Christov 'ol boy, jolly good to hear from you, safely arrived in Honolulu courtesy of the fine staff at Air New Zealand...... great liquid refreshments one must say, thank you Rob ( a personal friend of mine... of course)
Oh yes, one has been esconsed within those ivy clad walls of the Northern Club, over the summer months, talking with all and sundry. So much to discuss ol' boy, however the trivial matter of the price of residential property did not raise its head at all.... rather ways to siphen the middle class tax take "upwards" to the likes of you and me ol' boy....hawhaw
That reminds me, what happened to our good friend "Lord HawHaw", a spiffing chap, one of class and meticulous manners, that used to grace these fine literary pages.
Back to that tax take issue, I must say our little friends John and Billy Boy were a great ally in the SCF debacle .... great work and jolly good show chaps. That just made me a few mill on the side and it is coming to fruition now ie in moi's bank account ... haw haw !
Well, I had better get out, spend all 'your' money and enjoy this beautiful Waikiki afternoon, with a Champagne Cocktail (they don't call me Champagne Charlie for nothing! ) at the Mai Tai Bar at the magnificent Royal Hawaiian Hotel ... commonly known as the "Pink Palace" for the proletariat, as that is all they get to see ... the outside ! haw haw
Toodle PIp
The Auckland market continues to amaze me. Based on the evidence, I forecast negative growth for Auckland property between 2011-13. Yet despite negative factors longer than my arm (biggest global crash since 1930s, biggest financial disaster in NZ history etc), Auckland property barely takes scratch.
Unlike many 'bitters' on this site, I'll put my hand up and admit I got it wrong. My plan was to wait 2-3 years to realise a bottom market price before dabbling, a strategy I now feel would prove costly. Short term demand for property in central locations is off the scale, I have been blown away at recent auctions. In terms of the long term, one look at Auckland population projections makes investment a no brainer.
So why did I get it wrong? I based my forecast on fundamentals (earning growth, unemployment etc), when in reality it seems appetite for property in Auckland doesn't conform to the fundamentals. Like it or not us jaffas and our government have made a mint from property, and unless WW3 breaks out that will never change.
So while paying $850 for a half decent pad in Aucks seems crazy against the fundamentals, it's the reality and likely to go much higher. Time to visit the ASB!!!
Doh...tell us how it works Westminster because no bugger in the US govt or at the Fed has a friggin clue how it works...help us all out here..."saved us from the great depression"...wow...say, how many people are now living in plastic tents in the usa...how many are surviving on food stamps....how they gonna balance their budget Westminster....?
Westminster - I take it growth goes on forever? No exceptions? Nothing to do with physics, energy, anything like that?
Let me guess: at a certain point on the scarcity path, the price goes up and 'bingo', there will be a substitute. Always. For everything.
Doesn't matter whether there are i billion or 9 billion on the planet . Right?
Westminster - "In order to have economic growth, which is healthy, prices must rise. Its not evil if it is sustainable".
That was my question: Do you think economic growth, ad infinitum, is either (a) desirable, or (b) possible?
That it would need to go on for some time, for all those mortgages to be paid off, I do not dispute.
That looks remarkably like a contradiction Westminster.
by Westminster | 06 Apr 11, 11:47am
18 months, what a joke Ronald! Maybe in 6 years they'll be at 8-9%,
TrimChaiLatte
Good points.
Auckland does seem to be defying logic, although I personally would wait another month before accepting that it has turned a corner.
To me it doesn't make any sense. The economy is still very weak, confidence is low. Govt funding for big projects will be drawn out of Auckland. Maybe the 50bp cut in the OCR has had a big effect.
If this recovery is sustained I will admit I was wrong. Let's wait a month.
Either way doesn't really bother me - I'm happy to rent, to save plenty of money, actually maintain a sane lifestyle, and not lose sleep over how I will afford to pay the mortgage if interest rates increase 2%. I don't plan to be in Auckland long term anyway - get my son through Auckland Grammar within 4 years and then set off to a regional centre.
I don't think it defies logic at all. If you work daily with the RMA and District Plans it is obvious that there is going to be an increasing shortage of housing - and cities with shortage of housing don't care about houses being 3x slary or whatever. Visit Delhi, Sydney, Manhattan.
For example when the District Plan says a CBD apartment shall sell for $500K no developer is going to build one until they can sell it for $500K. Until then they will build nothing while population increases and prices are driven up by lack of supply.
There is glimmer of hope with the supercity and new Auckland Plan - however under current RMA processes it will take years for anything to happen while every 70+ year old NIMBY desperately fights to keep Auckland as low density (and expensive) as possible.
Bob, im not from auckland and have not followed whats happening up there that much, but maybe you could inform me something with regards to District planning/zoning up there.
The highly sort after, more central areas of auckland; is there suggestion that current laws that restrict density (houses per unit area) will be changed, allowing many properties to have additonal dwellings?
This law change would make a 600sqm plot with one house suddenly worth a hell of a lot more if the change allowed a second dwelling in this highly sort after location.
Investors (i know i do it where i am) keep a very close eye on things the council do... Some provincial towns have tones of land being re-zoned for housing, land that is within 5 mins drive from city center as they are smaller cities. These provinces will have property values decline for some time and are completely de-coupled from the auckland market
Auckland's District Plan is direct descendant of the pre 1991 RMA town and country planning schemes based on everyone being a nuclear family with two cars needing a giant lawn living in suburbia etc. etc.
At a high level Council realize that this is unsustainable with more diverse and affordable housing (denser housing) required and are starting to prime us for introducing a new plan were we don't all live in freestanding houses like we're just a large version of any provincial town, but a city.
Look at:
page 25 for housing types that are currently banned/illegal/absolutely not allowed under current planning that Auckland City that will be trying to introduce by the end of this year.
When they can introduce large areas of zoning that allows this sort of development, (without also taxing it up with large reserves contributions) we'll get more affordable housing, however...
the RMA processes means that any twit who doesn't like the thought of someone else living in something that's not a freestanding house (especially anywhere near them) can make this process of change take years and until then I think prices will be squeezed up.
Thanks for that.
