There was a sharp downturn in the number of homes that were sold in June as winter got its teeth into the market, however prices remained resilient, according to the latest figures from the Real Estate Institute of NZ.
They show that 6034 homes were sold nationally last month, down 20% compared to the 7578 that were sold in May, but down just 1.6% compared to the 6131 that were sold in June last year.
That trend was especially evident in Auckland where 1834 homes were sold in June, down from 2445 in May but almost unchanged from the 1822 that were sold in June last year.
However in most other major centres, sales were significantly down in June compared to May and to June last year, including Waikato (down 14% compared to June last year, Wellington (-11% compared to a year ago), Canterbury (-8%) and Southland (-8%).
In general sales have continued at the more subdued levels that have been evident since late 2016 and remain well below where they were in the boom years of 2011 to 2016.
However prices remained generally flat, with the national median price dropping by just $2000, from $562,000 in May to $560,000 in June.
Across the country median prices declined in nine regions compared to May, rose in six and were unchanged in one.
The regions where median prices rose compared to May were Auckland, Waikato, Gisborne,Wellington, Marlborough, and Southland, while median prices declined in Northland, Bay of Plenty, Manawatu-Whanganui, Taranaki, Tasman, Nelson, West Coast, Canterbury and Otago.
The median price was unchanged from May in Hawkes Bay.
The median price was below where it was in June last year in four regions - Auckland, Tasman, West Coast and Canterbury, while record median prices were set in Waikato, Wellington and Marlborough.
In a First Impressions note on the REINZ figures, Westpac Senior Economist Satish Ranchhod said they continued to point to a soft housing market.
"Price growth has taken a step down over the past year with weakness centred on Auckland where prices have fallen for the last four months," he said.
"Looking at the country as a whole, prices fell by 0.1% in June, with the level of house prices essentially flat since February."
See the interactive charts below to track median price and sales volume movements in all regions.
Median price - REINZ
Select chart tabs
Volumes sold - REINZ
Select chart tabs
231 Comments
Saving_for_Aus regarding your first comment;
I suspect that you are one who hears of a good party only to arrive up and find that the party is finished.
The old adage applies - past performance is not necessary an indicator of future performance. As price differential between the provinces to Auckland close, so too will provincial house price inflation decrease.
Cheers (saving_for_auss). You are invited to my next party but we are probably too old and you will find the party and company boring (however, very astute people). :)
If we all knew what any market was going to do we would all be wealthy and none would need to work!
The reality is that even the experts don't always get it right. In 2000 I was talking to a very close school mate of mine who had about thirty years of experience as a valuer. I was thinking of buying my first rental; he advised against it as the consensus among valuers was that the market would be flat in the foreseeable future. Meet up with him a year later after and he apologized for the crook advice as a housing boom was underway; even valuers despite consideration of market factors didn't see that one coming.
What is going to happen to the housing and share markets in the medium term? We all can have a view but those that look at the signals and think of the implications tend to have a greater deal of success.
All the best to you. Having the excitement of ones life in front is a hell of a lot better those who are old, wealthy but bored out of their trees.
..of course you won't. Far too many people chasing the declining energy available.
"The reason why growth in prosperity is over is that we no longer have access to abundant cheap energy. Where geographical expansion and economies of scale once drove down the cost of accessing energy, the driving factor now is depletion, which is pushing costs upwards, and is doing so exponentially"
and..
"The first imperative, then, is recognition that the economy is an energy system, not a financial one, in which money plays a proxy role as a claim on output. In this sense, money is like a map of the territory, whereas energy is the territory itself – and geographical features cannot be changed by altering lines on a map".
read on...
https://surplusenergyeconomics.files.wordpress.com/2018/03/surplus-ener…
Saving_for_us
You have the right attitude to do well.
What is of concern are the likes of RickStrauss (see below) who believe that there is a conspiracy to keep the young both poor and out of home ownership.
I can understand the frustration of potential FHB - especially in Auckland - over the past six years or so.
However, a blame mentality - such as a suggested conspiracy by those in power/older generations to keep young out of houses - only makes one bitter, provides a de facto reason/excuse for doing nothing, and increasing makes their accusations more wild.
All generations have faced difficulties; try earlier generations who have been conscripted to fight global wars, global recessions, significant share market crashes, high levels of unemployment (try the 1990s) etc.
Your initial question was about positive action; rather than moan and groan it was pleasing about "what can I do?"
I suspect that there are more millenials like you rather than Rick - or at least I hope so.
