Quotable Value (QV), the state-owned valuer, says New Zealand residential property values rose 2.4% over 2011 with Auckland values rising to record highs and likely to increase further.
QV says its price indices for December show values rose 2.4% over the year, and are now 3.5% below the previous market peak of late 2007.
However, despite national values moving upwards during the year, the property market continued to be characterised by lower than normal sales volumes, QV research director Jonno Ingerson said.
"Sales numbers in 2011 were more than 20% below the long-term average, and while up a few percent on the sales volumes of 2008 and 2010, both of those years were the lowest since the early 1980’s, so outside of those two years 2011 is the lowest for 20 years."
Ingerson said the low sales came with buyers generally acting cautiously throughout 2011, taking their time to do their research before making offers.
"First home buyers came back into the market in 2011 encouraged by low interest rates, while investors were largely on the sidelines."
This increase in activity at the cheaper end of the market was reflected in average sales price of NZ$398,411 for properties sold in the last three months of the year, Ingerson said, nearly NZ$12,000 less than the average sales price a year earlier, and a fall of almost 3%.
Record high for Auckland
Meanwhile, values in the Auckland region rose 4.3% during 2011 and ended the year at their highest level ever, 1.4% above the previous peak of late 2007. QV says the average sales price in the Auckland area over the past three months is NZ$525,532.
Ingerson said the Auckland market during 2011 was characterised by a lack of new listings and quality stock, leading to increased demand for good properties that made it to market.
"Auckland values are likely to increase further, especially given that the population continues to grow, building activity has been weak, and if a lack of new listings of quality properties keeps supply below demand," said Ingerson.
Summarising the year, he said the first few months of 2011 saw values across New Zealand stable with rises in Auckland and earthquake hit Christchurch balanced by falling values in many other areas. Then from April onwards national values started rising as most of the main centres, aside from Wellington, began to stabilise.
By September values were increasing in all the main centres, including Wellington, Ingerson said, plus in many provincial and rural towns, suggesting a nationwide improvement in the property market. However, 2011 closed with the first signs that this apparently nationwide recovery could be faltering.
"National values increased from November to December, as they continued to do in Auckland, Wellington, Christchurch and Dunedin. However values flattened in Hamilton and Tauranga, and dropped in several provincial towns that previously had been recovering, notably Gisborne and Rotorua," Ingerson said.
Auckland
Values in the Auckland area increased by 4.3% during 2011 and ended the year at their highest level ever, 1.4% above the previous peak of late 2007. The Auckland market in 2011 was generally characterised by a lack of new listings and quality stock. This led to increased demand for the good quality properties that did come to the market.
The central suburbs performed particularly well and consequently the old Auckland City area increased 5.8% during the year and values are now 3.3% above the previous market peak.
Wellington
Values in the Wellington area varied throughout the year, beginning by increasing slightly for the first couple of months then falling through until September before beginning to increase again. As a result, values at the end of the year were just 0.4% below the previous year, and 6.5% below the previous market peak.
Christchurch
The Christchurch property market is still significantly disrupted as a result of the earthquakes. Values in the undamaged parts of the city have increased due to demand from displaced residents or workers from outside the region assisting with the recovery. Values overall in Christchurch City ended the year 4.3% up and just 0.9% below the 2007 market peak. The areas immediately surrounding Christchurch have picked up strongly with Waimakariri District 9.1% up over the year and 2.6% above the 2007 peak, and Selwyn District 7.5% up over the year and 5.0% above the 2007 peak.
Hamilton, Tauranga, Dunedin
In Hamilton values dropped for the first couple of months of 2011, then steadied for most of the year before rising a little in the last few months. As a result values remain unchanged from a year earlier, and are 11.1% below the peak. Tauranga followed a similar pattern to Hamilton and finished 2011 0.7% up for the year and 11.3% below peak. Dunedin values varied throughout the year but increased steadily from August onwards to finish the year 1.6% up and 5.2% below peak.
Provincial centres
Of the main provincial centres, four of them ended the year up on the previous year, Whangarei by 0.6%, Palmerston North 0.1%, Nelson 2.5% and Queenstown Lakes1.5%. The other main provincial centres all dropped, Hastings by -0.7%, Napier -1.6%, New Plymouth -2.1%, Gisborne -2.8%, Rotorua -3.7% and Wanganui -4.3%.
These changes over the past 12 months don’t necessarily reflect which direction values are currently moving. Many provincial centres were relatively stable for much of the year before beginning to recover in late winter and early spring. However most have begun to level or decline again in the last couple of months of the year.
2012 outlook
The property market is heavily influenced by consumer confidence, so it will be fascinating to see how 2012 pans out. Auckland values are likely to increase further, especially given that the population continues to grow, building activity has been weak, and if a lack of new listings of quality properties keeps supply below demand. Whether values continue to increase in Christchurch depends on a number of factors including the re-zoning of properties to red or green, decisions on the nature and timing of CBD redevelopment, and of course any further significant earthquake events.
Values in Hamilton, Tauranga are likely to stay fairly stable, and whether values continue to rise in Wellington and Dunedin is difficult to pick. The property markets in the provincial and rural areas are heavily dependent on the strength of the local economies in those areas.
A strong rural sector typically has a positive impact on the property values in towns supporting those areas, likewise the coming or going of large local industries can have a significant impact. While business and consumer confidence seems to be on the increase, there is still some concern about the financial situation in Europe, and what may happen to the New Zealand economy if events there take a turn for the worse. 2012 is likely to be another interesting year for the property market.
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162 Comments
Economics is known as the " dismal science " ...... and let's face it , Bernard is a dismal sort of guy ...
.. .. I reckon we can push the envelope out a bit , and call him an economist ( even if , strictly speaking , he is a financial journalist and a small business owner ) .
If you think Bernard's opinions are worthless dribble then why sign up to his website? The "told you so" argument and who is right or wrong is only an argument rooted in how much time you which to apply your opinion. Economics 101 is a dismal science due to very bad indicators like measuring GDP for example that have more to do with political propaganda than true economics
GBH - not sure Bernard (Bubble Hunter) Hickey has a stake in JDJL Ltd
http://www.business.govt.nz/companies/app/ui/pages/companies/1617276
http://www.business.govt.nz/companies/app/ui/pages/companies/1617276/shareholdings
lack of good listings are driving the market...it's that simple!
Coupled with the banks paying higher borrowing costs in a hugely uncertain financial situation with a GFC2 in Europe and the USA even possible, this makes for nervous bankers tightening credit. Another factor is most banks won’t extend a mortgage on any monolithic cladded property – leaky building risks are just too high, regardless of how sound the building might be today.
Then factor new building codes and compliance by councils on top of builders very soon needing to be licensed before final sign-off by councils (about bloody time too – far too many cowboys in the industry with no formal qualifications) all combined with a lack of investor appetite to develop housing speculatively – and hey presto, very few houses being built = housing shortage where the population grows.
well-presented and realistically priced houses are selling easily anywhere in nz...but just wait until europe really starts crumbling and those euro-trash will be flooding down here to buy up what they see as very cheap housing...in our best kept secret of a country...go nz!
