By Bernard Hickey
Property market activity appears to have slowed somewhat in June and July by more than usually happens in mid-winter as the benefits of the surprise cut in the Official Cash Rate on March 10 wore off.
Concerns through July about the prospect of the OCR rising again from September 15 appeared to weigh on the market, although that may have eased in recent days as the global market turmoil encourages economists to push back their expectations of a rate hike to December 8. Most borrowers are now on floating rates which are expected to move in lock-step with the OCR. See more here in Alex Tarrant's article.
The Real Estate Institute of New Zealand (REINZ) reported on Thursday there were 4,928 properties sold in July, which was down 5.8% or 301 from June but up from 4,411 in July a year ago.
REINZ said the median price fell 4.2% to NZ$345,000 in July from NZ$360,000 in June and was down from NZ$349,000 in July a year ago.
REINZ said the fall in July sales was a slightly larger decline in the seasonal pattern than is normal at this time of the year, although it described the fall as a "mid-winter breather."
Our interactive chart below of the REINZ stratified measure of house prices, which removes the 'skew' associated with the raw median, shows nationwide prices were down 5.1% in July from the peak in November 2007.
The REINZ figures follow Quotable Value (QV) figures for the three months to July showing values were steady overall. See more here in Monday's article.
QV's figures are issued monthly and measure movements in values compared on a 'like-for-like' basis in the three months to July. They look at prices for certain properties in certain suburbs and compare them with similar sales a year earlier.
The QV figures differ from the REINZ figures in that QV's figures look at 'like for like' values rather than raw prices in any one month.
REINZ's figures are for median prices for sales in any one month and are therefore subject to being skewed by larger numbers of sales in any one price bracket, although REINZ does issue a stratified median figure that filters out the 'skew' effect. REINZ's figures are seen as more volatile, but up to date than QV's figures.
REINZ remained upbeat about the figures.
“The July results continue the trend of prices moving sideways with volumes on an annual basis continuing to recover. The drop in volumes and the median price in July is not unexpected and reflects the fact that we are in the middle of winter”, said REINZ Spokesperson Philip Searle.
“The lack of listings and vendors in the market is continuing to be an issue for agents with more and more regions reporting shortages of new stock and a lack of choice for buyers.”
“Despite these challenges, many regions report good attendances at open homes and active buyer interest, although concerns about the economy and volatility in financial markets may be holding some buyers back at present”, said Philip Searle.
REINZ's stratified measure known as the Housing Price Index showed a 0.6% fall in prices in July from June. It showed prices up in Christchurch, Wellington and the rest of the South Island, while there were falls in Auckland and the rest of the North Island.
The sales figures showing a flat to slightly weaker market in July contrasted with the feedback from real estate agents in a REINZ-BNZ poll result released yesterday showing agents relatively confident about prices and worried about a lack of new listings. See Alex Tarrant's article on those survey results.
Most of sales fall in Auckland
The raw median figures showed the median price up in Auckland to NZ$465,000 from NZ$461,000 in June and NZ$450,000 in July a year ago. Wellington's median price fell to NZ$365,000 from NZ$380,000 in June and was down from NZ$385,000 in July a year ago.
Of the 301 fall in national sales in July from June, the bulk of that fall happened in Auckland where sales fell 297 to 1,799 from 2,096 in June. Canterbury sales rose to 639 from 511 in June and were just below the 683 recorded in July a year ago. Sales volumes in other parts of New Zealand were broadly steady.
Auckland fastest to sell though
The nationwide median days to sell fell to 42 in July from 44 in June and was down from 45 in July a year ago.
The fastest region for days to sell was Auckland on 34 in July, down from 36 in June and down from 38 in July a year ago. It is now at levels last seen in mid-2007.
Auckland's biggest real estate agency chain, Barfoot and Thompson, was responsible for 778 or 43% of total sales in July. See Gareth Vaughan's article from last week on Barfoot and Thompson's figures.