Hi printer8, did you take your friend's belated advice and buy a rental in 2001? You should have done very well from it since then. We bought our first Hamilton rentals on no money down finance in mid nineties and were offered a higher price within the first few weeks but decided to keep and held for couple decades. Then forced to sell to finance something much bigger which we could afford because of the increased cashflow and equity. Property is so awesome an investment. I think you would agree.
I really hope that all New Zealanders have financial security to have the freedom to enjoy life both currently and in retirement. After all what is life and our society all about if not so.
I feel that this is achievable by those that want it, prepared to work steadily towards it, and don't expected it to be handed to them on a platter.
Houseworks, wouldn't it be great if you could actually bank the alleged investment gains without others getting a big chunk/all of it?
You purchased a neglected Hamilton based dwelling about 14 months ago and then refurbished it. Having also commented how it has already rewarded with a considerable profit, let's be transparent and discuss unavoidable formalities and then afford yourself the luxury of comparing your prized investment with a term deposit. After 33% Brightline tax, agents fees, interest, maintenance, refurbishment costs, rates, legal fees and of course insurance, is there anything actually left to pop the corks for? Probably not. Outside of Brightline, we move under IRD's intention provision. Its increasingly unlikely you will bank any gains without paying 33% CGT. Note also there is no time limit for IRD to perform retrospective assessments. Then there's timing, you must respect market forces that are beyond our control :-(
Being a late entrant Landlord is nothing to celebrate. The Coalition changed legislation subsequent to your purchase therefore it's easy to assume this was not part of the your decision making process. Being a professional long term Landlord is something very different. For starters they DO lodge their bonds with Tenancy Services, whereas you admitted openly that you don't. It's unlikely the spot value of their properties matter to professionals as they are in it for the long haul whereas it matters considerably to you.
These are simply the facts as I see them. Now don't shoot the messenger!
You haven't got a clue one bit hahaha How's your term deposit after tax and then inflation???? There won't be anything to live on to supplement your Paula Bennett (benefit). Oh that's right, you reinvest the interest and I guess you will tell us you don't receive government money.
Yes we know that rhetoric poppy is 53 and retired sfa he has told us sooo many times it's monotonous monotonous monotonous monotonous. The question is how does he support himself? Perhaps what you don't know as a recent convert of his is that he reinvests and doesn't spend the "low yield" income he generates from the capital or the capital. Given he doesn't work nor entitled to receive nz super how does rp cover the miniscule treats he affords himself. Perhaps it's the 50s plus benefit, but of course he hasn't answered that as he may incriminate himself. If that is so then you are paying for him and his freedom lifestyle whilst you are trying to save up for a basic one.
Houseworks, answered above. Interest income is my sole source of income and is taxed at primary. I draw no benefit and besides I cannot see how on earth I could qualify! Like TTP, you're comments are becoming more desperate and angry of late. You're just wildly digging for dirt now aye :)
For the record we have always paid and do pay all tax we're liable for, income tax, gst etc. There was a comment here by a commenter that their acct was "too honest" meaning the acct declares income and calculates the tax correctly though the commenter isn't happy. To that I say our acct is honest, they declare our income to ird and calculate tax accordingly with our full acceptance of the tax amount. One particular commenter here likes to imply otherwise in an effort to discredit my comments. And we dont use offshore companies or trusts to "legally" avoid tax. In my opinion nz income tax rates are about right not as high compared to western countries including Aust. The nz income tax rates are probably lower than what most people think. Most people probably do not realise what the high income tax rates were before gst was brought in. As Nzers we all pay a lot of tax when Inc tax on wages and business, Gst on purchases, company tax, paye, rwt on interest and divs, petrol tax and tabacco tax and now capital asset taxes such as bright-line and not to mention rates to local council. We don't need anymore to be brought in by the twg. The regulation and paperwork gets cumbersome and will only have a negative economic effect
Houseworks, firstly, it's not recommended buying investments straight after a splurge. You broke the first rule. Secondly, term deposit returns do indeed exceed inflation. In my case the interest earned is more than enough to live on and is primary tax. Thirdly, it's recommended investing at a time when everyone else is selling. it appears you broke that rule too. It leaves little for you to boast about. Anyway, it's not my position to judge, best left to time to reveal who are the biggest fools. One thing is pretty much guaranteed at this point, your debt is certainly going to rise in value. It's your Landlord Bank that wins in the end. They hold all the cards.