Rob of the North,
not sure there would be many Europeans finding NZ property cheap, especially after they sell their deflated property and exchange it at records low euro rates (and ditto for UK and USA). About the only race who might find our property relatively cheap are the Aussies, and they dont come here (except to invest in Akld apartments pre crash). Dont forget the only real driver of this rise is cheap rates, which reflect a weak global economy which may be on our door steps sooner than we like when our true risk is exposed. For my part, I have no idea where we are heading, ppty shoudl crash but the market is fixed by the govt so it is out of step with reality. All i know is that I can invest my money in another asset propped up by the govt (bank shares) and get a 7-8% fully franked dividend (equiv of around 10% pre tax). Better than a 2-4% net yield in NZ resid property any day and a lot less hassle. No guarantees, but there are none in property either. any way
Word on the street is that New Zealand is looking more and more like Iceland. Why is it that no one can call the bubble when they're in the middle of it?
People getting on Bernard's case re his prediction of housing crash- they did the same to Steve Keen regarading Aussie housing market and Steve has had the last laugh now... as will Bernard in time. I am sure neither Bernard or anyone else who sees price drops in the future will be happy to say I told you so. It is a sad thing and many good people will be trapped in upside down mortgages.
It is amazing, bubble psychology, repeated time and again in every country. Prior crash experience does not even seem to confer immunity.
The meagre up tick in the housing market, the last death throws, is due to further credit expansion and low interest rates, not demand. Believing that a property market can expand infinitely is silly.
Too true, unless your in a country filled with "mugs" who contantly listen to the jones's who can't see what's really happening out there. I feel sorry for them and the pain they are going to inflict on not only themselves but their children and grandchildren. What will hurt NZ more than anything in the coming years will be our Current Account, the banks having to lift interest rates to outrageous levels due too a failing Europe and US. Nothing more sad than an 'optimist' who best lines are full of 'dogma'. That is unfortunately the NZ psyche.
Bernard, will be right, in fact he would of been right years ago if it had not been for his underestimation of just how corrupt the RBNZ are and their relationship with the big Aussie banks who they protect at all costs.
The bank profits never took a dive. Any true follower of economics can see that glorious anomally for what it really is along with what i call "real world" inflation.
The simple question people need to ask is: Which is easier? Printing money or printing ENERGY? One involves actual 'work' to achieve, only actual work has TRUE value
You read the motley crew comment though, and missed the points as usual, rather paying attention to the trivial typo's that only would occupy the pea brained. ;-)
Dude, if you have a differing INFORMED opinion I'd like to hear it? but i doubt you do.....I will just continue making a profit from my IP with NO personal debts whatsoever and you can go back to your day job when Xmas break is over. The kids can go back to learn how they too can claim a benefit like mummy & daddy's WFF's or Kiwisaver .
Wrong ! ... Steve Keen has not " had the last laugh " .... Oz residential housing has slipped back a little , but hardly a " crash " as Keen predicted . Property owners are still sitting on hefty gains from the last decade .
....... people still get on Bernard's case because he made public such a dramatic statement that house prices would fall , crash in fact , 30 % . Some people may have made investment decisions based upon that prediction . ....... and he was wrong , just as Steve Keen has been ..... terribly wrong .
Until now , the most accurate prognosticator has been Ollie Newland .
As I said at the time GBH ... just look at other's who made similar predictions in the late 1990s.
Remember Charles Drace the NZ property expert?
Probably not. His well publicised book (at the time) entitled "How to Survive the NZ Property Crash" published April 1998 is unsurprisingly "out of print":
http://www.wheelers.co.nz/books/9780958376204-how-to-survive-the-new-ze…
The synopsis of the great literary work (turned out to be one of fiction) was that house prices were in for an iminent 40% crash!
Low and behold prices actually rose by 100-200%+ (depending what part of the country you were in) over the following decade.
All the gloomsters just don't understand that at current pricing, houses in general represent fair value. Only an unexpected decline in population or a significant deflation in costs could make current levels look excessive.
Thinking of all the poor sods who listened to Bernard et al, it makes you wonder if financial commentators and journalists should have to offer a higher standard of proof, explanation or proviso before they make such influential prognostications?
Olly and Bernard both are offering theories, neither of them KNOW anything, Olly's theories are far less substantial then Bernards but it's all just guesses. Investing for capital gains is the worst reason in the world to invest. The infatuation with capital gains makes no sense at all.
Invest for cashflow, this takes financial education. Buying your own home is not an investment. Investments are assets, your house is a liability. As many homeowners in the US have found out the hard way. Yet those who invested for cashflow, are running around mopping up the bargains. It's hard to get too sad about capital losses when you are making money.
Something definitely a bit odd with your analysis, the bet was originally negotiated to end in 2013, 5 years after it was made. How then can Keen have lost it already?
http://www.debtdeflation.com/blogs/2010/05/12/a-monkey-off-my-back/
Typically the story takes more than 5 seconds to explain, or investigate, so only the headlines were ever reported by the press.
Steve Keens original statement was 40% in over 10-15 years (peak to trough, presumably over this period). I guess to a speculator peak to trough means something different, but mathematically this financial definition makes little sense, because the aggregation period of the data changes the peak and the trough by creating new local peaks and troughs.
Keen did the walk as a fundraising exercise anyway, because if what he claims does happen (and it appears to be) then winning a bet would not be a consolation for what is going to happen to Australia.
Some commentaries have even started inventing new financial language to try to explain the situation away, soft-landings, price correction, property prices increased too rapidly, did I say bubble, no there is no bubble. There is no depression in NZ, there are no sheep on our farms. wow!
http://rwwhiteman.com.au/home-mainmenu-1/RP-Data-Rejects-Housing-Bubble-Claims.html
feel free to take their word for it if you wish.
Actually Gummy should know better than to claim Ollie knows best, ChrisJ also.
I would say the Bernard's work shines far and above Ollies dismal performance.
It is all too easy to predict rising house prices when you know the money supply has to keep increasing year over year to pay the interest, the trouble is you have to be a crook to participate in this ponzi scheme once you understand it is going on. But the real trouble comes when trying to pick the timing of a correction, which there has been before and will be again.
But a reminder Gummy that Ollie has been catastrophically wrong before. He got burnt and those who took his advice or invested with him got burnt badly also. I can't say the Ollie's recent track record has yet balanced out the damage he did previously, or the damage he may yet cause.
So what is there to say that Ollie can't be destructively wrong again? And what is there to say that next time we correct downwards that it will come up again within a generation?
One is not claiming that Ollie knows best . Merely noting that in the period where Bernard ( and Steve Keen in Australia ) predicted house prices to crash ...... not just ease off a tadge , but an investor scaring crash ..... Ollie's contra position was proven correct .
..... no crash !
But yes , Mr Newland does have a checkered career in predictions , if one goes back further ..
There is every possibility of a slow to flat market in Auckland this year, but given the illiquid nature of housing with current calamity facing the worlds financials, do you really want to be exposed? Notice where real estate is on Exters Pyramid.
Time to look further forward than in front of your nose eh!
Olly is actually pretty onto it. He was adamant there would be a slow down from 2007 and said that publicly.
He may have got things hopelessly out of hand in 1987, but so did many other successful business people. The moral is to learn from their mistakes.
Bob Jones's 1977 book and Olly's "Lost Property" and his 1978 and 1981 Property Boom books are well worth reading for understanding the merits and pitfalls of property. I read them in the late 90s and it certainly made me focus on the fact that you can't rely on prices always going up, but you can still always make money from property.
If people did their own research, they would realise that any thought of being a life long or even a semi permanent renter makes absolutely no economic sense.
If people did their own research, they would realise that any thought of being a life long or even a semi permanent renter makes absolutely no economic sense.
Thats a sweeping statement Chris! Its not so black and white, IMHO.
Here in Aus, the quality of public schooling is generally not so great. Since we have two kids, education quality is important.