So you could say there is some 'pricing in' of these inevitible changes to planning, where stand alone 'provincial town like' properties get speculated on as investors know they will soon be worth a lot more once they are allowed to be subdivided up into 2 or 3 town-house units.
Does this answer the question as to why auckland and some central suburbs in particular are behaving differently (and unusually in context of property in NZ) to other markets?
I doubt it - the first draft of new Auckland Plan will be end of this year at the earliest so I'd be suprised if anyone would speculate on what or where these changes will be (and speculate on what they'll be after 5 years of submissions, hearings and environment court hearings). Even developers usually move on if there's risk of a notified RC application.
I live in central Auckland because that's closest to job and I want to walk and bike and not sit in a car for hours a day, as does everyone living around me, not to 'speculate'. That's why prices have been increasing constantly since 2007 - there's more people that want to live in these areas than houses available in these areas. Supply and demand.
But Bob usually restrictive planning leads to a bubble which is followed by a big crash. Look at most of the cities in the USA which have had restrictive planning. That regulation fires prices up, but then there is a large correction.
We haven't had the big crash, maybe its still to come, maybe it won't happen
Sorry I'm not quite sure what you're saying?
We have restrictive planning so we will have a bust? We don't have restrictive planning therefore won't have a bust? Exactly what US cities are you talking about - Florida has loose planning and had an enourmous price drops?
Bob you need to educate yourself.
Read some of the research from Glaeser and co. out of Harvard University, earlier studies from Berkeley etc. Read the Unconventional Economist, and Demographia. The writings of preeminent economist Paul Krugman. The evidence is clear - cities with heavy planning regulation see high escalation of prices, the inflation of bubbles, however they also experience correspondingly greater crashes than the more lightly regulated cities.
FLorida did not have loose planning, it was actually quite tightly regulated.
Texas had loose planning regulation, so therefore there was a smaller boom and a smaller bust - ie. the market was flatter and less volatile.
Why? - I've had a good look at Demographia in the past and think it's complete rubbish to promote suburban sprawl - the most environmentally and socially destructive practice on the planet. I don't believe your comment on Florida.
Anyway what I don't get is how you seem to think I am promoting heavier planning regulation by wanting to see density deregulated? I'd like to see NO regulation around density or minimum densities rather than maximum. How is that tightening planning regulations?
As previously discussed on other threads the excellence of a city is not just based on how cheap houses are (there are cheaper places than Texas) and the desirability of a city is not just based on how fast it's growing (there are faster growing cities than those in Texas). I'd rather live in Paris or NY than Lagos, Texas or Mogadishu even though they are cheaper, growing faster and less regulated.
Bob
I wasn't challengng your thoughts on freeing up planning regualiton. I agree with you 100%.
The point I was trying to make is that Auckland is defying logic by bouncing back with its prices. We both agree it has been too heavily regulated - but most of the heavily regulated markets boomed massively then busted substantially. That was my point about Auckland defying logic (and research) - it should have busted more than it did. I think the only reason it didn't was the Reserve bank had huge room to cut interest rates
I'm 100% with you on freeing up planning regulation. The NIMBYists out there view 3 level terrace housing / apartments as some great evil. The Council needs to tell a simple message. Auckland is going to grow by roughly XXXXX. Auckland has no choice but to intensify - move to a regional centre if you want to live in a town. But we can choose HOW to intensify (lots of high rise in 4 or 5 main centres, or lots of 3 level in many areas: my preference)
Bob, you are totally right...these buoyant Barfoot figures illustrate how outdated our planning rules are, combined with Bollard lowering the rates when they should have stayed where they were...but Auckland Council will be freeing up land supply (they have no choice) and interest rates will ramp up after the election...and once the supply issues are addressed things will be much different.
Good to hear I'm not the only Jaffa scratching my head
I agree things may still change, but several factors since New Year indicate that central Auckland property won't budge;
1. Fuel prices mean that people will pay top dollar to live centrally
2. National not even considering a CGT (even when it was recommended)
3. Chch quake driving migration to Aucks
4. Aucks to hit 2mil by 2035
Rental demand at record highs
For me it's a tough decision to make, but my gut feels says I'll pay $850k now with good terms or $900k this time next year at higher rates.
Sometimes it's better to take the plunge and get on with your life. Waiting for the central Auckland market to crack is like waiting for the Blackcaps to win a world cup…it will probably never happen!
What is up with the 12% drop in Market share for Barfoots in a month?
Interest rate drop of .5% with freer lending from banks makes a rise not really surprising.
Great balance between long grind of deflation and exploding inflation. That will dictate whether renters have "missed out" or whether this is a dead cat Bouncing.
I wonder what the catalyst will be for inflation?
What is hasppening in Aukland is due to it being a growth centre with in-migration, both from overseas and from within NZ It should follow that other areas of growth in NZ will soon be reporting an upswing, cities such as Hamilton and Tauranga which have significant in-migration.
But in many parts of the country it is not going to be so good, Marlborough is an example of what it may be like.
It's just pent-up demand being released. The same thing happened starting in March 2009, the run of which proved temporary and lasted 12 months (so ironically March 2010 was the last good volume month). 12 months have past - looks like March 2011 is the inflection. Who knows - release of demand or start of another up-cycle? My bet is we will have up to 12 months of increased volumes, limited pricing growth, and then back into a slump.
FYI from another reader via Facebook
"When you export you own people and import immigrants to replace them, then you open up a can of worms where your biggest growing city's real estate prices, constantly hold up no matter what. To get the real idea of where our house prices are, we need to evaluate NZ house priices in isolation of Auckland. Thats where you will see the real underlying real price trend. Ak is isolated in so many ways from the rest of the country simply because it is, and always has been our only centre of "growth". Very misleading!"
Bernard.....in regard to your breaking news above....John Boy's estimates for labour required at 12500 full time workers.......could you inquire as to whether we shall need to use the cycle way formula in an effort to arrive at what he is actually trying to say.
cheers....and do let's know.
Amazing how Barefeets figures can fire up so much comment.....But the figures dont lie.....50% of the Auck market.....best sales in 4 years....ave price up $60,000
Why the comparison with the depression.........80 years ago...move on please.