Heres some very basic educational material for you to feast on; https://www.google.co.nz/search?q=RBNZ+investment+advice&rlz=1C1NHXL_en…
Still skipping over that whole lodging your bonds thing then Houseworks? How many other legal protections do you deny your tenants? When you openly admit to that type of illegal behaviour don't then start patting yourself on the back and shouting about what a great "investor" you are.
You didn't "make a mistake" you open admitted to repeatedly breaking the law. Its not for me to forgive you, and your facetious remarks about what I may or may not have done do NOT detract from the issue of your own behaviour and just demonstrates exactly what kind of person you are. Utterly despicable.
Personally speaking if you were my landlord I'd have hauled you in front of the tenancy tribunal long ago. YOU and your ilk give the truly good landlords (and I do believe there are some) a bad name.
Honestly I'd have more respect for you if you'd owned it from the start and stated you would cease cheating your tenants out of their legal rights and protections. But no, you haven't done that. Instead you've tried to wriggle around and point the finger elsewhere in a vain attempt to deflect.
Ha the height of hypocrisy!! You sound like one of those people who would go on a lynch mob and find the first coloured or black to take out vengeance and ease your own conscience. Moreover, you have worked yourself into a lather so basically anything you say from that point is without point HAHAHA and you don't have to worry about being a tenant of ours ever. By the way all of our tenants love us and stay for years and years.
Don't tell me rm stands for Real Man will you!
Hahaha wow, you're just incredible. So now I'm a hypocrite and a racist??? Evidence for that is....?
Worked myself into a lather over you breaking the law and boasting about it so you can ignore my points? That's hardly a good rebuttal now is it Houseworks?
Quite right though, I'll never be a tenant of yours, you wouldn't survive a week,and if your tenants are oh so happy then I pity them knowing how you're ripping them off. You're no different from the likes of Augustine Lau.
Oh and it's no secret that I'm in my first home, why is that a bad thing? It's not quite in the Munterwato, but I do like your attempt at merging an insult with a location name. I remember merging insults with other kid's names at Primary School, pretty much stopped in Standard 3 or 4.
Hi Retired-Poppy,
You fail to mention a vital factor in your opening comment today - INCOME / CASHFLOW / YIELD !!
When the financial benefit of a house purchase is taken into consideration, a very different picture unfolds from the one you paint.
Rent revenue from a property (or, alternatively, living in one's own home and, thus, avoiding having to pay rent) is a crucial/fundamental factor in weighing up the investment. It's not just about changes in capital value!
In most cases, one is much better off owning a property than having the money in bank deposits. And that's not just because of the financial benefit but also the non-financial (or intangible) benefits - of which there are many important ones.
It's not the first time here that you've forgotten to take account of income / cashflow / yield - and the intangible benefits. To ignore these benefits, as you're in the habit of doing, is grossly misleading.
And, by the way, interest rates for term deposits are currently falling. But rents are rising.
TTP
To me, rental yields/CGs vs bank deposit is not a fair comparison. One is very high risk, one is not.
Check this out
https://www.superlife.co.nz/investment/all-funds-and-fees/?RVRGLUZ1bmRz
Share market returns have been much better than rental yields this year. And they don't require playing landlord or dealing with property managers. Just invest and forget.
So - why property investment over say, the S&P 500?
Errr, just about every property investor on this site takes the view that there has never been and will not be a material fall in Auckland house prices in real terms, cos it’s an investment where you just can’t lose? I am pretty sure that’s your attitude as well. Apparently significant falls in value are always things that happen to other people in other countries, never to us cos we are special. Ok, well we shall see
But if this is such a common claim, surely you can quote or send me a link to one single instance of it.
My view is that prices go up and down, but the overall trend since records began has been positive, and this is likely to be the pattern for the foreseeable future.
Anyone that says prices don’t fall is making such a nonsense claim that I don’t actually think these people exist. A quick google search can prove that this isn’t the case. Look at what happened to NZ property prices between 1974 - 1980 after the UK joined the common market.
I honestly don't know what other criteria margin lenders have, can you enlighten me? You must have some support for your statement that most people will struggle to get it.
Yes, the LVR depends on the share you are purchasing, in reality you can invest is most of the NZX50 and then some:
https://www.asb.co.nz/content/dam/asb/documents/asb-securities/2017/asb…
My main point was you don't have to borrow as much as you do to buy a house, you can start an investment small and grow it over time rather than having to commit multiples of your net worth into a single asset in a single class. This actually means you can have some kind of diversity, without having to be a millionaire.
My evidence is anecdotal, I haven’t actually applied for this sort of facility myself. But I’m pretty confident about this.