Now, given that, we could choose to buy in a "cheap" area and send our kids to private schools. Or do what we are doing and renting in a great area with the rare great public schools. Doing that we actually pay less in accommodation renting in the great area compared to a mortgage in a cheap area, and have "no" schooling fees (other than standard public school fees). Financially we are far better off, especially as living in a good central suburb means we can survive with only one car
As long as we save most of the balance (which we do) then we do very well.
We also attain a number of non-financial benefits. I spend 30 minutes a day commuting rather than 90 minutes, and we live in a suburb which feels pleasant and safe
Hey Matt in Adelaide : Gummy took a drive up the south road . Why did the State Gumnut of SA choose to construct the $A 150 million overpass at Regency Park , where there's minimal traffic congestion ; but to leave the section between Torrens Road & Port Road unaltered , the bit where vehicles are bumper to bumper ?
"Well done to all those who ignored the crash and burn nonsense on this site and got on with their lives and bought themselves a house, if thats what they wanted to do"
That's what we did at the end of 2007 (meant to be the peak). Now that I am in Aust, it will be on the market soon. The feedbacks I had so far is that it will be 40-50% more than what I paid for it. By saying that I'm not counting my eggs until they hatched! If I managed to hock it off I think I was just lucky.. not all are like that.
As Aussie goes, so goes NZ. Tell me how this couldn't happen in NZ?
http://www.youtube.com/watch?v=tJB4frVnilQ&feature=related
There is no shortage of real estate. What we are witnessing is the same thing that happened in the US, that brief pause, like a calm before the storm, where house values don't support the mortgage debt. If a "homeowner" can't sell his house for enough to pay-off the mortgage, then he usually keeps it, until he gets into trouble and the bank takes it from him. This is the silent build-up of inventory, and it could be happening on your street, to a family you know.
As buyers will not go waist-deep into debt to relieve you of your house, the bank eventually does, and the process takes about a year. 2011 was that year, I reckon, and the skeletons will start coming out of the closet and doing a good dance for us sometime this year, or 2013. Until then, the quiet struggle continues.
The crash is happening NOW, evidenced by low interest rates. Do you think we would have the prices we have today if interest rates were still 9%? I think not! A 33% reduction in interest rates tells me a crash in value is happening- a trend. They will probably get lower, unless Europe blows up, a possibility.
Who will lend NZ money then? Japan is out- they have their own problems. US too. So where does the mortgage money come from when Oz implodes? Most of our banks are Oz owned.
It is one of the things people ignore when they say that it is cheaper to rent than to own - the fact that rent will always go up but mortgage repayments should stay relatively the same (assuming interest rates are pretty stable). So it may be cheaper on day 1, but what about in 10 years time?
the difference between owning and renting also earns money when invested so the savings put aside also grows. Given the difference is so high nowaday (between 2 to 4 times) thats quite a bit. Like I said above, you can buy plenty of lowish risk blue chip stock yielding 2 to 3 times as much as resid property - and these have much better propsects of gains AND most of the dividends is franked (eg westpac is almost 8% divs and it govt guaranteed).
Remember also that rental gains will largely track inflation over the long term, so it will take a couple of decades t get to sensible levels based on current yields.
the dividend is effectively the rent skudiv, it just pays a lot better thats all, and comes with tax credits, and I dont have to pay maintenance / rates / insurance etc etc etc. Its not about being bearish on financials v property. its about being bullish on assets whose price is low relative to its earnings, and bearish where the situation is reversed. Quite simple really.
First website on google, but you can have your cake and eat it too.
http://www.rentingshares.com/rentingshares/how-to-rent-shares
See how knowlege is money.
There is nothing dangerous if you already own the shares, it makes sense to rent out your shares. If you own it and it goes down, you've lost money, if you've written an OTM call, you have lost less. Dangerous is buying govt bonds, with a negative real yield.
Not my investment stratagey, because I hate paper portfolios, there are opportunities out there, and people will buy anything.
Skudiv: Your example works providing the head share neither rises nor falls, but if
(a) at the end of your first month price rises above the strike price, you get exercised, you're now out of the game, you now have cash, but price kept rising a further 20%, how do you get back in the game?, or
(b) at the end of your first month price falls 20%, youve lost 20% but you keep your $3000 rent, but are you now game to write again just above the depressed price?
(c) or do you stay out of the market for 3 or 4 or 6 months with your house vacant? and paying interest on the money you borrowed to buy
"So it may be cheaper on day 1, but what about in 10 years time?"
LOL your logic is deftifying !
When housing bubbles occur nothing is gained simply due to the new playing field for ALL being inflated to new levels based entirely on speculation. Living here in the US I see the direct result everyday. It's coming your way also. Buying overpriced assets fuelled by speculation of value is a fools paradise and your 'e welcome to it.
You are right Jimbo, but this is also a misnomer of wisdom. Basically rents will have to cover the property bills, mortgage, tax, just as the owner does. Rents and property prices are linked, but not so directly. In general however expensive property = large rents.
Some people like to focus on renting vs ownership, because it detracts from the important central concept, how much income people pay (financial institutions) to have somewhere to live.
squirrell, I'd be extremely surprised if your rent was anything similiar to 20 years ago unless you are in some hick town.
Most of my rents would have been up no less than 50% on 10 years ago, some are up over 100% over the 15 years we've owned them. On top of that, when we bought those properties we bumped the rents up by in some cases 30 or 40% because the previous landlord had been asleep for the preceding few years (perhaps like your landlords?).
For student flats in Dunedin, a centrally located room was about $55-60pw in 1998, now it's $105-115pw. Standard 3 bdrm houses in ChCh north west were about $190-220pw in 1998, try $360+pw now.
Saying rents have barely gone up is a bit like arguing milk and cheese is roughly the same as it was 20 years ago!
You will never get ahead renting, especially if rents are about the same as owing a house (which is the case throughout most of the country except central and desirable Auckland areas and central Wellington).
"You will never get ahead renting"
The New Zealand national anthem, sung at all good property spruking seminars near you.
You will never be part of the in-crowd, in a non hick town, unless you BUY a piece of crap, leaky box, so you too, can bore pepole to death at the neighbourhood barbeque taliking about house prices.
Chris J you sound like a landlord, so is owning your own home the way to get ahead? Or is owning rental properties? Maybe more apropriate to say, you'll never get ahead unless you own some assets ie rental properties, business, etc.
Just saying, because your own home sits on the expense side of the cashflow report, not the income. Income comes from the assets.
"Never" is way too absolutist. It's anecdotal again, but my rent now is the same as it was in 1997, and if adjusted for inflation, it's far less. It's for a better property in a better location, too. Both suburbs of Wellington, so don't go thinking that I'm distorting this by concealing a move from Central Wellington to Wanganui. Meanwhile, my earnings are several times higher, and the rent is more than covered by additional investment income. I could buy for cash, but don't plan to while things are still ridiculously overpriced.
Be more accurate to say you'll never get ahead renting if you rent to the limits of your income, and don't use it as an opportunity to save and invest.
Kakapo, your investment produces income on which you pay tax (at your marginal rate) and then use to pay rent!
On top of that you miss out on any potential tax free gains.
Say you have $500,000 cash.
Put that in a (probably risky) investment to earn maybe 7.5% gross (on a very good day). So you get $37.5k income. Then you pay a third in tax. So you are left with $25k or $480pw to pay the rent. Equivalent to say $525pw with rates and insurance.
Now I've got properties I bought near the market peak in 2006 for under $200k that rent for more than that!