Economists comment
Westpac Economist Dominick Stephens said the housing market appeared to have absorbed the impact of last year's tax changes, which reduced the appeal of property.
"The domestic economy has been steadily gaining ground since the start of the year, and interest rates remain very supportive," Stephens said.
"We continue to expect a 4% rise in house prices this year, but rising mortgage rates are likely to keep a lid on prices next year."
JP Morgan Economist Helen Kevans said the figures showed the market appeared to be stabilising.
"We suspect, though, that house prices will rise this year (around 2%), owing mainly to persistent stock shortages," Kevans aid.
"The worsening demand-supply imbalance is putting upward pressure on house prices, which will be dampened only modestly by slower net migration inflows and expectations of higher interest rates," she said.
"But, the fact that households continue to shy away from taking on additional debt and that house prices remain high relative to incomes will limit the upside. Indeed, house prices remain elevated, despite the fact that the economy recently battled a recession that latest for five straight quarters."
ASB Economist Christina Leung said the lower number of median days to sell indicated some tightening in the housing market while house prices were broadly flat over July on a seasonally adjusted basis.
"Today’s data reflect the very gradual recovery that is occurring in the housing market," Leung said.
"It is encouraging to see housing demand recovering in Canterbury over July following the disruptions in June. Auckland is already becoming a sellers’ market as stock levels fall and buyer competition warms up. While the recovery in housing demand has been more subdued elsewhere, we expect things to pick up over the coming year," she said.
"Recent data point to an improvement in household sector conditions. However, with household debt still remaining at high levels we expect households will remain cautious. At the moment, the global outlook is dominating market attention. With global risks intensifying in recent days we now expect the RBNZ will hold off taking back the 50bp insurance cut until December this year."
See full detail on REINZ statistics for July here in this set of tables.
See REINZ's full release and regional commentary here.
See all our interactive real estate charts here.
| Region | Index level | 1 month | 3 months | 12 months | 5 years CAGR | From Nov 07 peak |
| New Zealand | 3,208.7 | -0.6% | -1.1% | 0.5% | 1.6% | -5.1% |
| Auckland | 3,467.8 | -1.6% | -2.6% | 3.5% | 2.4% | -4.6% |
| Wellington | 3,304.4 | 1.3% | -2.2% | 0.8% | 1.5% | -5.5% |
| Christchurch | 3,005.0 | 2.7% | 6.9% | 0.2% | 3.0% | -2.8% |
| Other Nth Island | 3,007.1 | -2.4% | -1.6% | -4,4% | 0.1% | -11.7% |
| Other Sth Island | 3,308.2 | 2.6% | 0.4% | 3.8% | 2.1% | -5.7% |
| Sections | 4,393.4 | -7.1% | 5.7% | -1.8% | 0.6% | -18.8% |
(Updated with details, links to previous articles, regional detail, REINZ comments, Economists comments, table, chart)
House price index
Select chart tabs
98 Comments
Just looking at those graphs(stratified measure), 'Rest of North Island' (ie exc Auk/Well) is almost at the low seen in February 2009. Also note this months reading for this area (3007) is some 400 points below the peak reading of Nov 2007 - or 11.7% down. Now I know Auk/Well are big markets but there are a heck of a lot of folk in the rest of the NI being taught the very painful lesson that property prices can actually fall.........Hamilton, Gisborne, Napier, Wanganui, Palmerston North, Tauranga etc etc, welcome to the land of the long white fall.
Chris_J
Cheers. Yes July sales volume up 11.7% from a year ago.
But that was a lower rate of increase than we saw in June from a year ago of 14.3%.
Here's what REINZ said about that: "The volume of sales for July 2011 was 301 sales lower than the June 2011 figures; a slightly larger decline than the seasonal pattern expected for this time of year."