My point was that you can’t say investing in shares is a comparable alternative to investing in a house because banks don’t readily lend anything close to the same amounts of money to purchase stocks.
My claim was never that one can’t potentially borrow smaller amounts to invest in stocks. Your strawmanning by bringing up smaller loans to invest in shares. This is essentially changing the subject and is unrelated to my point. I questioned whether borrowing $500k to invest is shares was a realistic option. It isn’t.
No doubt in my mind the average person would really be pushing their luck to ask for a $500k loan to gamble on the stock market. But securing a $500k loan to gamble on the housing market is quite easy.
Sounds like typical property spruiker FUD to me.
Why would a bank not margin lend? Everything is heavily in their favour
No mortagagee proceedings, if the loan exceed its margin limit and their buffer they can just sell some of your securities to pay themselves back.. in minutes if they want too. Compare that with mortgagee proceeding and all that cost, and the illiquid market for housing in a downturn
Lending margins are higher.
and from personal experience with setting up a US sharebrokerage account, I had to actively take steps to avoid having my account set up as a margin account, as thats what the default settings are in the online application.
As for your statement about borrowing $500k to invest in stocks, yes, it is an option: heres a comparison of margin lending rates from two online us brokerages comparing margin lending rates up to $3.5million
https://www.investopedia.com/articles/active-trading/040715/brokerage-r…
I was quite clear that margin lending is a thing. Banks margin lend all the time, although it isn’t as common in NZ as it is overseas.
Are you saying that an individual with $50,000 could, instead of purchasing their first home, walk into a bank and expect to be loaned $450,000 to gamble on shares? Whilst theoretically possible, any mainstream bank would be very reluctant to do this. The reality is that they would margin lend to such a person, but the amount would be much smaller.
Ah, typical property spruiker spin.. "gamble" on shares.. its an investment. I'd say the chances are at lest as good as being able to buy an investment property on similar income.. why wouldn't it be? And no you won't get 90% margin lending from a bank, they top out at about 70%-75% on selected securities., (But you can on certain securities like NZ govt bonds from non-bank margin lenders).
Look at my previous comment, I referred to both shares and the housing market as a gamble. If you don’t think shares area a gamble you’re simply wrong. Don’t get me wrong, I’m a huge fan of shares, but I’ve made far more out of property because banks simply don’t lend the same amount for shares (not that I’ve ever seriously considered margin lending). For first home buyers the 10% deposit required for a welcome home loan is far less onerous than the minimum 30% for margin lending. Another reason the two aren’t comparable alternatives. This is the difference between being able to borrow $450k vs only $150k. Also, the interest rates for margin lending are almost always floating only and are in the order of 50% higher than a home loan.
So can you clarify - you are saying you think that a run of the mill person with a decent income would have no worries securing a $500k loan to invest in the share market? The bank manager will look at you as though you have asked for $500k to purchase a yacht that you say you’ll be chartering out to help with repayments. They will then politely suggest that you consider a $50k margin facility instead.
Saving for Aus. Over the very long term insured property is the lowest risk investment one can make other than lending money to an entity that can print cash to pay you back ie governments. Many people thought finance companies pre GFC were safe, or invested in mutual funds and other sharemarket vehicles and found out they had literally bought into a Ponzi scheme.
I worked in Aus up until 2012. Post GFC I was known as being good with money, so was asked for advice from colleagues who typically were female and in the 50-65 year range, what would be the safest place for their Super Funds. In Aus can use self-managed Super for property, can use minimal leverage effectively max borrowing 33% LVR. My advice was you need to assume you will live to a 100, so the funds need to survive to 2060, most had money in range 500-850K, My advice was buy 2 rental properties in a green leafy suburb of an Easten state capital (eg Melbourne, Sydney or Brisbane) or Canberra. As if could live off the net rents of 2 houses, the spending power on these 2 houses should be the same now as in 2060. Whereas, I could not stay the same for term deposit funds, bond investments or investment in the sharemarket. Just like the South Park episode, within seconds of investing banker "ANnnnd it's gone"". Well located residential property will always be in demand, and rents will rise with inflation, preserving purchasing power. Well located residential property with minimal leverage if any, is best bet if went into cryogenic suspension and wanted to preserve wealth for 100yrs.
mja,
I feel sorry for anyone who "thought you were good with money". Only someone with little financial knowledge would write off the stockmarket for long term income growth.
let me try to enlighten you-a little. A portfolio of good-quality,dividend orientated equities offers;a wider spread of risk and significantly lower operating costs. Thus,no need for insurance or regular maintenance outlays and no rates.