But let's say you are in a Wellington suburb and you can rent a $500,000 house for about $525pw, so you are maybe marginally better off but what about inflation?
In 10 years time with just 2% inflation (I'd bank on more myself) your rent would be 22% higher.
So you'll be paying $640pw in 10 years, but your investment hasn't grown because you've used all the income to pay 10 years of rent! On top of that you're now topping it up by $115pw out of your personal income!
But you've also missed out on 10 years of tax free capital gains which might conservatively be 20% (unlikely to be less than inflation unless you are in a relatively overvalued or oversupplied location, simply because construction costs will likely move with inflation).
So after 10 years you are likely to have paid an extra $30k+ in topping up an ever inflating rent plus missed out on $100k in tax free capital gain (which is needed if you are to eventually buy).
So in essence you have gone from being able to afford 100% of a $500k house to affording $470k on the same now $600k house. Hence you can only afford 78% of a house.
Not smart.
Of course if you were in Dunedin like the property I was referring to, with the rent now 14% of the purchase price (up from about 8% at the time of purchase partly due to a 25% increase in rents over 5 years and partly due to a 40% bump at the time of purchase because the previous landlord was sound asleep snoring), then you would be enormously worse off having spent about 40% of your savings to prop up the rent in just the 5 years I've owned the property! (Note the property I'm referring to is a student flat, but there are plenty of regular homes that fit the same pattern). On top of that you'd have missed an around about 70% capital gain. But of course that's only an aside!
Provided there is still no excess supply of homes, and inflation is positive buying a home which you could otherwise rent for 5% will get you ahead.
You really would have to be a mug to not own your home, and have passive investments earning taxable income to pay the rent.
It's really a bit like buying the house down the road to rent out with all of your cash, then renting the place you actually live in from someone else for a similar amount per week! Unless you were stealing your house from your landlord it makes no sense!!
(Do I have to explain? You lot seem very simple so here we go: Own a house down the road, rent it out for $600pw no mortgage, then after tax receive $400pw. Pay $600pw on own rent. You do the math - live in the house you own - only cost is rates, insurance, etc. Rent as above - you pay rates, insurance etc plus $200pw to the Government!
Simply no logic in having investments and no home (unless it's purely for lifestyle reasons - ie you never, ever, ever want to own a home).
Again, you're making a lot of assumptions, and picking the numbers to support them.
Rent going up by 22% over 10 years? Possible, but hasn't been the case. As said, mine's gone down significantly, to the point where it doesn't even make a dent. And I doubt that I'm unique in that experience. Assuming significant future capital gains at this point is highly questionable too, with a good case to be made for stagnation and/or decline.
Could have loaded up with an enormous mortgage years ago and spent decades paying all my income to the bank, but bought bank shares instead (and other industries, of course), and went for good returns, diversification, and liquidity. There're plenty of ways of making money out of a real estate bubble that don't involve exposing yourself to ridiculously overpriced real estate. And you know what one of my favourite things about this approach is? It flies under the radar socially. My net worth isn't out there on display, and I really prefer that people assume that I'm poor. Means getting patronised occasionally by status-crazed mortgage slaves who like to feel superior to the poor oppressed renter, but I can live with that.
Had circumstances and timing been different, buying would have been the best option, but with all the craziness over the past few years, other strategies have made more sense. Your mileage may vary, of course.
Not much point trying to explain equities or diversification to the average property investor, Kakapo. Most of them don't have the capital or cash to buy shares, Terry Serepisos used to rave on about how many properties he had, but forgot to mention how much he owed. Ended up being bankrupted over a piddling tax bill. It's all show, and no go, with these guys.
Kakapo, I have nothing against other investment classes. Regular bloggers will know that my first job out of university was an investment analyst with a global financial services firm.
If the returns from equities or fixed interest were stellar, then maybe other investments would make sense, but consider the risks right now. Most bond yields are low so don't bank on any profit from yields moving lower, in fact many are turning to junk so you can watch you capital disappear!! In general companies aren't exactly growing and expanding, and there is still huge downside risk especially if China's growth slows.
Inflation (which most likely will be steadily rising rather than rapid) is the most likely outcome.
So you would have to want to own real assets rather than debt in such an environment!
Now some people will have varying circumstances, such as they may need to be transient, or they may have latched onto an exceptional rental bargain or the always want to be in the newest flashest apartment etc. But, in general, if you are renting a regular property for the long term on the open market (which you ultimately would want to buy if only you weren't so unrealistic on what things actually cost to produce or buy), and at the same time kept enough cash to buy a similar place in the bank because you are waiting for armageddon you are a moron (if not only because the bank would be the last place to keep your assets if you believe financial armageddon is near!).
It's perhaps the same mentalilty as someone who put all their assets in gold perhaps stacked next to their 10 years supply of tinned beans and their collection of rifles?
But seriously assuming WW3 isn't about to start, and assuming that you find a property to buy at around 5% equivalent rental yield then add tax, then add the inflation needed to make sure your invested capital still produces enough income to pay your rent (+2%), then add some more to cover the lack of tax free capital gains (+1%) and you suddenly find that you zero risk rate of return required is 10.5%PA. So then add on the risk premium you require on the investment - it's almost to acheive impossible unless the investment is your own business or similar.
Consider if the rent equivalent was 8% (which it is in many parts of the country outside Akld and Wgtn) then 15%PA is zero risk rate of return required.
If the equivalent rent was 3% then you'd still need a 7.5% risk free return.
Hence you can see why sensible people own their own home (if they want to own home).
People who can afford their own home but rent long term and invest the money are generally going to get themselves behind unless they really really know why they are renting and have calculated the actual costs.
I suggest the perpetual renters out there collate how much they have spent on rent in the last 10 years (or however long ago that they had the money to buy a mortgage free house (which is what Kakapo is arguing) but decided to leave it invested instead) then calculate what the current value of that rent is with interest.
Let me help. $500pw with just 3% average rental increases over the last 10 years with average interest earned at 7.5% (in one of those stellar investments that Kakapo seems to know). That's over $385,000! (You could buy a $500pw rental for that price 10 years ago!).
So if you didn't allow for inflation in the amount you had invested you would have had to contribute another $125,000 in todays terms over the past 10 years (385-10*26). ie you'd be $125,000 worse off even before considering any house price rises!
Look at it another way, say your investment returned 7.5% average pre tax over the period. So for the investment to pay the rent covering 3% inflation (so to just keep the capital up with inflation to cover the rent you would only have 2%PA net to put towards rent) hence you needed $1,320,000 in funds to cover that rent.
But in 2002 you could buy a house that rented at $500pw in say Auckland for $385,000. Hence you could have simply bought a house and invested the remaining $935,000 which with interest at the stellar 7.5% rate would now be $1.52m after tax
Ok you'd have been $300,000 better off even if the house price hadn't changed! (1.52m-1.32m)
Add in a doubling of house prices and you'd be a 3/4 of a million dollars better off buying the house rather than investing funds to cover the rent and inflation!!
A long explanation but clearly it's a hairbrained scheme to rent long term as a strategy for wealth unless you have a very special set of circumstances. Obviously those that do have never actually worked out the numbers.
(You'd probably need to be renting something like a $2m house for $800pw to seriously be better off when you consider inflation, long term tax free capital gains etc).
There are several things which you don't take in to account. Firstly you design your lifestyle, so sometimes finding the good house to rent isn't a matter of luck but a matter of diligent research, just as if you were buying a house. My situation is significantly lower, but better than your $2m for $800.