Here's our interactive charts on volumes where it's clear there has been a slowdown in the volume growth since the end of March.
http://www.interest.co.nz/charts/real-estate/volumes-sold-reinz
cheers
Bernard
mid winter breather - priceless
On the one hand they correctly state that winter usually sees a bit of a dip, on the other they acknowledge this dip is greater than usual
Auckland is clearly holding steady, but for how much longer? The Auckland economy is weak and likely to continue to be for some time, especially as redevelopment focus in chch heightens
I think people read way too much into these month on month sales figures, property will fluctuate a bit but remain flat for a long time I suspect. I don't really see a crash - there's too little supply in the centres, and the market won't take off for obvious reasons.
I agree, it won't take off in the main centres but won't crash either. These monthly figures are not that meaningful, the volumes are so low that there are a lot of distortions. If a lot of higher end property sells, then the average rises, but this is not reflective of the overall market.
There are very few buyers and sellers right now. Those that already have houses are staying put and paying down the mortgage. Those that don't are either saving a deposit, or competing for the very limited stock available (which is keeping values steady in the meantime).
Once those few first time buyers that can actually afford it have bought, then who is left to buy?
A cheap Central Otago property with a big back yard is a good proposition according to this
http://online.wsj.com/article/SB100014240531119039181045764999005645523…
In the mean time I am humming that Spandau Ballet's song in the 80s
gold
always believe in your soul
you've got the power to know
you're indestructable
always believe in,because you are
gold
glad that you're bound to return
there's something I could have learned
you're indestructable,always believe in...
Have added comments from Westpac's Dominick Stephens that he expects house prices to rise 4% this year before rate hikes dampen things down.
Also comments from JP Morgan's Helen Kevans that prices are likely to rise just 2% because supply shortages are being offset by affordability problems.
cheers
Bernard
yeah you are right, bugger - the RWC is going to transform NZ's economy, property prices will soar, a whole lot of tourists who come here for the world cup will decide to emmigrate here, somehow magically finding a whole lot of jobs where they don't exist, and house prices will boom
stupid me....
“The July results continue the trend of prices moving sideways with volumes on an annual basis continuing to recover." - don't think so.
Peak annual volume: 121,777 (to April 2004)
Trough annual volume after the GFC: 53,448 (to Feb 2009)
Peak during the 09 bounce: 69,629 (to Dec 2009)
Current annual volume: 56,560
"Annual volumes still at 20+ year low" would be a better way of putting it.
I have noticed a few smug PI's making disparaging comments about the share market of late and how better it was to be in property than shares. Another interesting observation is the lack of comments from both sides about the latest statistics from both QV and the REINZ. I can only assume that there is a lot of fear building up out there. It has been my experience in the past that for a housing market to be healthy,especially the higher end, you need a healthy share market. The people who buy the better homes tend to have investments in equities and when those equities are doing well they are happy to sell all or some of those investments to buy that better home or investment. Now is certainly the time to have a debt free home, cash and some shares that pay good dividends. When markets have their bad days you buy some more. Look at some of the quality NZ shares. There yields are now over 7%. You cannot beat that in the bank. In saying that however you should have a good source of funds always available in the bank to buy equities that are currently looking oversold. Not having all your eggs in one basket still applies especially in the current situation the world finds itself in.
It is disappointing to read the statistics because they paint a false picture.
To muddle in sections and other (small?) towns with main centre figures and then call the median for the lot is wrong.
Real estate values are very much localised.
Just because a house in Hari Hari sells for half its last price does not mean that everything in Auckland also halves.
As presented the conclusions drawn by these figures are a nonsense.
But they are comparative, Big Daddy. It doesn't matter if you don't like the compostion of the stats. They are just comparing the same data set with historical data. So they as are valid as any figures. It's like saying' It's nonsesnse to say the NZX index is down, because Fletchers, our biggest cap. is up." It doesn't alter the fact the index is down.
According to the world of the Real Estate Industry:
- Interest rates go down, more 1st time buyers can afford it - good for property prices
- Interest rates go up - indicative of healthy economy, good for prices
- Values fall - market taking a breather before a huge rise in prices, market still healthy, good for prices as more buyers will rush in and push values up again
- Values rise - indicative of a healthy market, which we (smugly) knew all along, best you get in quick now
- Nuclear war - all houses destroyed, good for property prices since there will now be no stock but still plently of buyers out there
Does anyone see a pattern here?