I don't want to strain your intellect too far,so will leave it at that,but you could also do with improving your written English.
Linklater, I do actually invest in the sharemarket. But, I would not passively invest in shares for the long term. I predominantly trade US markets, as the NZX and ASX do not offer required liquidity and you would get killed by slippage if putting on positions of any note. I run a short term mean reversion system that I aim to be at least 50% hedged. Alongside this I operate a medium to long term momentum system that is fully hedged (long short). Hedging is key to sleeping well at night. All depends on level of sophistication regarding where you invest, but the average punter will get milked via financial advisers re: up front sales and trailing commissions with mutual funds. If going down the shares for the long term path, best bet would be via Vanguard ETFs if after diversification and overseas exposure .
" If going down the shares for the long term path, best bet would be via Vanguard ETFs if after diversification and overseas exposure "
For an unsophisticated investor in the stock market, who has a large lump sum to invest, and a long investment time horizon - the one important additional caveat with that is to consistently purchase in over a long period of time - say 7 years. For an unsophisticated investor, this would reduce the risk of buying at or near the peak of the stock market bubble.
Imagine if someone who had a lump sum to invest and received those funds in the 2006 - early 2008 period and chose to invest it all into the stock market at the time they received the funds. It would have taken quite a few years for the market value to have returned to its initial value. If they had purchased over a period of time, using a dollar cost averaging program, then they would have benefited from their consistent buying when the stock market prices fell over 50%.
I'd disagree, while you spread your buying over a time period you are missing out on the gains you would get if your money was invested in the market. If you take 3 years to get your money into the market your have lost a lot of gains.
Sure, there may be a correction at some point, but it could happen the day after you get all your money in anyway, in which case you have just lost x years of gains anyway.
That suggestion above does not apply to anyone who is clearly in the financially sophisticated category.
The above suggestion was for a financially unsophisticated investor - someone who has a very limited understanding of investment and does not have the time or inclination to improve their financial and investment literacy - off the top of my head, amongst friends and family that I know that would be people employed in the following careers - physiotherapist, nurse, manager at a retail store, bank manager, book-keeper, partner in an accounting firm, CEO, retiree, doctor, policeman, warehouse storeman, health-care worker, stay at home parent, masseuse, actor, student, sales rep, sales manager, equipment technician, engineer, vet, business consultant, business owner, teacher, school principal.
For example, a friend recently had their parent pass away and they received a lump sum from the parent's estate. Even though they are a partner in an accounting firm, they were thinking about using the proceeds to purchase a property in Auckland. His sister who is in the medical field, went ahead and used her portion of the estate as a deposit to purchase a house to live in, in Auckland.
Sophisticated or unsophisticated makes no difference to my argument. Timing the market is a matter of luck, spending 7 years getting into the market when you have a large lump sum to invest means you are losing 4-7 years of compounding gains on a lot of that money if a correction doesn't occur. If they are young enough/ don't need the money anytime soon then get into whatever investment categories they are planning on investing in as soon as possible. If they need the money sometime soon/are extremely risk averse then term deposits might be the best option for the bulk of the money.
Pragmatist? Not at the end of one of the longest bull runs in history, during the late cycle stage of the economy, with growing global volatility and a possible trade war though surely? I mean, if you just came in to a chunk of change and were an inexperienced investor would it not be wise to wait on investing all your dough?
mja,
yet by our own account,your "i am good with money" advice was to invest exclusively in investment properties.
I have no problem with your view that for less sophisticated investors,low-cost index funds represent good value. Most active managers are useless,or worse,as are most financial advisers.
Your strategy has no appeal to me;I invest for the long-term in equities i have researched. my sole aim is to generate an increasing dividend income from companies with good cash flow and manageable debt. i trade as little as possible. I have a rental property in Mt. Maunganui for diversification,but achieve a significantly better return from my share portfolio.
My advice was investment property was a good option in the 2009-2012 period. If you want a secure ongoing source of cashflow you cannot do better than well located residential property in a major city. The key is a person may be retired for 30-40 years, and in 2060 I think the net rents on a property in a middle class suburb of a major city will provide similar purchasing power to today. They key thing is you are a long time retired and there often no coming back from financial mismanagement, fraud, or simply erosion of capital from year after year of ticket clipping from financial advisors.