Another is leverage, which you assume can go on indefinitely. At 20% down you are leveraged at 5:1, at 5% you are at 20:1. In these cases a 20% or a 5% drop in prices wipes out your equity. Now if prices drop 20% and you are levered at 20:1 then you are in serious trouble.
Now you assume that all you have to do is hold on to your property and eventually the prices will rise again to cover you loses, but if they don't you are seriously exposed.
Now you have had experience recently of how unstable the earth can be, but you still assume that man made systems will continue to be stable. Systems like fiat currency and engineered scarcity of land.
I think it is ludicrous to believe that everyone owning their own house will make everyone wealthy. Sooner or later the numbers will come home to roost and it will be shown for the ponzi scheme it is.
Scarfie - ChrisJ is a not uncommon phenomenon, one that gives me a lot of thought. He's not apparently pushing an agenda (as some obviously are) and he's not stupid. But - without research it seems, he's prepared to base an assumption of growth, on "we haven't scratched the surface yet".
These folk make comments like that, when three decrepid vessels get into trouble the other side of the planet from home, chasing a cold-water fish that doesn't start breeding until it's ten years old, when the fossil-fuel industry is down to shale, sands fracking, coal-to, gas-to and bio. When in their lifetime the global population has gone from 2 billion to 7 billion.
Denial or belief? Both?
Clearly, the ability of tenants to earn real money will dwindle. Clearly, the demands on their dwindling wealth will be multiple - real saving for retirement, more expensive food, water charged for, energy dividends to shareholders (some of whom will no doubt be landlords). If their ability to pay - and you have to factor in the removal of benefits at some Govt-deficit point - reduces, so too does the 'value' of rental property, especially when you backdrop the scenarion with permanent cessation of capital gains.
The one contra, is the scarcity issue. It'll be real, but not quite in the league of food/water. I suspect that there are a lot of large, recent houses with one aging couple incumbent, which will house a family or three in the future.
I think a lot of it comes down to Myers Briggs typology and the intuition vs sensing. Sensing people are unable to link together facts, but excel it dealing with the situation immediately to hand. Task focussed if you like. It isn't a fault just a difference, however it becomes a problem when there is an unbalance in the distribution. Because sensing types are task focussed they tend to do well in our current short term focussed business models, and even worse our short term focussed governance schemes. I bet ChrisJ would condemn the performance of the authorities over the earthquake, but can't connect that behaviour to his own.
To clarify the sensing versus intuition is linear, with both being on the same line. People fall onto the line at a point, which can be mildly, moderately or extremely expressed. Important bit is which side of the centre you are because you can't really be both.
The other linear qualities are introversion/extroversion, thinking/feeling and judging/perceiving. The result puts you into one of sixteen categories that area very useful tool for prediciting behaviour.
Very true. And in business there's been a long selection process favouring certain types. So many blustering extroverts who fail at long-term strategic thinking. Personally, I think one of the best things to have in your thought-process toolbox is an awareness of just how flawed human thinking and analysis can be, so that you can deliberately counteract those tendencies.
(speaking as an INTJ, so may be biased ;-))
I'd always assumed that cometh the set of parameters, cometh the winning strategy within them. I'ts when the parameters change that it gets interesting.
One can presume that the women who covet the Sonny Bill Williamses, do so from a residual of the time when manual labouring ability bespoke a better mate, and therefore a better chance of species survival. Many more, have made the jump ( :) to seking those with 'wealth', which does the same job in a time of abundant energy. Young bimbo's happy with middle-aged income-suppliers, even taking the inevitable 'pre' baggage/costs, kind of thing.
Interesting to pick what will be desirable next - some kind of MacGyver traits, perhaps.
:)
Seems that ignoring facts is the solution of the above commenters.
The fact is that in a lot of cases if you had the cash in the bank (for the full purchase price), you would still be better off in 10 years time having purchased rather than renting, even if house prices fell 20 or 30% in real terms.
I've made my own calculator to see when it becomes not worthwhile to buy.
If you have the full cash and buy a house with a rent 5% (gross of the purchase price), then after 10 years you could have the following:
With 2.5% cpi inflation, 7.5% interest (on savings) you would need real house prices to fall 24.6% to be better of renting.
With 2.5% cpi inflation, 5% interest (on savings) you would need real house prices to fall 39.7% to be better of renting.
With 3% cpi inflation, 7.5% interest (on savings) you would need real house prices to fall 29.5% to be better of renting.
With 1.5% cpi inflation, 7.5% interest (on savings) you would need real house prices to fall 13.8% to be better of renting.
With 1.5% cpi inflation, 5% interest (on savings) you would need real house prices to fall 31% to be better of renting.
Of course with rent 8% of the purchase price you would need:
With 1.5% cpi inflation, 7.5% interest (on savings) you would need real house prices to fall 51% to be better of renting.
With 2.5% cpi inflation, 5% interest (on savings) you would need real house prices to fall 72% to be better of renting.
It's all pretty clear.
Here's the thing Chris, as an enginner, I can see the logic in your calculations.
But what happens when we get large real inflation on our expenses, but with little inflation on our income? This appears to be what is happening now.
It paints a very different picture of the future.
SK ignores the bigger picture and in particular the global picture.....but bearing in mind its a ponzi scheme he's playing in, getting more fools to buy is exactly what he wants.
inflation in expenses v no inflation in wages, Its been happening for 2~3 years now.....but there is the worse side which is looking close ie....when we see deflation in our assets.....and many ppl go into neg equity on their get rich quick property deals.....
The picture will be very ugly....
regards
Quite.
My age and circumstances were such that at the time I was ready to buy, the bubble was well underway. So rather than run along with the flock and sink everything into a panic mortgage on some crappy shack in gangland and shovelling all my income into the mortgage interest black hole, I chose to continue renting cheaply, and make money out of the suckers fuelling the bubble, hence shares in banks, construction materials, mining, energy, retail, etc as one of the strategies. Saw the GFC coming, and got out of construction and retail before it hit. When it makes sense to buy I'll buy, but even as cash or minimal mortgage buyer, I'm not convinced of the desirability of buying while everything's still absurdly overpriced and fuelled by delusion. Just the opportunity cost of that is horrific, and really I'd rather keep my diversification and flexibility. Sure, some value is eroded through inflation, but I really don't see the best way around that as putting it into a illiquid asset that's likely to decline or stagnate, and which needs a hell of a lot of money poured into it just to maintain value. I have zero interest in running rentals, and would only be buying a long-term home.
Why the concept of temporarily eschewing property and using other strategies is so difficult and threatening to some, I don't know.
Kakapo, in previous comments you suggested you had the money to buy and chose not to.
From the above it appears you actually didn't have the money at the time which is completely different to the argument you were putting forward.
If you can't afford to buy, I would never suggest doing so.
If you have the money to buy, but put it into alternate investments while at the same time paying market rent, those investments would have to be pretty stellar to justify the financial gamble you were taking.
I simplified things a lot, because booring, and/or nobody's business. And of course there are plenty of factors in the equation that aren't measured in $$ and percentages. That's where I think your models fall over - they're based on a narrow set of assumptions, and like most models or averages, can be very inaccurate when applied to individual cases.
My original point, where all this started, was that I didn't go along with your absolute statement that it's impossible to get ahead renting, and qualified that with a couple of big IFs. More than one way to skin a cat, and all that.