Sure Auckland an advanced market on the rest of NZ......but the remainder will follow.
Buyers are realising interest rates going to be down a long time.
Be quick buy now before property goes thru the roof
As interest rates go up later this year the property bubble will burst . First home buyers like me should stand aside because they will be the worst impacted when house prices fall.
We would face financial ruin if house prices fell below our debt.
The entire property market relies on first home buyers so that sellers could cash out and buy superior properties.
Without FHBs, second home buyers cannot trade up. The whole juggernaut grinds to a halt and if we choose not to buy at these outrageous prices, the market will correct sooner than later
So those who don't buy a property are locked out from ever owning one? I think thats a funny joke, if an investment turns into something that HAS TO BE BOUGHT OR YOU WILL NEVER BE ABLE TO BUY IT kind of thing it doesnt sound like an investment I would want, ever. In fact the notion that if people don't buy now they won't ever be able to buy is a hilarious joke, this is how I know things are going to go belly up, because spruikers are trying to get some fear in ya.
Yes, it must be a lie. Those bastards probably also are the ones that manipulated the RBNZ mortgage approvals just released today. You know - the ones that for the period ending 7 April were the highest since mid december 2009 at 6,076 - 27.8% higher than in the corresponding week last year, and by value 38.6% higher than in the previous week. It also must by why the average value per approval is at a high. And why the trailing data since december points to us hitting an inflection point.
The numbers are what they are. Why get so emotional about it?
It is probably just the same as what happened starting in March 2009 - pent-up demand is now being released into the market. It doesn't mean house prices are going to increase 15%. But it does mean volumes will probably be a good 15-20% higher than they were in the preceeding 12 months.
This is the really exciting part of any cycle! The bit where' faith starts to ebb'. Where the cash gets spent too soon for 'fear of missing out'. This is the bit where the money that isn't spent now, gets to buy at the best prices, later, as the cycle finally completes. Just as a reminder :
Wave 5: Wave five is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average investors finally buy in, right before the top. Volume is often lower in wave five than in wave three, and many momentum indicators start to show divergences (prices reach a new high but the indicators do not reach a new peak). ... bears may very well be ridiculed ...
FYI here's detail from Canterbury in March from Harcourts, who are the biggest player there.
cheers
BH says Auckland our only centre of growth. Hasn't he heard of the likes of Hamilton and Tauranga ?? Hamilton might be a 'cow town' but that's the best kind of town to have at present, average cockies annual takings over a $million (better than being on national super!). And have just been reading the Environment BOP Chairman's comment that Tauranga has net 135 extra arrivals over departures each week, 30 new houses built by end of this week to the start of week, 60 more cars on the road each week. And that's before the proposed $50 mill deeping of the harbour (going through the objection process currently), which will increase the port capacity even more (Auckland's facility in comparison is limited), the 6,000 student Waikato University expansion in the CBD, 83 large cruise liners already booked at Port for next summer's tourist season etc. These provincial areas have been in a lull, but what happens in Auckland then happens in a year or two down the track in Hamilton and Tauranga. It's not doom and gloom everywhere outside of Auckland, although take the point that it's not too flash in a lot of areas.
RBNZ stats out this afternoon show bank mortgage approvals last week hit NZ$896 million in one week, the highest in one week since November 2009 (ie a post Global Financial Crisis high).
Looks like we're back on the borrow and spend wagon.
Now we know where last year's income tax cuts for the richest salary earners is going. It is being leveraged up by banks desperate to grow lending again and being put into the pricier houses in the pricier suburbs of Auckland...
plus ça change, plus c'est la même choseSee our interactive chart here
http://www.interest.co.nz/charts/real-estate/mortgage-approvals
Just got back from the gym and here's some factual anecdotal evidence:
Neil, the bank manager form Albany says they have had an upsurge in mortgages from good clients who are looking to upgrade their homes.
the interesting thing is most of them still HAVEN'T sold their existing home and have bought more expensive ones.
when Neil indicated this could be R/Estate suicide some indicated that they weren't concerned cause if there existing home didn't selll they'd rent it out and move into the better one and then make big bucks renting over the World Cup..only in Auck. could that thinking occur...so after the World cup you own two homes and interest rates are on the climb..Neil says they're not concerned..?
Alan the salesman from Barfoots Browns Bay.. says they sold 51 props. last month of which he sold 8 which is the best thye've had for some time.
he said some were to buyers who were sick of waiting and other based on vendors dropping their prices o they could move on.
fresh in today and true!
I certainly know what you are talking about. I have weight trained for years. Pressing 140kg and upwards is exceptional.
That's All Black forward-capability training weights. Andre Agassi used to top out at that weight believe it or not.
Given your last comment, I don't believe you.
Damn DonnyMac!!......and here's me thinking you were talking IQ.......come on mate your not really a grunter are you...? i had you pegged for an intellic...intellact...intah...smart guy....and I make it a life rule not to press anthing heavier than I'd want on top of me.....
And your point is ...?
Obviously, more people can afford to borrow, improve the quality of housing for themselves and pay it off over time. - What are you finding wrong with this?
Even if you are right in your guess as to where the tax cuts are going - so what? That's where some decided to put their money. - what are you finding wrong with it?
I say, stop the negative anti-property obsession, stop whining about "unaffordable" housing, stop the unhealthy and unhelpful blaming of others (be it "baby boomers", or "rich salary earners", or property investors, landlords, banks, or the Gov't) - take responsibility for your own destiny, work smarter, be more productive, earn more and solve whatever financial problems you might have. And if the stats show that more people do this, - great, the more the better!...
a) Leverage....
b) The idea was the tax cuts would be spent or invested productively....this doesnt look to be the case....its being sunk into a non-productive asset.
c) Too many ppl are doing it.
Just look at Ireland for why we are concerned.....
"......the Irish state to these stunningly failed banks.
No financial institution or bank will lend to them. Ireland's banks can't borrow from anyone except the Irish people"
"house prices have more-or-less halved over the past few years"
Read, if this goes wrong in NZ the crazy's like you will be bailed out by the likes of me and BH. Its known as moral hazard, I'd be perfectly happy for you to do as you wish provided it does not effect me, that unfortunately isnt an option at present.
regards
What a load of rubbish!