As I state below I have sold 2/3 investment properties, and at present with gold at $1225 have allocated funds to gold stocks (gold fell $17 overnight and the gold stock indices closed up, this tends to signal a bottom, as the large players flush out the retail investor by running stops). I will leave funds in gold sector for minimum 6-9 months. But again, I'm not wedded to any position, and could be invested in anything in 2019, I simply buy assets in bombed out sectors and look for large gains. While also running a mean reversion (grinds small gains) and longer term fully hedged momentum trading strategy for US equities, I developed (money is made on 10-15 of 200 trades per annum, as rely on 200%+ runs in these 10-15 stocks with 33% trailing stop, and the others effectively cancel each other out with mixed wins and losses).
Key is keeping your mind open and when a market offers an opportunity you take it.
This strategy has paid off, I'm in my early 40s, I work 2 days a week as a contractor (so I don't feel useless), . But basically do what I enjoy, trade markets (because I love it and it is my passion), read novels and avidly watch the NBA from Oct to May. The worst person to get financial advice from is a person in their 50s, wearing a grey suit and working 9 to 5.
MJA
Any one particular investment asset class does not make the lowest risk investment. Unfortunately real estate is being sold as the safest solution to wealth creation and passive income generation to so many.
Let's take a piece of residential real estate. At any one time
1) at one price say $X, the risk adjusted future expected return is attractive
2) at a higher price say 150% x $X, the risk adjusted future expected return is less attractive, and lower than in scenario one
3) at a higher price say 200% x $X, the risk adjusted future expected return is zero.
4) at a higher price say 500% x $X, the risk adjusted future expected return is negative.
When the price is too high for any asset, that asset is no longer a safe investment. That can be true for real estate if prices get too high and risk adjusted future expected returns get too low (or even negative).
It is the purchase price that determines whether purchasing an asset is high risk (defined in terms of safety of principal).
Buying good assets (real estate, shares in companies that own good monopoly businesses, etc) can be bad investments if too high a price is paid (for example real estate in Ireland in 2008/2009, real estate in Las Vegas in 2006/2007, real estate in Western Australia in 2014, internet stocks in 2001, etc)
Conversely buying bad assets can be good investments if the price is sufficiently attractive. Look at the vulture funds who buy operating assets out of bankruptcy. Or those Auckland property buyers who bought a leaky home at a cheap price (and the cheap price more than discounted the cost of repair of the leaky home).
CN the situation I was giving advice on was regarding secure retirement income. The future value of the asset is less relevant, rather than a stable income that should adjust with inflation. Hence if the person can live off the net rents of two houses in green leafy suburbs of major cities. I would wager the net rents in 2060 will likely offer a similar purchasing power. I view this as offering a more stable retirement income than relying on mutual funds etc. An insured house is not going to evaporate due to financial mismanagement, and leave you on the bones of your a**e for the rest of retirement. At this time 2009-2012, the net rents on well located Australian property offered a great opportunity to lock in secure retirement income.
I'm not wedded to any position, I have cashed out 2/3 of rental properties, and have cleared debt. I will invest in anything that appears to be a bargain. At present with gold at $1225, gold stocks are my play for the next 6-9 months, who knows what it will be in 2019.
mja ...now i'm fantasising about some kind of economic utopia that could solve the impending pension crisis. Investment properties are only allowed to be purchased for the purposes of retirement and only two per person or three per couple. This way, there is always ample supply of rental properties, but the wealth is spread out, rather than being hoarded by professional landlords who buy up multiple properties and specuvestors are banned. Eventually death returns the properties to the market when the pension is no longer needed. ;-)
Hi thegic,
I have no problem whatsoever with what you say.......
Subtracting expenses from rent revenue is the logical (obvious) flow-on from what I said - giving net income.
And, of course, the next step is deducting income tax - giving net income after tax. You forgot to mention this last step (-; but certainly not holding it against you because it's the detail rather than the "big picture" I painted above.
It's what keeps accountants in their jobs!
TTP
TTP, funny how you conveniently omitted to mention several important considerations; rates, insurance, interest, maintenance - and PRICE! At the top you will clearly see I was referring to FHB's and the rewards for practicing patience. Do you honestly think yield is a deciding factor for FHB's who are just intending to be nothing more than owner occupiers? - NO. For the first time buyer entering today's market as a Landlord, sure, in the absence of capital gain, yield should matter more than ever. But, with Auckland's paltry sub 4% yields matched up against similar term deposit yields, it's nothing more than an insane gamble with the "Landlord banks" money. Then you have to consider the expenses above along with letting fees. Remember, Landlords need to consider spells of vacancies too! Then there is ring fencing to consider, good luck finding that rental in Auckland with a positive yield after said expenses.