That's true if people rent up to the limits of their income, and don't use it as an opportunity to save and invest. Rent high and live high on the hog on the credit card, and you're an idiot. I'm sure we're in complete agreement on that. If you don't do that, then other strategies are completely viable. I doubt that my circumstances have conformed to averages. No idea how common it would be to be paying the same rent as in 1996/97, but that's the case. Adjusted for inflation it's a decrease, while my income is many times larger, I've always been a saver, and haven't really ramped up my lifestyle as my income increased. I'm not remotely interested in owning a lot of stuff, or in displaying status or wealth. When it comes to being comfortably off, I think that having more is only one side of the equation - wanting less can be pretty effective too.
When the bubble began in early 2000s, I had a large deposit, but because of what I was doing at the time (while overseas), buying here wasn't an option. By the time I was back with a larger wad bubble was inflating by the day, so I chose to exploit it via alternative routes.
Investment-wise I've done well, and have a good track record on seeing the drops coming and avoiding them. Avoided finance companies because they tripped my scam radar, and thank bob for that. Fingers in a lot of industries, businesses and commodities, NZ and overseas, and a few hobby-type things like antiques, where big one-off wins are possible, and steady profits are reasonably easy to make if you know what you're doing. There are a couple of items that are cheap and plentiful in NZ to the point where people can hardly give them away, but rare and sought-after in the USA, for instance. But I'm not about to tell you what they are. ;-)
Capital is probably as safe as anybody's. It's not like it's all sitting on TD with one institution. If the world's banking and financial institutions collapse, then that's the least of our worries. You of all people know that everything comes with risks. I may not own property just now, but on the other hand my investments aren't now mud and rubble, or trapped in zoning/insurance limbo. If shit happens, we adapt and deal, change strategies if necessary. That's universal.
Good luck with that!
It reminds me of when I bought a house in Dunedin for about $13k 10 years ago. The previous owner asked me why on earth I wanted to buy a place down here?
My reply was that it's not too bad.
There was nothing wrong with it. In the past decade I've got about $60k in rent in from the property, only having spent about $2k in repairs in that time.
Did I really care if prices fell 50%? No. Would it make any difference to the rent I received? No. Do I ever intend to sell it? No.
Get the right property at the right price at virtually any time (only barring those silly peaks we saw in 2007 and 1997 when things really got out of hand) and you will be right!
I always find it humourous to hear people say prices were fair 15 years ago. In fact in 1997 prices were seriously high and it was a much worse time to buy than now.
Remember we are now 5 years on from the market 'peak' (technically we are higher now but certainly 2007 was the recent market climax), now is really a time when property is starting to represent value (although we may still have some years of relative flatness), the envy and lust for property displayed by those desirous souls on this website (who are praying for the market to fall so that their view to hold off proves correct), clearly demonstrates the insatiable demand out there for property ownership!
Chris_J - I agree with alot of what you are saying - anytime is the right time to buy IF you can find a property at the right price.
But, I also think a 50% price drop - i.e. the $350K house dropping to $175K is certainly not out of the question if the NZ government is forced to bring in the type of austerity measures we are seeing in the UK and Europe. Coupled with that will be a concurrent drop in private sector demand/employment as well.
Education, in particular looks to be one of the areas this government might target first. As soon as the interest-free goes off student loans - well, there goes the student rental market nearly over night. And the already graduated students will suddenly have alot less to spend on rent (and other general cost-of-living necessities). Students will come to study nearer home (i.e. free accommodation). And many families simply wouldn't be prepared to live in places students will live without a whole lot of upgrading... hence I see big price drops in the bottom end rental-type housing. Then if the government stops forking out the billion per annum on accomodation supplements - the middle of the road rental market will take a pounding as well.
It just strikes me that so much of the present prices in the housing market are being propped up by government-sourced money. Similarly, government money by way of pensions is one of the main reasons why many pensioners don't need the capital out of their homes to live on - 60% of the average wage is one of the most plum universal pension schemes on the planet. Anyway you look at it, NZ just can't go on affording it's big government - and when the crunch comes on government spending, the housing market will plummet (as will residential rents).
My guess is the second budget of this Nat government term will be the austerity one - the shock that jolts the entire economy. Point about those waiting for those large price drops however - lending will likely also be tight - so even at 50% price drops, it might be very difficult to borrow (which further depresses prices).
Kate, I rent houses to young working people who pay as little as $80pw for a shared room (as part of a group).
These young people have pretty average jobs, but mostly would earn $30k, some part time only workers may earn less but to be only paying $4k on the rent is hardly a big issue for them.
Likewise with the students. I have people maybe paying $5 or $5.5k a year, they then spend the holidays working in Dubai or something along those lines.
I hardly think that current rents or prices are dependent on the government propping them up.
What I do find is that Housing NZ rent houses with a market rent of $320pw to 21 year old solo mums for about $60pw who then have their loser hangers on move in (without WINZ knowing) and wreck the place, all while the state pays the lot of them to sit at home smoking and drinking, while eating takeaways 7 days a week.
That has nothing to do with the open rental market or house prices.
The government needs to sort their own issues out. Austerity should go to the likes of the above. There is plenty of fat in the system needing cut.
Education and work ethic is critical.
It abhors me, that in ChCh where thousands of unskilled jobs could be created in demolition (which could lead to construction jobs), we instead have diggers crunching buildings at huge cost, creating tonnes of rubbish that could have been reused or recycled - creating revenue, opportunity and jobs, while instead the unemployed continue to sit at home on the playstation.
NZ needs overhauled.
Yes, ChrisJ - it needs overhauled. Your comments are quite right, re the trashing of perfectly good materials - it's criminal. Maybe good for GDP, but criminal.
However, there are other things wrong - too many parasites, and that includes you. You don't do anything productive (I question whether maintenance is 'productive'), the buildings were already in existence, and so you are parasiting on the incomes your tenants are currently bringing home.
In terms of proper accounting - when the true cost of resources and pollution are factored it - it may well be that the playstation players are actually less unproductive than you, depending on what your tenants have to do to fund you. If they dig coal, for instance, the real bottom line is - counterintuitively! - never going to be in the black. Doing nothing can actually be less negative, but most folk don't (want to?) understand that. :)
This kind of thing:
http://www.triplebottomlineapproach.com/
Under it all is this:
http://physics.ucsd.edu/do-the-math/2011/07/can-economic-growth-last/
Re 1997 - we bought our land low in 1994 (should've bought it in '87!) , but it had actually dipped from that by 2001. Only thereafter did it go stupid. Different area different demand, maybe?
Yes, ChrisJ - it needs overhauled. Your comments are quite right, re the trashing of perfectly good materials - it's criminal. Maybe good for GDP, but criminal.
However, there are other things wrong - too many parasites, and that includes you. You don't do anything productive (I question whether maintenance is 'productive'), the buildings were already in existence, and so you are parasiting on the incomes your tenants are currently bringing home.
In terms of proper accounting - when the true cost of resources and pollution are factored it - it may well be that the playstation players are actually less unproductive than you, depending on what your tenants have to do to fund you. If they dig coal, for instance, the real bottom line is - counterintuitively! - never going to be in the black. Doing nothing can actually be less negative, but most folk don't (want to?) understand that. :)
This kind of thing:
http://www.triplebottomlineapproach.com/
Under it all is this:
http://physics.ucsd.edu/do-the-math/2011/07/can-economic-growth-last/
Re 1997 - we bought our land low in 1994 (should've bought it in '87!) , but it had actually dipped from that by 2001. Only thereafter did it go stupid. Different area different demand, maybe?
good luck? bearing in mind such a drop will almost wipe out my only "paper" wealth....not so good.....the ugly will be for the 30 somethings with 80%+ LVR they loose their deposit, the bank could foreclose and any debt they end up with they have to pay back......