The sellers of the damaged properites ( whatever the defect) have...what..left to re-buy with? Less than what 'the market' value was at the very best. That's them pretty much out of the equation, unless prices fall. And if a purchasers has $350k, or whatever, to spend; do they pay 'full prices' for a goody, or whatever % less for a defective one, and 'add value'? I knwo what I'd do if i was a buyer, and that's one less 'goodie' sale losing out to a 'leaky'. How's that sound for efficient market pricing?
Same number of people chasing fewer houses is not going to bring the market down....thats not going to happen unless sellers capitulate in large numbers and I cant see that happening.
Flat to low single digit growth for some time, yes. Sustained fall in price...i just dont see it happening.
Perhaps not. Buy the same number of people into' more people per house' will. And I doubt there'll be a capitulaion a la stock market. It's too illiquid on the down side. So it will be years and years of slow grind down. And the longer a vendor wiats, the less they will get for their property.
I'd disagree, Big Daddy. It doesn't matter what colour of seller a vendor is ( willing or otherwise) it only matters what the buyer is. Without the buyer, with means, there is no sale. And the price paid by any buyer is 'market'. Competition sees to that. Asset classes are dynamic. There will always be 'distressed sellers' of some sort. The reason why, is immaterial. They should always be part of the market price.
What about a mortgagee sale?
The seller is willing, it's probably a bank. The bank should get a fair market price otherwise it wouldn't sell. You can't remove those from the stats, especially if they represent a small but significant share of the sales.
Ditto for a leaky home. You can't say that the seller is unwilling. It looks as if there is some statistical manipulation going on here.
The long term trend of most markets is up, look at Gold, the US Stockmarket, Oil etc etc etc. Real estate is no different. Thing is that if you buy at the wrong time (the peak) and overpay then you can be waiting a LONG time to breakeven, you can even go bankrupt if you are forced to sell for some reason. Talk to those who bought leaky homes, inner city apartments, or baches in Paihia.
There has never been a one-way market in the history of mankind.
Nicolas A.
You are still wrong.
I suggest you ask any registered valuer and he will confirm that when setting valuations, distressed sales must be excluded.
Therefore the same must apply to sales statistics as valuers rely on them to get answers.
That has always been the case.
If you were right then you have just made centuries of valuation practice redundant.
Centuries ago, Big Daddy ( to continue your theme) people thought the world was flat. We believe it isn't. The fact that valuers discount 'dsitressed' sales from their figures makes the practice a method of current calculation. I'd argue that there is such a number of 'leakies and 'quakers' that they are too big a part of the market to be discounted. - As a 'distressed' in isolation, perhaps there is merit in removing individual proeprties in, say, one street. But a whole group? When it's such a big part of our market? And it isn't going away without a price altering effect, one way or another? The world is, and has, changed, and it isn't flat...( well not in Christchurch, any longer, anyway...).
Yes, that's right Chairman, and expect the number of these places to be more than most might think. Good, well presented properties in growth areas are always a good bet. BigDadddy give up on Nicholas, he doesn't know much about property and he's been predicting/hoping there will be a crash in NZ for some years now. Fortunately in NZ the banks did not give out many loans to the Earl Hickey's of society, unlike in USA, and fortunately we took a breather some years ago whereas Australia carried on regardless and now is finding that might not have been the best. Actually property is still pretty cheap in NZ, [some areas in Auckland excepted]. Last month I was in South Korea on business and had a look at property in south Seoul, well out from CBD, and a tired 3 bdrm apartment in a 20 storey block is around $1.3 to 1.5 million, no comparison with what one can get in NZ. I'm renting out a 4 bdrm property in a top suburb with good section size to a Korean family here in NZ, they must think they are in heaven with what they get for the rent they pay.