Now, say goodbye to your capital gains and say hello to increased days to sell along with the downward price pressure. Baring an overseas shock, this is now the new norm.
FHB's, like I've commented for some time now, you should continue to wait and save hard. Don't be in a hurry to commit hard saved deposits in this overinflated market and potentially fill someone else's pockets with easy profit. Why not save yourself tens of thousands of $$ in extra interest? After all, like rent, it's just dead money going down the gurgler.
Hi Retired-Poppy,
You are a complete duffer.
Yield (which I refer to above) is often/usually defined/calculated as revenue minus expenses anyway!
Thegic, above clarifies that - and (as above) I have no argument with him. (He is only stating the obvious.) In fact, I then take it a step further and discuss subtracting income tax - because the interest accrued from term deposits is also taxed.
The point is, that in your opening post today, you FORGOT to mention the yield from rent altogether! That's a major BOTCH-UP - and not the first time you have made the blunder. Unforgivable! Whether yield is 1%, 2%, 4% or 10%, or whatever, it is still central to investment appraisal.
There are plenty of houses and apartments in Auckland attracting high rents - some of them well over $1,000 per week. To ignore rental income in carrying out an investment appraisal (as you have done) is sheer stupidity. You demonstrate a high level of ignorance.
Further, of course FHB are interested in yield! Often, for example, FHB are mobile and will spend time living/working in other cities/countries. When they do so, they often let their homes to tenants - and yield becomes central to their decision-making.
Retired-Poppy - you are a serial blunderer. One botch-up after another......
TTP
Except when yield is calculated as lower quartile selling prices vs median rents. I.e. Gross yield.
Rental yields on QV.co.nz for suburbs.
https://www.qv.co.nz/property-trends/rental-analysis
Gross rental yields in some Auckland suburbs are just crazy. Take for example the suburb of Mt Eden where the GROSS rental yield on a 3 BDRM house is 2.0%.
The financial risks seem to outweigh the financial benefits of being in the property leasing business at current property price levels in Mt Eden.
It's absolutely crazy. In the absence of Capital Gains there's nothing in it. Can't even justify it with some clever maths.
A 2% Gross Yield at 100% is a 5% Gross Yield at 40% equity, but the interest on an IO mortgage is 5.5% (this is based on the 60% borrowed) so on an $800k house yielding 2% the rent is $16k per year and the interest on the mortgage (60%) is $26k per year.
You seem to have forgotten the rise over the 2011-2016 and averaged that out over this cycle 2011-2019. At 0.7% decrease over the last year Auckland's looking remarkably stable more so than I expected. Property in great locations like Campbells Bay have averaged 10% capital gain per year compounded for the last 35 years I've been involved. Rightly or wrongly it has happened so it is little wonder people choose to have money in real estate. Will it continue who knows time will tell but it's worth being in there.Many would have seen a property in the news a few weeks ago sold at the mount bought in 1989 for $300k sold 2018 for $6.3 owners made $6mil over 29 years - how can that be ? it works out exactly 11% compounded on average every year the power of compounding !
Saving_ for_auss... Hawkes Bay median home prices fall 30k !!! Hawkes Bay Today newspaper Thursday July 12 says , Covering March to June this year, the report showed Hawkes Bay and Central Otago Lakes bucked the trend of other regions with a MAJOR quarterly fall in median house-price growth - down 7% or $30,000 in Hawkes Bay.
When the Mainstream Lamestream Fake News Media start to talk like this, you know those famous words of John Wheeler are looking closer by the day. 2018 - THE YEAR OF THE CRASH.
Major quarterly fall in median house-price growth - down 7% or $30,000 in Hawkes bay.
So it's growing, just 7% less than it was. In other words, instead of 14% growth it's 13% growth?
According to the REINZ June Report, Hawke's Bay median prices increased 15.3% in that month. Hawke's Bay also had the highest annual growth rate of 14%.
by Nic Johnson | Thu, 12/07/2018 - 16:55
up2
Thanks Auckland.. Just took a look at the article which title reads
'From March to June this year, house-price growth fell by 7 per cent in this region..'
I just love how the word 'growth; is still present in the title of the article though.... but when read it is really a 7% fall in median over a three month period or a massive 28% if annualised - I can't see how the word 'growth' even managed to appear.
(addendum - I guess it sounds nicer that 'crashed 7% in 3 months')
First Nic, and now someone quoting Nic... I'd recommend looking at the recent history of this metric for that location. The prior 3 month data point was an outlier on the high side, the more recent data point returns that value closer to the norm. But you would know that if you had read all of the comments after Nics comment.