Interesting but in 1997 I could afford t,o and did buy....today the same place is out of my league as its 2.5 times that value....my wages have not kept up despite my seniority / promotions....
and you ignore the losses on the horizon.....sure you might be one of the sensible ones with a low LVR and good cash flow so a serious dip wont chop the legs from under you....but others? I know a few in my office who have become PIs and they are making nothing....and risk a lot....if not all they have......I mean the bank would sell their rental(s) and go after their home to get the money back.....this will cure the "insatible" demand btw.....ppl are gambling in a never can lose game, they think.....
regards
You talk alot about gains, but where is your factor on risk?
15~20 years ago housing ws sensibly priced.....today its 50% over-valued and there is a real possibility it will [over-]correct........so in 1995 the 15ok house is today worth 400k.....tomorrow it could be worth 200k.........a buyer from 1995~2000 is probably OK.....A buyer from 2005 to today is at substantial risk of a wipeout loss....a renter is at no risk.....
Long term renting, I tend to agree except when we are in a ponzi scheme / bubble.....right now thats what it is and we have seen nothing like it since the Great Depression of the 1930s....e living memory.......
So today to get a house/flat I would rent and wait 5 years.....let the bubble pop.....buy at a 50%+ discount.
by the way a CGT will come I think......probably a land tax as well.....Govn will be desperate for income by 2014....
regards
Trouble is if you go bankrupt then I as a tax payer will be expected to bail you out for your stupidity......personally its at times like that I think Govns should be allowed to sell body parts to recover losses....but who wants parts of stupid ppl.
I own my own place btw.....I just see it as my home and of no paper value.
regards
Actually Steven has plenty of idea. What am eluded to above but will enlarge upon for you here is that he, like PDK, Kakapo and a few others on this site come from the group called the rationals http://en.wikipedia.org/wiki/Rational_temperament Most great miliatry leaders come from a subgroup known as the ENTJ, where the logical thinking, analysis and stategic thinking combine with decisiveness in execution. A couple local examples I am certain of are Ron Brierly and David Kirk.
When ratinionals tell you the housing market doesn't make sense you should listen for they are the ones that see trouble in advance.
Learn your history and you find because of their foresight and generally higher intellect than the average you will find most dictators get rid of them first. Those that didn't leave(Einstein) were dispatched by Hitler.
only 20 mins PDK.
http://www.humanmetrics.com/cgi-win/JTypes1.htm
Rationals have the middle two letters NT.
scarfie, what a bizarre, daft and arrogant comment.
Simply because someone subcribes to a view in agreement with your own they have a superior intellect?
That's totally irrational!
I suppose that with your superior intuition you have net worth in 8 figures by now? Well at least one person on this post does...
I'm not trying to convince anyone about property, but I am simply pointing out that the extremist views posted here about prices being unrealistic or overvalued are simply not supported by fact or figures.
Good luck renting for a lifetime, because nominal falls of 50% or 30% will never happen. While real falls even of perhaps 20% are nothing to be feared in a world where deflation is legislated against!
You don't get it do you. But the point of my post is that you wouldn't so funny how you come along and prove it.
Simply because someone subcribes to a view in agreement with your own they have a superior intellect?
I suppose that with your superior intuition you have net worth in 8 figures by now? Well at least one person on this post does...
So where did I refer to myself in anyway above Chris?
But funny how you write off the work of one of modern histories greatest minds. I only quote from work that stems from this guy http://en.wikipedia.org/wiki/Carl_Jung
The sad bit here is that you need lots of numbers on a computer somewhere to sustain your self esteem. You have no idea of what my material wealth is and won't find out. I don't even know precisely because I don't use that as a measure for wealth.
scarfie, I'm not interested in making any personal judgment about you, however your comments whether it be due to the poor grammar, lack of coherence or sweeping generalisations, don't give me any confidence that you can consider other points of view logically.
In fact like many bloggers on this site, you seem to be regurgitating a hotchpot of other people's views.
Now, in regard your last comment, I'm not sure if it's your poor grammar or the fact that I'm slightly slow, but I have no idea what you mean by your first sentence which reads:
"But the point of my post is that you wouldn't so funny how you come along and prove it." (sic)
Q.E.D!
Your next point, asking "where did I (scarfie) refer to myself in anyway above?"
Well, I quote you from above,
"Steven ... PDK, Kakapo and a few others on this site (yourself implied) come from the group called the rationals ... where the logical thinking, analysis and stategic (sic) thinking combine with decisiveness in execution ... When ratinionals (sic) tell you the housing market doesn't make sense you should listen for they are the ones that see trouble in advance."
I think that that statement affirms my first comment! You believe that you are superior therefore you should be listened too!
My next point follows. Of course if you have superior insight in business, property and financial markets (so that I should listen only to you and ignore logic and facts and figures), then you must have acheived better outcomes financially than I have!
Now clearly this discussion is all irrelevant. The purpose of my comments was to pour some cold water on the doomsday rubbish being posted on this site.
I don't care if people agree or disagree with my view. I am only highlighting the fact that an extreme set of negative circumstances need to occur for the never buy until prices halve fraternity to be proven right in their decisions to rent (if they can afford to buy and do want to eventually buy).
It's all a bit bizarre for you to chastise me for viewing numbers important in a discussion purely about financial benefits!
By the way, scarfie, your material wealth is of absolutely no interest to me. (I suspect I know what it would likely be for someone with your literacy and world view).
And in case you were wondering, material wealth isn't the only reason I like property.
I've bought properties just to replant a podocarp forest, or save historic buildings. I plant trees at most of our properties, and make sure anything we build or develop is something worthwhile.
Property is something I can look back on and see I've created something positive.
It's much better than just trying to drag everyone down.
Enough said.
Sorry Chris but I wasn't referring to myself at all, but giving acknowledgement to other rationals that are readers or commentators here. Despite their combined MBTI typologies being 25% of the types, they are only about 5% of the population. However I would estimate that they are likely over represented in a forum like this. Look at Plutocracy, who jumped in and did the test. An interesting exercise is to find a list of famous INTP's.
Once you understand Myers Briggs you can sometimes (only sometimes) pick a persons type or temperament. Much more difficult with these limited exchanges but sometimes it is obvious.
I am not the only one who has worked out the money supply is fraudulent, and with your tertiary training you must be aware of it also.
Despite what Gonzo says, the actions of Hitler are well documented. Hitler would have kept those around that were no threat. Interestingly Albert Speer was likely an INTP and was the only Nazi to say sorry.
BTW the four temperaments are ancient knowledge.
scarfie, your discussion here is completely irrelevant to the point of view you were attempting to argue. To be perfectly honest it all seems a bit nuts!
For your satisfaction I looked at the test you linked. INTJ. All really just a load of twaddle.
Enough said for good this time.
scarfie is a nobody. I have no interest in him nor what he says. This is a result of him accusing me of my money coming from criminal acts just because I can afford to buy a family home and a few other investment properties in posh suburbs. He is a "my way or the highway type" skank.
Good on you, I stand by my regular comments that those using leveraged money to invest are at best gambling and at worst guilty of criminal behaviour. But my experience is that most criminals have justification for their behaviour and assume they have done no wrong.
I never said rents had not gone up, just that I'd never had a 15% rise, let alone a 10% one.