I've made many, many millions out of property over 35 years, muzza, in 4 different countries. So I do have a clue. The secret to making money ( or not losing it in the presnt case) is recognising when things have changed. And they have, for property in New Zealand. If you don't believe me ( which I'm sure you don't!) then have a look at what your Government is saying. Political parties on all fronts are GOING to make changes to the market. National started in a small way. If they get back in, expect a heavier hand, and if a opposition party wins, get set for who-konws-what, but it won't be property positive.
Only ever had one that needed taxing; a land parcel that moved on, and yes, to answer your question. Part of my schooling was ' never annoy the taxman, he has a long memory and unlimited resourses" :) NB: property speculation wasn't my day job, but I actively managed my homes, and didn't need to 'interpret' the asset.
The only time I owned 4 properties at one time was when I had a home in each of ther UK, Aussie and NZ, plus a a block I had intended to relocate to in Christchurch. That I sold, whilst keeping my Quenstown property as my NZ home, and paid tax on the Christchurch land sale ( only about $9k as I recall as the sale price was only about $30k more than I'd paid). Does that help?
Tax isn't assessable on sale of a property used as a sole residence, as I am sure you are well aware.That's why I support a comprehensive, non discriminatory CGT. Had there been one in place on all property transactions in New Zealand, I should have been liable, and tax would have been paid. As it is, I just have to console myself in my rented accommodation with checking the balances in my bank accounts from time to time.
It's been done before, I suppose, so who knows! At least the Aussies grandfathered their existing property when CGT came in (only new sales done after the date of the implimentation got taxed on future sales). I believe Labours current proposal doesn't, and all sales after the fact are taxed, regardless of when they were bought. So that's a kind of 'retrospectivity'.
Concur 100% 28-29. Wouldn't fancy your chances campaigning on the RCNDCGT platform so best to dump it on them the week after the election. Make it just 15%, adjust for CPI, but no exemptions. Be really tough on avoidance techniques. No chocolate fish for any sneaky finkies caught trying to get around it.
Not at all. It's about seeing what is coming Isn't that what life is all about?. And by 2007 it was obvious something was. Intitially it was 'jack up the OCR" and it went to 8.75% and was headed higher. The GFC intervened. But as Bernard spotted in March 2008, something was going to happen to stop property's rise in New Zealand. That process hasn't stopped, merely interupted. The Government, whoever it is, has a lot further to go.Stamp Duty is lilely to be one thing. Then I shall have to pay it, along with all other property buyers.
The best advice I got 30 years ago, which I shall relay to you, is "You get rich out of doing your day job". Investment, real investment, is putting to work the surpluses of that day job; not 'gambling' on capital gains to make up the sortfall, o tor sustain a lifestyle. I know you think that's of no use to you, today. But that's, in my opinion, where we are all headed off to "Back to the Future' in effect.
"I've made many, many millions out of property over 35 years" . I'm impressed Nicholas. You must have some great stories.
Bernhard, get out and get an in depth interview with this guy. Maybe even secure the book rights. Charlie Sheen as NA for the movie perhaps? BTW, how many, is many many. I've been at it for about 35 years and haven't even scraped together half a many.
Sorry, I read registered valuations every day and good valuers do include distressed properties in their valuation as comparable properties BUT clearly note them as mortgagee sales / private transactions etc. They are used as the sample of comparable properties which the valuer then caluates his valaution. A good valuer in his market has the local knowledge to identify issues that have effected sale price.
A good valuer has full discription of each comparable property, photo, last sale date, any factors influencing the sale price and whether subject property thay are valuing is superior, comparable or inferior to subject property.
One problem valuers are having at times is number of comparable properties as a result of lower sales numbers to use as comparable sales.
Also pays to remember that mortgagee sales come with far less warranties then one sold by owner. Mortgagee sales do not include chattels, bank does not warrent condition of property and may come complete with owner as a sitting tenent which new owner has to evict!!!!!!