You and i are free to spend our money any way we want.
"Too many ppl are doing it" - Do you mean they should have asked for your permission or that from comrade Hickey?
"...you will be bailed out by the likes of me and BH" Are you trying to be funny? If so, try harder, it's not funny, just ridiculous.
I'm impressed with your French, you even got the special characters right :)
As for last year's tax cuts, they took place accross the board for Pete's sake! Please stop referring to them as tax cuts for the rich all the time, it's not funny it's annoying... And by the way, 70K isn't rich.
"They were supposed to save it and invest it in new export businesses." With all due respect, where did you get that from? I didn't hear of any new law being enforced recently to tell me how I must use my tax cut (not that I bought a 2nd home with it, mind you, I'm actually much more interested in investing in business). Does this new law that I don't know about only apply to people who earns 70K+?
What do you find so disgusting about having studied hard to avoid being stuck in a lowly paid job and doing something useful instead, like R&D for successful NZ export companies (you rarely do that on 30K a year)? Should people aspire to being on a crap salary all their lives instead?
You might also like to keep in mind that those people on 70K+ pay a much higher tax rate than those on low incomes (I'm assuming they are honest) and pay for all the benefits of people who can't support themselves to top things off. Reading the repetitive comments about "tax cuts for the wealthy" does make me wonder if maybe other countries would value productive people a bit more. There's no pleasing some people...
There are productive ppl earning little....there are bankers who are damaging to their Nation's economy if not the world's economy gambling and make obscene amounts of $ in the process.
So far from my observations Im quite happy for a 50% of the "wealthy" to be allowed to take their money and leave, I think NZ would benefit.
regards
"There are productive ppl earning little". OK, like...? The thing is, salaries are usually a function of supply and demand, like everything else. Low-skilled jobs are usually low-paid jobs, whether you feel you are productive or not because basically anyone else can do it just as well. (I agree on bankers though, LOL).
Seeing the deficit of the govt, I'd rather not think about what that would be like if 50% of the "wealthy" left, along with the (bulk of the) tax money they contribute. NZ is a poor enough country as it is. You might change your mind when the only people remaining in NZ are limited to beneficiaries.
Seriously, earning a decent salary doesn't make one dirty. Amazing as it might sound, even people on higher than average incomes can be honest, work hard, pay taxes and then give some more away on top of that because they genuinely care about families in a worse position than they are.
"...avoid being stuck in a lowly paid job..."? - that's exactly what you "are supposed" to do, not being a tall poppy!
"...doing something useful instead..." - now, this is outrageous!
You are supposed to (a) produce very little and of very low quality, (b) get every handout you can, (3) whine about unaffordable housing, goods, holidays, etc. and (4) blame whoever you can think of (baby boomers, high salary earners, the Government, the banks, etc.).
Do you agree comrade Hickey?
I think you all missed Bernard's point. The tax breaks are, according to economic theory, meant to be an incentive that stimulates the economy. Houses don't do that.
Stupid thing is that history shows that those with money in this situation will hoard it.
Only good thing is that history shows that a great depression will actually reblance the inequity in wealth.
Which economic theory? There are so many I get lost. As Steven said, for many people this little extra that they get to keep is being used for their day-to-day cost of living/debt. For others, like my family, it's gone to a savings account (saving for something specific).
Let's not forget that the tax cuts only took effect 6 months ago. Most people have only saved a few hundred dollars over that period. Those on very high incomes probably didn't need the cuts to buy a house in the first place. And reading this site, I was under the impression that the property market was in great difficulty, not the other way round so it is hard to reconcile this "fact" with the claim that the tax cuts have been used, so early on, to buy yet more houses.
He went off on a sidepath Elley...the theory is a reserve bank can boost GDP and market confidence by making credit cheap and porking a splurge...you are right when you say people will save and not splurge...that is the emerging pattern of behaviour which is cementing in place the recession and leading to the silly game from Bolly.
All he is doing is thieving from savers and in so doing driving them to spend less and save more.
The real market overseas is waking up to Bernanke's scam and together with the European piigs debt fiasco...you can expect rates to rise, regardless of what 'game' Bollard wants to play.
The idea to my mind,
changes to the tax system are about:
- Helping hardworking families get ahead
- Boosting growth to create jobs and lift incomes
- Encouraging savings and investment
- Making the tax rules fairer for all New Zealanders.
Not pointless investing in houses.
regards
As you know other countries do value productive people more. One firm I'm a Director of was approached post earthquake by a strategic partner in Australia if we would consider moving, they reckon to arrange tax and other State assistance to move would not prove difficult with their contacts. hmmmm
"They were supposed to save it and invest it in ..."
Sorry comrade Hickey, they decided to disobey your orders...
People are free to do whatever they want with their money. And if it's a "bigger and better house" as you say, why not? what's wrong with this? and why do you appear so jealous about their choice? why is it even your business anyway?
Most if they were like me were put into day to day living and increasing paying down debt....We are not talking $70k in these suburbs, probably well past $150k. The point is at these incomes it frees up more disposable income......as opposed to necessary income. If you are convinced that taxes are going to rise soon then sinking it into an asset like a house makes sense at a simple/shallow level....the prblem is the risk of loss, but few see or want to see that I think.
regards
Ex-agent, Hugh P....where the bloody hell are ya? :)
So....we are 3-3.5 years post the 2007 peak, economists are now calling the bottom, slow and steady climbing for the next few years are not out of the question, who said 7 year cycles don't exist.
Now I must find that post from last year of my prediction for 2011 :)
Matt in Auckland I will have a look for your prediction in the old archives too mate :)
28/29 if you look at my comments of late I have been consistantly saying central Auckland has been holding up but the rest of the country is struggling. Auckland has been saved by the earthquake migration, lower interest rates, higher earners getting great tax reductions and the more expensive houses getting attractively cheaper. Looking at B&F's statistics it is clear a lot more expensive houses have been sold and bought in March. Time will tell whether those who have borrowed big time to upgrade their homes will get away with it. Inflation is rising and interest rates will not always stay at the current emergency levels. I am told prices are starting to drop in places like New Plymouth where the purchase prices are regularly lower than the current registered valuations.