"For student flats in Dunedin, a centrally located room was about $55-60pw in 1998, now it's $105-115pw. Standard 3 bdrm houses in ChCh north west were about $190-220pw in 1998, try $360+pw now. "
thats about 4.5% growth for the dundin flats YOY. So if you buy a house with a net yield now of 3%, long term mortgage rates = 8%, it will take you about 20 years to become cashflow positive. WHOOPEE!!!!!
New landlord took over a place that I was in (beachfront block of three townhouses) and tried it on with a 50% raise. Whole block emptied out before the increase took effect, and according to the next-door-neighbour stayed empty for months with a big 'To Let' sign out front. That was in about late 2006/early 2007, so I assume they paid way too much for it and felt entitled to cover the mortgage at someone else's expense, but the damn scummy tenants wouldn't cooperate. Greed and stupidity do seem to go together.
Mr Squirrell, good student flats can be purchased at around the 8% net in Dunedin. If you choose carefully you can generally add some value and maybe get the rents up 10-20% straight away, then we have been getting solid around 5%PA increases for the last few years despite the recession.
Unless it's a development site (or seriously under-rented), not even ultra prime properties go for under about 6% yields at the moment.
Most people in the market would only buy if they are cashflow positive, and by the way 5 year rates are only about 7% so it is all WHOOPEE!! out there!
I think you may be shooting yourself in the foot a bit SK, your tennants will figure out that they are getting ripped off, resulting in a loss of income from an empty property.
Our rent has gone up 5% over the last 8 (yes 8) years... This seems to be inline with the national averages.
Yep Aucklands inflation is now right up there with China India, and other third world's and banana republics. Makes you feel richer though, makes you feel like a good descision maker. It's all part of "the wealth effect". Forget about the fact that those dollars in your pocket have lost their value by an equal amount, doesn't even register on the radar.
Certainly as a bear I can't deny its a solid result for Auckland's property market. However, it should be noted this is based on mean rather than median values, likely that median values (more reliable ) would be 1-2 % up - not a significant gain, especially on the back of record low interest rates.
Interest rates are unlikely to drop any further, and unemployment is likely to increase. But house building will stay low. Net result is pretty flattish 2012 I would suspect
I wouldn't rule out another interest rate cut, followed by many more. Not based on economic theories, just trends. Higher interest rates would mean a disaster for the housing market. The govt wont like it, or allow it. Just saying, free markets are dead and buried, bankers run the world, and they want to expand their balance sheets. I'm not sure how a collapsing housing market will play into their hands, unless they are expecting a bailout.
Auckland looks very expensive compared to where I am, but maybe the wages are higher or something.
gidday cobber
well, I look at the median as being more reliable, lets see what that was for 2011, I suspect an increase of maybe 2% for Auckland. So not significantly above "flat", and certainly flat in real terms.
2012? I think similar to 2011. Interest rates will stay low, a plus for property, but low interest rates are indicative of a weak economy aren't they? And that weak economy - with growing unemployment, minimum wage increases etc - will limit people's buying power. But then throw in minimal construction.... so there are pro and con factors for house prices which will balance things out
It needs to be asked, just how much depressed demand for new builds and reno work, due to the gst at 15%, is English prepared to admit to?
To date he has not said a single thing about this mess...why not....is he worried the public will realise the govt failed to do the homework necessary...will he claim that savings are so much higher with the paye reductions...that gst at 15% on every aspect of a new build or reno job is NOT convincing people to say "NO"
Why are we not seeing some real journalistic research into the impact the gst level is having on the demand for new builds and renovation work?
Why is the media incapable of doing this? Surely somebody can see that 15%gst on the chch rebuild amounts to a windfall for govt...if the work takes place!
The same is true for the rotting houses reno and rebuild work.
Is it too much trouble to carry out a properly managed survey...to at the very least phone round the suppliers....or speak with building firms....or builders....or plumbers....sparkies....etc.
Wolly, based on my own experience the GST hike proved costly. We did major renovations on our house last year. From the initial quote dating from pre the GST hike, to the final one several months later when all was good to go, the price went up by about $27k, with the bulk due to GST and higher steel prices.
Yes taxation sure does warp the market demand for goods and services...it also tweaks the urge to go underground and join the dark side...
So we have a govt that played a political policy tax card without doing the homework that would have exposed the potential for nasty shocks...now the shock is setting in and the same fools refuse to accept they stuffed up big time.
Peasants are saying "NO" to new builds and reno work, while also saying yes to swapping stuff and doing cash deals.....along with striving to spend nout.
Then along comes the second shock...a drop in gst revenue...hahahaaaaaa what a farce Bill English....put it alongside the decline in employment in the building sector...oh what a wicked tangle of political filth all wrapped up in National Party dogma about lower taxes.....never has there been a bigger cockup.
AS the weeks pass more chch residents who collect payouts will shove the big finger up when asked if they intend building a new house...you can't blame them can you...blame National.
It will definately be an interesting year for housing. On one hand you have got low interest rates, under supply and low levels of construction. On the other hand there is the European crisis and prices that the average person can't afford. Anyone who reckons they know for sure what will happen with house prices this year is fooling themselves!!
Greens go after Landlords - ( nz herald)
Green MP Gareth Hughes has launched a private member's bill aimed at improving substandard rental properties, and said today that the commission's submission was in line with his own concerns about housing affordability.
"There's a whole generation of people effectively locked out of home ownership, it's just a distant dream for many of them,'' he said.
"There are a number of good landlords out there, but there are a number who are absolutely amateurish, doing it just to reap the capital gains in the future and not providing a good rental service for their tenants.''
Mr Hughes' Warm Healthy Rentals Amendment Bill would set a minimum standard for landlords to meet, and would introduce penalties for those that did not fulfil the requirements.
"I've left it entirely absent about what the standard should be to give us the flexibility to decide what standards should be enforced,'' he said.
"Rental legislation in New Zealand is absolutely out of date ... the actual minimum standards a house needs are sort of laughable in the modern age - it's got to have an oven, it's got have windows that close - that's pretty much it.''
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…..and then guys – your small talk - in comparison we have a national government, which costs the taxpayer billions, because of megalomaniac economic plans we cannot handle in this country.
amateurish: The Government admits it has "dropped the ball" by failing to sign up to an international convention that would have protected taxpayers by an additional $12 million for the cleanup of the Rena oil spill. http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10759571
…….when are you talking about real issues ?
Could they go after sub-standard tenants too!
I'm tired of being polite to people who haven't got a shot in renting my properties. Maybe I should just be just be grumpier and more obnoxious, then they will go away.
From my experience grotty people will make even the most sparkling house grotty, so the solution to get rid of grotty houses is to get rid of grotty people. Do something useful Greens, round up all the grots and get them to actually clean their own homes rather than complaining to the landlord because he didn't install a self cleaning shower, or automatic vacuuming carpet.
Because Chris it's not PC to say tenants are bad. Bad tenants equal bad properties. One of our properties was in really good condition after a refit and within 18 moths the tenants had ran it down. Forget the bond, that covers nothing and if you try and keep it to cover damage, the tenants go through the Tenancy Tribunal process, where they have a better than average chance or else it is paid by WINZ and so they couldn't care less.
No self respecting home or investor has an interest in letting their property go downhill, but after years of naff tenants, you just give up in the end and think, let them live in their own squalor.
It's just that a few of the WINZ people work around here, and sometimes they come to work stinking like they shook hands with a property investor, wasn't you was it? You know leveraged to hilt, shaking in thier boots every time the Reserve Bank moves rates a quater of a percent, couldn't buy a candy stick without asking the bank first. Sounds like it.
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