So from that point of view you are not comparing apples with apples when you compare normal process for selling a property against that as a mortgagee sale (and valuer will note such in his valuation).
Sorry, I read registered valuations every day and good valuers do include distressed properties in their valuation as comparable properties BUT clearly note them as mortgagee sales / private transactions etc. They are used as the sample of comparable properties which the valuer then caluates his valaution. A good valuer in his market has the local knowledge to identify issues that have effected sale price.
A good valuer has full discription of each comparable property, photo, last sale date, any factors influencing the sale price and whether subject property thay are valuing is superior, comparable or inferior to subject property.
One problem valuers are having at times is number of comparable properties as a result of lower sales numbers to use as comparable sales.
Also pays to remember that mortgagee sales come with far less warranties then one sold by owner. Mortgagee sales do not include chattels, bank does not warrent condition of property and may come complete with owner as a sitting tenent which new owner has to evict!!!!!!
So from that point of view you are not comparing apples with apples when you compare normal process for selling a property against that as a mortgagee sale (and valuer will note such in his valuation).
Sorry, I read registered valuations every day and good valuers do include distressed properties in their valuation as comparable properties BUT clearly note them as mortgagee sales / private transactions etc. They are used as the sample of comparable properties which the valuer then caluates his valaution. A good valuer in his market has the local knowledge to identify issues that have effected sale price.
A good valuer has full discription of each comparable property, photo, last sale date, any factors influencing the sale price and whether subject property thay are valuing is superior, comparable or inferior to subject property.
One problem valuers are having at times is number of comparable properties as a result of lower sales numbers to use as comparable sales.
Also pays to remember that mortgagee sales come with far less warranties then one sold by owner. Mortgagee sales do not include chattels, bank does not warrent condition of property and may come complete with owner as a sitting tenent which new owner has to evict!!!!!!
So from that point of view you are not comparing apples with apples when you compare normal process for selling a property against that as a mortgagee sale (and valuer will note such in his valuation).
Sorry, I read registered valuations every day and good valuers do include distressed properties in their valuation as comparable properties BUT clearly note them as mortgagee sales / private transactions etc. They are used as the sample of comparable properties which the valuer then caluates his valaution. A good valuer in his market has the local knowledge to identify issues that have effected sale price.
A good valuer has full discription of each comparable property, photo, last sale date, any factors influencing the sale price and whether subject property thay are valuing is superior, comparable or inferior to subject property.
One problem valuers are having at times is number of comparable properties as a result of lower sales numbers to use as comparable sales.
Also pays to remember that mortgagee sales come with far less warranties then one sold by owner. Mortgagee sales do not include chattels, bank does not warrent condition of property and may come complete with owner as a sitting tenent which new owner has to evict!!!!!!
So from that point of view you are not comparing apples with apples when you compare normal process for selling a property against that as a mortgagee sale (and valuer will note such in his valuation).
Sorry, I read registered valuations every day and good valuers do include distressed properties in their valuation as comparable properties BUT clearly note them as mortgagee sales / private transactions etc. They are used as the sample of comparable properties which the valuer then caluates his valaution. A good valuer in his market has the local knowledge to identify issues that have effected sale price.
A good valuer has full discription of each comparable property, photo, last sale date, any factors influencing the sale price and whether subject property thay are valuing is superior, comparable or inferior to subject property.
One problem valuers are having at times is number of comparable properties as a result of lower sales numbers to use as comparable sales.
Also pays to remember that mortgagee sales come with far less warranties then one sold by owner. Mortgagee sales do not include chattels, bank does not warrent condition of property and may come complete with owner as a sitting tenent which new owner has to evict!!!!!!
So from that point of view you are not comparing apples with apples when you compare normal process for selling a property against that as a mortgagee sale (and valuer will note such in his valuation).
What's happening at the top end then?
According to this report 161 houses sold in the million-plus bracket. At the beginning of July I noted the number of one million dollar and plus houses for sale on Trademe was around 2,700.
That's about 6% of houses selling in this bracket. And the message is...