FYI here's regional detail broken down from within the Barfoot's stats
http://www.barfoot.co.nz/Info/Market-Info/Analysis/March-2011-Market-Analysis.aspx
They show volumes in the central suburbs and North Shore rose 24% to 489 in March from 395 a year ago. Sales elsewhere in Auckland rose 9.2% to 581 from 532 a year ago.
The number of sales for NZ$800,000 and over was 186, which was up 37% from a year ago.
What this shows is the tax cuts for the wealthy are being reinvested with leverage into expensive homes in and around central Auckland and the North Shore.
Is this what John Key means when he says he wants to transform the economy into an exporting powerhouse by cutting income taxes?
cheers
Bernard
Bernard
Given that Barfoots only account for arond 45-50% of Auckland sales would you be able to drum up charts of sales from some of the other players in AK like Ray Whites, Bayleys etc.
Be very useful to do a mean average over a range of them?
cheers and a free angus burger if you do...staple diet...you know what i mean?
Those RBNZ mortgage approvals for last week are still down 18% compared to 2 years ago (by number) and 16% down by value. There has been some growth compared to the absolutely abysmal numbers late last year, but its very modest, and not in the same league as 2 years ago
I'm not denying that the Auckland property market is strengthening, but it is worth pointing out that Barfoots use "mean" prices rather than "median". There is no doubt in my mind that the strengthening is exaggerated by their method.
Bernard - would hope to see some questioning of Bill English or Phil Heatley by one of your team in terms of these stats, given their rhetoric about being concerned about high house prices
Anecdote for you MIA. ( fresh from the in-house gym!). I mentioned 'these' figures to the building manager - he manages the sales for the block as well- and wondered what he was seeing " A lot of the Chinese students who bought over the last few years, who haven't come back, are moving them on to local buyers" was his reply. The Kiwi$ is up against the US$ ( and hence the yuan) and they are taking their profit (more of 'our' money?) back home, I guess? Property prices work for the country, again. The difference would appear to be ,though. That where the sellers paid 'cash' the buyers are getting a mortgage? "They came; they studied; they left.... richer ...!"
There's quite a bit of cash people are holding, and the options include housing, looks like may be an aversion to finance companies, bonds, stock market, so it's going into housing.
This will be nothing compared with any capital gains tax that exempts the house, then you'll see a huge flight of money into one's Mc Mansion.
NA - I was also wondering where Big Daddy was
This just came through in Kieran Trass's newsletter
In this months ‘BUMPER’ 20 page commentary we take on some tough but neccessary subjects and outline them in detail:
- The lies being told to you about the market by the real estate industry ‘leaders’
- What the Banks and funders have been up to over the last 5 years, deliberately collapsing finance companies by withdrawing crucial funding lines and then effectively ‘looting’ the most valuable assets from the collapsed finance companies and wiping out ‘mum and dad’ investors funds in the failed finance companies. There were some very sound finance companies which were deliberately imploded by withdrawing crucial funding so the very same funders could then loot the finance companies good assets whilst lumbering the finance companies ‘investors’ (mums and dads) or all taxpayers via the Government Guarantee SCAM (as in the case of South Canterbury Finance) with the bill!
- How the Banks and funders are now sitting on large tracts of developed bare land whilst a building shortage (they have created) builds a head of steam as development funding for any new developments has dried up because of the lack of finance companies that are left due to the Banks/funders actions… It’s true that BANKSTERS are alive and thriving in NZ!
- Why New Zealand’s House Price Indexes are no longer reliable and why I have ceased producing the SuburbWatch Index for all suburbs because the data can no longer be relied upon to give an accurate indication of property price growth rates. So my suggestion is that you also do not rely upon the REINZ or QV Indexes to give an accurate view of property price movements
- The shocking truth about the current state of the property market and what you can do to take advantage of it now and how.
In 2005 Hundreds of people were told by Kieran Trass in Ellerslis race course the house price would drop in 2006. Even though the house price didn't drop in 2006 he still keep predicting the housing market.
Last year he said the hous price world drop over 5% in 6 to 9 month.
I am waiting for hin to walk the country, but now he is saying Why New Zealand’s House Price Indexes are no longer reliable .
Two things,
Why doesn't the government build a set of new state houses (keeps builders and the supply chain employed) around key public transport routes. And sell the existing post WW2 (Kepa, Kohi, Meadowbank, Glen Innes) to the public? This would add supply to the market and you would be able to build and house more people requiring state help.
I know of three houses that have sold for dirt cheap recenlty. Two in cheaper areas and one that is kanckered city fringe, well below CV and well below original asking prices. Do Barfoots only deal with high end real estate? Are these figures a market reflection or a Barfoot reflection?
Well you need to study the buyers and the sellers. Why are people selling. I left Auckland in 1996 and have held a property since I left. After the christchurch earthquake I think the macro situation and how we get out of it is a real problem. I'm a natural optomist however the evidence is so compelling it has made me decide to sell down NZ assets. So our sale does not reflect confidence from us.
Sure prices may remain sticky and it is not a rational market but if the macro situation is not resolved property at some point and all NZ assets must come down. So we sold before winter and a special thanks to the extra stimualtion provided by the interest rate cut.
We are one of the seven figure sales for the month, thanks for the return even though none of it is rational :-)
We have also just sold a commercial property in christchurch with a new quasi governement tenant in place post quake, marked incraese in its yield and consequential value, the money will be offshore asap.
I think for many they have no idea what else to invest in, as I work also in overseas markets I guess I'm more aware of alternatives.
But it came to pass, that all those who signed up for the mortgages, found their fiscal cupboards bare, as had been foretold. This caused them some disquiet, to say nothing of their bankers. Verily, when the banks put the houses up for mortgagee sale, it was a case of the parable of the talents. Or, more precicely, the lack of them.
You see, they'd all gambled - for that is what it was - on there being a continually growing supply of resources (real physical ones) to keep them all doing stuff to gain the wealth ......
Sadly, selling the same thing back and forth doesn't create wealth, but they'd never bothered to think about that, indeed, it would appear that they never bothered to think much at all.
So - when they ran - with exponential suddenness - into that lack of supply, they were sore perplexed, and went to the High Priest; "You said there was always an alternative at a certain price", they shouted, then they lynched him. It wasn't pretty, but then, he was starting from a back marker.......
Too late, though, to save themselves. You see, they'd made the Cardinal (sorry Christov) mistake of allowing the moneylenders to run the temple.
And of electing a Government stupid enough to advocate casting nets on both sides simultaneously. Even as it advocated passing by on both sides too, at great expense to the yet unborn.
So, if one gets your drift, you are saying we are stuffed, that everything is turning to custard in Aotearoa. That of course is your perception of the reality, that's all, even if you are a half-pied physicist. Hope it doesn't happen before RWC as I'm looking forward to that
Talking of realities, what did you think of Matrix?
Me - no, you don't get my drift.
The exponential-growth, physically-underwritten fiscal structure, won't last.
That doesn't mean 'we are stuffed', or that 'everything is turning to custard in Aoteoroa'.
Who drew that bow? A self-sufficient. non-leveraged lifestyle was clearly not going to be 'stuffed', and that's where folk like me went.
But - if you're leveraged, and the possession involved is important to you, then yes, you're in trouble.
The RWC is a side-issue, and sorry, I don't watch a hell of a lot of movies, don't have 'telly.
High probability these figures result of recent lower interest rates. BH was quite correct in saying there was no need to reduce OCR. It seems very probable to me that when interest rates INEVITABLY rise back to 8,9,10,11% (take your pick) due to inflation / commodity / energy prices the fall and pain will be harsher especially in residential property.
Easy money never equals long term economic prosperity. It simply pushes the underlying problem in to the future but with more severe consequences. NZ's are expert at this .
Cut in OCR and apparently slackening lending standards are simply doing their job. The OCR cut never had anything to do with ChCh. The earthquake was used as a pretext to fuel another credit bubble. Maybe this one will remain restricted to AKL - coz it obviously is where the majority of people live who have money to play "the market".
NZ needs a major economic disaster to change its ways. Anything short of that and it will simply remain the one-trick-pony it has been in the last decades.
The problem is the property ponzi scheme is too big to fail right now.....look at Ireland for how the bursting bubble plays out.
What hacks me off is my ways dont need changing, Ive taken little risk and im sound financially. The ppl who's ways need changing ie the crazy PIs and Yes I agree it would take a big shock on the scale of Ireland to do that but the aftermath reality is the broke PIs will be left on welfare so I pay for that while I pay their debt....
regards
Steven - yes - you can off-load risk, they can off-load that risk, and someone can offload that, but sooner or later - whether it be socialised debt (Govts taking it on) or joint-and-several debt, it gets too much,
The underwrite requires, at any one time, more than has ever been required before.
Obviously, given that the underwrite in turn has to be underwritten by things physical (or Brownlee wouldn't have to advocate digging for wealth) then it had to hit the limit at some point.
And the longer things went on, the closer that point had to be.
Meaning anyone carrying serious leverage at this point in time, is one or the other form of ignorant. Optimism never trumped reality.
Feels awfully like 2007 - the dollar hovering around .80US, fuel and food prices sky high, poverty increasing, NZ net debt spiralling, and the housing market going gang busters. I'm not sure this is what NZ needs right now, especially with business confinence so low. Surely this is unsustainable! Perhaps lowering interest rates wasn't such a smart move.
Just in off the Press .... my brother who lives out of NZ is good friends with a guy from New York and when my brother showed him some photos of his rented 2 bdm unit in central Auckland ... then told him the "market" value, he fell out of his chair !!!
The New Yorker has just bought himself a duplex on Long Island (the Hamptons) for USD 150,000 (NZD 192,310) .....
Says it all to me ...... the prices may have held up in Central Auckland but the 'value' is cr*p !
Well, you really are "The Duke" in disguise ....... Look whether or not it was the Hamptons, Babylon, Hempstead or Montauk, I still think for a good area of New York (Long Island) that is a good price to pay.
Anyway, my real point was the shock he got when my brother told him the market value of his property in central Auckland (in a top 5 suburb) .
So for you to sit in front of your PC and make judgements based on not knowing the background says it all to me .... and reflects the attitude of so many property spruikers.
By the way, when were you last in NY? .......
Sorry Duke but you are wrong. I have consistantly remarked that the high end in Auckland was holding up. Mind you any PI with a brain would not be renting out the high end if he or she wanted a reasonable yield. I am not so sure the housing at the more bottom end is holding up so well though. People looking there are not normally earning as much as those buying the higher end so finance is not so available. And there are the landords getting out because they relied or had to rely on depreciation.
You are full of it ex-agent
just going through your old comments,
by ex agent | 03 Oct 10, 8:50am KS the REINZ report is theKS the REINZ report is the last one anyone should put any weight on as it is produced by spin doctors on behalf of an organisation who are never going to tell you the truth. Bernard is right the market is going to drop by 30%. What he got wrong is how long it was going to take.It is going to happen slowly but surely over a number of years. The Sunday Star Times this morning has a refreshing honest article by an NZ valuation firm. There is a growing glut of houses coming on the market at present as people try to get rid of some debt they no longer want to support. The housing market in NZ has been in a downward trend for several months and it is gathering steam. Spring is only going to make it worse for vendors. Buyers should just back off and be patient as paying rent is costing them pennies but waiting for prices to fall further is going to save them tens of thousands that they will not need to borrow. This is great news for my kids and your kids who will be able to buy a home like we did without needing help from mummy and daddy.It can only be good for the nation. i am not concerned about the stupid and greedy who borrowed to much for their big home or for their rentals as they should have known better.
More to come.......
The pressure is on central Auckland ex agent. But there are few houses being built in the outer reaches of Auckland also. So eventually the shortage in central Auckland will become a shortage in other areas also.
In a while you will have run out of saying the same old thing.
No wonder you are an ex agent. Why do you comment on an industry you were so bad at you had to leave?