Remember Infometrics' forecast from August 2009 that house prices would rise 24% over the next three years?
http://www.interest.co.nz/news/44384/nz-house-prices-rise-24-next-3-yea…
Well they're back. They now think prices will rise 12% over the next 3 years...
http://www.interest.co.nz/property/54830/infometrics-forecasts-12-rise-…
Bernard
Its been said before and I'll say it agin.
Why don't you have a running record of these predictions? I mean these guys need to be held accountable for their usually appalling predictions. They present themselves as credible experts.....Some people might place a lot of stock in their predictions
What say we average out the most bullish prediction for house prices ( up 24 % , Infometrics ) , with the most depressive prediction ( down 30 % , Bernard Hickey ) , then the sum we achieve is a 6 % fall in Kiwi house prices over the 3 years 2009-2012 .
... that sounds closer to the mark than either extreme .
QED : You're an extremist , Hickey ... A big fat Doc Martens kick in the goolies if you scare the kiddies with freakish nightmare stories of property collapses , again . .
.. Behave !
I'm not suprised that house prices have dropped even if only a little. What is coming to terms for a lot of people is the people that try and keep the market going with various predictions. People make decisions on these predictions and it's not fair if the predictors have there own vested interests in mind. These people should be held accountable.
Apologies to Nicholas, you have some experience obviously, and also have done very well out of property. Mist 42, the GNP per capita in Sth Korea is US $30,200, which you will find is higher than NZ. For Seoul (11 mill pop) I was told at the university, per capta is $50,000
So many opinions! So much argument. Who knows who is going to be correct?
Is there any history of the various sales of a particular address over say 50/75/100 years? - anywhere?
I would like to see what that graph line showed over a long period thru wars, depressions, periods of affluence & adversity .
Any ideas?
Here ya go petrus1942. House prices over 300 year time frame...and the result? In real terms they're...flat! But note: there are many periods of no/slow/falling growth over tha time, to off-set booms. Is this one ,for us, now? I think so...
http://theblogbyjavier.wordpress.com/2010/05/25/highest-house-prices-in-300-years/
Thanks, Nicholas - very interesting.I have no doubt that the NZ experience since 1840's probably looks similar. But I sure would like to see a NZ example.
I know that some years ago someone tracked the selling life of a house in, I think Hamilton over a period from the 1930's - & I would like to see that or some other example.
The difference with housing as compared to other "investments" is that we all have to live somewhere; & we are all therefore vitaly concerned about the value of our most important & in many cases only asset.
Plus - we cant afford to trust banks,finance companies, share market or the government to look out for our interests! - doesn't leave much other than property
Nicholas, the Case Shiller graph of 300 years has some quite major flaws which even Robert Shiller himself has admitted.
The big one for me that doesn't get much of a mention is that they actually haven't got a clue what the currency in 1650 would be worth today - I imagine they would be gob-smacked to find out.
A lot of the 'inflation adjustments' were purely 'educated guesses' - even if they were lucky enough to be right all it shows is that property keeps up with inflation in the long term.
Have a look at the 'peak' shown in the 1980s, and then ask yourself: if you'd bought a place in 1980 would you be regretting it today? !!
I know you don't regret it personally, as you've said you made 'many,many millions' from it. But for someone owning property today, will they regret it in 30 years time? The answer is no, they won't. For those that bought in 2007 and are currently trying to sell, sure, they regret it - property is a long term game - if you want short term, stick with shares but be prepared for much higher volatility.
28-29 yr, can I answer your question?
But, firstly don't waste to much time on a blog where a few people just talk to each other to no real effect. Allow the older age group their little indulgence and to kid themselves they are having some contribution to policy etc (tui moment).
Secondly, invest in a business, as unless you are highly skilled like a surgeon or the like you won't make a lot just on wages/salary. I have a company in an area I will admit I didn't have a huge amount of expertise in, but recruited the expertise.
If you do have some expertise in the area, get into dairying, but you do actually need to understand about farming. I am out of dairying but it is the consistently best money earner, so long as pay sensible prices for the land.