You insist on being a pain in the %$#@ Westminster...why? You know dam well rates will rise when Bernanke stops buying the Treasury shite bonds with his mousemoney. You refuse to accept that rising rates will destroy equity values. You refuse to accept as fact that hundreds of billions in filthy dead assets are hidden inside corrupt banks and inside the fed.
What is it with you. ?
Bernanke doesn't need to pump prime anymore .... The US economy is on a sustainable growth path . 300 cities out of 374 have reported jobs growth over the past month . And nearly as many have reported a falling unemployment rate in the last month , and across the last entire year .
......... Bloody brilliant ! No need to own gold anymore . She's all goody good ....... Pass the Gummy Bears , thanks .
P.S. And from Bathtubs report , Auckland housing prices being up , Olly
Newland is right , Bernard Hickey is spectacularly wrong .
Thought you knew better than that Gummy....seems you and Westminster share the same vision...pink pigs flying past at angels 10.....if the USA is on a sustainable growth path you better give Bernanke a call and explain how it works because he has used more than 500 billion of his mousemoney to buy US Treasury bills to keep the rate near zero...you remember don't you..the ZIRP farce...Oh and I think there are a few million Americans who would like to hear you explain the unemployment situation and the housing and the debt and the federal budget solution...and while you're at it..tell us where all the filthy dead assets are hiding out!
Don't you hold back you hear...shame to waste those pink pig visions Gummy.
NZ Gold you are a SELF PROMOTING GOUGING joke! BH how can you let this whore promote his money making scam via cynical self serving posts in a supposedly unbiased forum??? Seriously if your thinking of investing in gold investigate doing it through NYSE ETF "GLD" not our friend MR GOLDCORP O800 I SCREW U
Powerdownkiwi, ok to get your drift then, seems as if you are saying that we are ok if we aren't leveraged, and I guess owning 4 income producing properties without any mortgage means one is fine?.
Only problem is if a whole lot of others are going to crash, as you' predict' isn't that going to impact on everyone? eg they might not be buying goods at my stores. Then it will all surely be turning to custard, except the reality is that it won't and your opinion is too tragic.
ME- think.
What happens in that scenario? ( Which I think will happen, by the way, customers and tenants will indeed earn progressively less, on average).
You earn less.
So what?
How do you get from 'earning less but not leveraged', to 'turning to custard' and 'tragic'?
After being static for quite some time, rents are starting to rise across the board, certainly in the major centres ...
http://www.interest.co.nz/charts/real-estate/rents-median
This data is from the Tenancy Bond Service of the DBH and covers 17,865 bonds registered in March 2011 - the highest monthly level since March 2010 when it was 19,683 - so that makes it a 9% fall year-on-year.
Me, you are bang on, Powerdown you are just banging on. I didn't think Me was saying the situation was tragic, he is saying you are tragic. As Gummy points out, we are actually on the improve. Don't know about you but my tenants are all able to pay good rent, they want good places and pay good rent for them. Have to say my commercial building is a bit of an issue though, the latest being City Council paranoia about possibility of a big earthquake and buildings needeing to have hundreds of thousands spent on them. My company went through a bit of a lull last 12 months ago, but have to turn some business away at present, as things are flat tack. I see you are so cheerless about things, is it your personality ?
Muzza - you seem to suffer from the same cognitive issue.
Why has income - more of - got to equate to 'cheer'?
I'm quite happy, thank you very much. (Have a look at my interchange with Christov over on the Lotto thread).
The point is, whether you want it or not, the world has peaked in 'wealth' terms. Sure, there will be winners and losers, long and short term. All graphs are saw-tooths.
But the general trend has to be down. Realise that real accounting would be in 'resources per head', not GDP which - as I've pointed out here - is nonsense.
If you are serious, intelligent and like to learn about all things, get in touch via my blog, and we can debate is real depth......
Thanks but no thanks, have too much work on adding to the GDP, don't you work, may be you are of a certain age? Haven't had an afternoon off for some time, so took this afternoon hoping to get a bit of golf in but weather was too blustery for my liking, hence visited this site, which I do realise is a bit of an indulgence.
Also, I'm probably not all that intelligent for you, as I seemingly suffer from some cognitive issue and only took my education as far as a Masters, and I do sometimes get a sore tooth, but can't graph that.
I would hate to admit not wanting to add to my knowledge.
I'd see that as choosing to remain ignorant.
As for 'work', when did you last question what 'work' is?
Renting existing buildings (existing manifestations of expended energy, in other words) to folk, is not 'work' - it's parasitic. Sooner or later, someone has to do something with newly-gotten resources (and the 'doing' requires newly-gotten energy) to underwrite your 'income'.
I expend more personal energy than most - but not in pursuit of $.
Spent the whole of last week rescue-boating for a Secondary Schools regatta - I put back into the society which gives me what it gives.
But formal 'work'? Not for many moons. Nor do I bludge.
Masters? Doesn't count with me. Some folk who think have 'em, some folk who don't also have 'em. There is a tendency to learn more and more about less and less, until you can know everything about stuff-all. Wide, deep and ongoing, is better.
Pity you've stopped.
Jousting aside, it doesn't need intelligence, so much as the willingness to learn.
If all wealth is an expectation to purchase goods/services, then all wealth requires both a supply of resources, and of energy to do the work.
Supplies of all finite resources (including fossil fuels, but they're a special case, not to be confused with discretionary commodities) follow a thing called a gaussian curve - think of it as starting at zero, finishing at zero, and having one or more peaks in between.
This is as good an oldie-but-goodie as I know:
http://www.hubbertpeak.com/bartlett/hubbert.htm
Here's the essential one, oil:
Sure, that could be pessimistic. Sure, alternatives might be found. But today we've just had a plethora of comments decrying an insurance company which made a call which faked a 1 in 6000 year event - and yet -, as Bartlett points out - this is something that will happen within less than 26.
Many of the folk decrying AMI, are quite comfortable hocking themselves - and creating a hocked infrastructure - on the bet that something will turn up. Or worse, that it won't happen (Bau will continue because it is inconvenient to me that it wont?)
I don't call that an intelligent, nor a responsible, approach.