Be prepared to make some mistakes, I once got into goat farming and it went belly-up, cost me a very good holiday home at Wangamata, but that's life.
Property is not called REAL estate for nothing. Buy in a growth area and don't by cheap rubbish, and you would have to be very unlucky to not do well over time. I'm a little older than you and have been involved for 2 decades now, got started when I was younger than you. I have had shares but it's never done much for me, and pleased to be out of that altogether these days.
Have a realistic goal, who cares if you are an incredibly wealthy multi-millionnaire? - an annual income of say $150,000 can provide a good lifestyle to retire on.
There are always people with a jaundiced or negative disposition, and have the tall poppy syndrome, just accept that and move forward, let them be the victims of their own thinking. The 2 big mistakes : one is greed, make sure you don't get greedy make sure you always have a good cash flow; and the second is fear to have a go at things. You here a lot about the former, yet for everyone like that there are 10 who never amount to much(financially) because of their own fears or listenening to those who tell you all the reasons not to do something.
Accept NZ is a pretty damned good place to live in and enjoy it.
28_29 be careful just how much faith you put in Muzza. Just because he cannot handle shares does not mean everyone else should. One reason I managed to retire at an early age is because I have a good income stream from blue chip shares that generally are increasing their dividends as each year goes by. When markets fluctuate as they have recently it just gives me the opportunity to buy more at very good dividend yeilds and some in New Zealand are getting close to 10%. The advantage of dividends are there are no expenses, no tenants, no hassles and they are normally tax paid to boot. All you have to do is spend them. In other words you should diversify. Having cash on hand to be able to buy shares when they fluctuate is a good idea also. If I need money for a car or a vacation, blue chip shares are readily sold on any trading day. I don't think the young PI's today realise just how many baby boomers are going to turn their very average rentals into cash as retirement looms. This will put more and more pressure on housing as time goes by.
I'd be interested in knowing how much the cost of building houses has risen over the last couple of years. I'd imagine it's quite considerable, after all isn't inflation close to unacceptable?? I also haven't seen too many houses getting pulled down to inject new sections onto the market. So I assume that if people had money there would be demand for those sections if I could grow one?? Landlords have increased the rent on most rental properties that I've looked at which would suggest there is a lack of rental properties available?? Leaky homes are bought for cheap I assume by people that will fix them up and increase their value quite considerably, otherwise why would they buy them?? I guess they might want the land they sit on maybe, but then I figure if that's the case then there must be demand for that land to go to all that trouble... How much have councils raised their impact fees and processing costs over the last 5 or so years?? Tomatoes are really expensive. So is cheese and milk. Milk grows in cows, cows grow on land. Do we need more land to grow our cows on to get cheaper cheese?? Not much seems to be getting cheaper to me or making sense...
Volumes are down, as are house prices. I guess that goes hand in hand when no one really knows what to have with their cereal... sounds to me like everybody likes to wait and see... personally I'm waiting for the boat loads of Americans with their hulls full of gold that they've been stacking under their pillows for years, inflating the price of gold due to demand... Escaping the land of the free and the falling/crashing American economy to settle in the land of the long white... well probably Australia for they have uranium and let’s face it, Americans love bombs!! What a fantastic gig uranium is. Sell it for heaps, get paid heaps to take it back and bury it. The Americans will bury their gold beside it so no one dare steal it for fear of death and the gold market will sore!! Ouch!!!
Since when has property been a short term thing? Many people contributing seem to assume it matters if tomorrow my house is worth less. But I guess they're the speculators. If I want short term gains, I'm gonna invest in Lotto!!
I hope I haven't over complicated myself here and confused my point if I have one...
I have another question... If I have 5 rental properties today with 50% equity but in 20 years time I have those same 5 rental properties but own them outright (that's 100% equity) but the value of those houses is now 50% of what they are today (Yip that's right a 20 year recession)... Am I better off now, or in 20 years?
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.