What a lot of self righteous twaddle. Doesn't take much intelligence to realise if everyone didn't work and pay taxation, then people like you who don't wouldn't have any hospitals etc to go to. Just as well we have farmers working and producing to earn oversea funds for the likes of you mucking around pontificating about things, and sorry you are a bludger in my books if you expect all the social services provided by government but do little to actually pay for them.
Me - how stupid can you get?
Who said I 'expect all the social services? You - making assumptions.
Who assumed I don't pay taxes? You - making assumptions.
Who didn't define work? You - making assumptions. Let's say I bought a chain of houses, Lets say I rented them out. I'd be paying taxes, all good?
Well, no. Nobody is doing anything that wasn't being done before, no house exists which didn't before, and all my income (and my taxes) would have been furnished by the tenant. I'd have been a parasite, of no use to anyone. The tax could have gone straight from the tenant to to the Govt.
Most folk don't actually 'do' anything - their 'pay' is creamed-off someone who does. But they expect it to buy 'real' stuff.
I spent about 20 hours a week last year, in various forms of voluntary social input. Actually DOING something, just unpaid. That's my social input.
Health? I first installed an X-ray machine in a hospital (Watson Victor/Kew Hospital) when I was 16 (1971). How much did I contribute to our health system, compared to the landlord described above? Somethig compared to nothing, is what.
Farmers producing? Yeah, it's better than finite resource-extraction. But - farming is intrinsically bound up with oil. Sure, we can choose to subsidise, or ration/allocate, but at that point your other assumptions (market stability) are gone.....
And you know the ultimate irony? Even while you're failing to account properly for Natural Capital - finite resources, degradation/pollution, and energy properly - your system is going backwards; every kiwi is $27,375 further in (govt) debt very year NOW, and that won't get any better, and they're the third (from memory) most privately-indebted nation on the planet. Just as 'passing go' became an unavailable option.
There is a better way, but while folk think like you, we aren;t going to get there.
Looking only at real estate is a bit myopic, sad to say. It's like a blind person touching an elephant, and describing an elephant by the part he's feeling. Such is the case for Auckland. It's in it's own world, just like Vancouver. Plenty of cash buyer immigrants, but once all the "stupid money" washes out, average Kiwi's can't afford any of this, and it all falls down- Kiwi's move, or are forced to move somewhere cheaper. It's immigrants that must be paying these prices, just like Vancouver. We aren't too far from China. I seriously doubt it's average Kiwi's paying these prices, because this is a low wage country.
http://www.bloomberg.com/blogs/paul-kedrosky/2011/03/tracking-vancouver…
Hugh Hendry has been betting against the China real estate bubble for at least a year. When that pops, what will it mean for Auckland and Australia? They're fcuked. Get out while you can, if you haven't already. Now's your chance while there is still "stupid money" in the market- it can't last. It never does. The fundamentals don't support it. Rents are too low, and not likely to go way up due to unemployment. So prices are a bubble until they aren't any more- and that can only mean one thing. The US said the same thing all of you are saying- about 3 years ago.
So you follow Olly? How'd it work out for him in 87? This years price action is but a blip in the bigger picture. If the rent can't pay the mortgage- it's overpriced, plain and simple. If you can't pay cash for the house, then you should rent in this type of market. Some day in the future, houses will be cheap again. Just have to be patient, while so-called property investors (most are financially walking dead, in my opinion) have their (temporary) day in the sun.
Enjoy it while it lasts, because it will end in tears for many, especially families, especially those who depend on 2 salaries to pay the bills- only to have one lose their job.
The only charts you all should be looking at are gold and silver.
While spruikers have been saying how awesome real esate is, the price of silver has doubled in the last 8 months, and you guys get all excited about 3% "possibly" before the end of the year. To this I say "Lies, Damned Lies, and Statistics." Renting is, by far, a better deal right now, until it isn't any more. THAT'S when you buy, when the sellers completely capitulate and "investors" HATE real estate to the point of despising it, because they got their fingers burned. That's when the smart investors swoop in an grab a bargain, and the rents cover the mortgages again.
Buying at these prices is hoping for a greater fool, and you don't want to be the one that loses the property to the bank. If you can pay cash, and REALLY insist on living in a particular neighborhood in Auckland, and don't mind if it loses half of it's value- then go for it. If you are like most people, and have to take a loan, then the risk is not worth the POSSIBLE reward. How few people think about "what if my projection AREN'T correct?"
I would just as well move to another city, if I had to vote with my feet. What's so special about Auckland? Many I talk to hate Auckland. Yet it captures all the headlines. Barfoots is only in Auckland, and it happens to be the place where the Chinese, and other immigrants, depart the planes with cash in hand, ready to buy their piece of New Zealand. Well, I'm here to say that there is a lot more land here than just Auckland, so unless the suckers keep flying in, this market will crash and burn, eventually. It's only a matter of time, and no, I don't think I am "missing out." Theose are the words of a Ponzi salesman. I'm missing out on what, exactly? Having owned several houses, and a few hundred rental units, house maintenance is a pain in the arse, and expensive. Right now you are PAYING MONEY to the bank to hold their property for them, becuase they are the ones gonna end up with it, in the end. So why not go fishing instead, and wait for a bargain? It'll come.
Then Bernard can watch many investors eat their own humble pie. It's not an ideal event, but it's bound to happen eventually, that is, unless you beleive "this time it's different." Good luck with that.
Someone said in another post, "the way you get rich is by switching asset classes at the right time." I couldn't agree more. Things that can't be printed are good right now, and things that aren't attached to debt. They are usually shiny and heavy.
The construction quality in this country is shite, anyway. I can't believe what you guys call "safe as houses." To me it's "safe as crackerboxes" and hopefully I am not in one during an earthquake!
All of these prices you are paying are totally dependent on a willing bank to lend those ridiculous prices. I believe so-called "Qualified Valuators" should all be hung by the balls. They are part of the problem. Again, it will end in tears for many. As the Aussie banks start having their own problems with their own portfolios, I'd expect things to get a bit tight here in NZ, since all the banks are Aussie owned. The trigger will be China not buying so much iron, etc- already happening.
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