The first three months of the year had a property median price gain of around 9%... Of course, median sales price has to be understood within its context and to understand the limitations of the metric, especially in the regions where the influence of small fluctuations in price strata sales can have a large effect on the outcome.
I have recently been diagnosed with P.P.P.F.S (Property Price Prediction Fatigue Syndrome). It's apparently quite serious and can lead to my brain literally melting and running out of my ears in response to the sheer monotonous tedium of relentless predictions.
It's increasing in prevalence, so please all of you out there who feel urged to make a property price prediction, please just think of us P.P.P.F.S sufferers.
#thestruggleisreal
#prayforginger
;-) ;-)
I prescribe that you take a Panadol or similar with a glass of water then get a hurry on and go and buy the first home you love/really like. Afterwards have a short rest and don't pick up the property pages or read any property related article for a lengthy period until you feel up to it. By then your PPPF syndrome will have subsided and you will instead feel elated with having your own home that you can add all your wonderful ideas to and make just the way you want.
I have purchased 4 homes so far in my life. Alas, the feeling of elation doesn't always last. I regretted 3 out of the 4. But you live and you learn!
As i've said before, if house prices were inflating out of our reach, we would be in a hurry to find somewhere, but as prices are mostly flat we can wait for the right place (there is very little choice atm anyway). Wellington is a great city, but each suburb has very distinctive features and we will never regret giving ourselves time to decide which one suits us best. And I don't suffer PDAF (Property Data Analysis Fatigue) just PPPF.
People in these comments keep asking each other to make predictions on property. IMO predictions are shady even when made by leading economists and statisticians.... so I was just poking a little fun. I just think most incidence of prediction are silly. My stance is to look at the data and then make decision based on your own personal needs, risk aversion/ sensitivity and finances. Simples.
Nice answer. Personally it makes no difference to me what you choose to do, so I don't care. However it may make a difference to you should you sit on your hands too long. I think from previous posts you have said that you originally considered to buy in titirangi several years ago and you could afford to before it got out of reach. You can either sing and dance while doing chores in your own home or in someone else's but I think the own home option is better even if the house isn't perfect.
As to the future of the housing market, just like a horse races we all have our view.
My view; under current conditions we are not going to see a significant crash. Subdued prices and volumes over the winter period; yes.
Why not in the medium term? While a lot of the steam in the market has been lost, on the positive interest rates remain low and immigration rates are still high. As a result, prices have been relatively stable in Auckland over the past year. The regions are still in catch up mode but as the price differential with Auckland close, so too will these markets slow.
I think that we need to take note of Adrian Orr who has the most influence on the future of the housing market through control of OCR and LVRs. He recently stated that in the medium term he sees house prices maintaining a growth rate of around 2 to 3%. Neither continuing high house inflation nor crash in house prices are desirable; the later would have a negative influence on maintaining a stability in the wider economy especially with the wider threats such as trade wars and political instability.
Reads like young Kiwis should expect those in various positions of power to do everything possible to protect their own investment portfolios, at the expense of younger generations of Kiwis. The priority is maintaining what they have, keeping home ownership out of reach of younger Kiwis. Importing replacement buyers who are not reliant on local earning power will remain a priority for these folk.
A sad comment Rick.
There is not a conspiracy of those in power to keep young Kiws poor.
I can appreciate potential FHB - especially in Auckland - being frustrated as the housing market accelerated away leaving them stranded.
However, with a more stable market outlook in the medium term, signal of continuing lower interest rates, and government actions (e..g KiiwBuild, working for families packages etc) can only assist close the gap.
It is not only FHB missing out; older people such as myself are losing out on low interest rates arguably at the benefit of younger generations with large mortgages. But that is where the economy is at; not in your thinking, a conspiracy against older people.
Whoa Rick.
Too many negative vibes! You are at risk of self-imploding.
Stop being bitter about things that are not for certain and start directing your thoughts and energies into achieving those things about you and how you can achieve better things for yourself (including partner, kids etc if applicable).
We've actually just sold a property, printer.
Don't automatically assume I'm writing these for myself, just because I highlight the ways many are not passing on a reasonable lot to following generations - as the likes of Edmund Burke exhorted us to.
As the older generations appear to be abandoning consideration of the younger generations of Kiwis and what's passed on, I simply counsel younger Kiwis to fight for their own lot and economic wellbeing. As you're suggesting.
BadRobot
I agree with you. There is threat of external factors - which is always an issue but probably more-so in the medium term. However, the RBNZ is taking actions to maintain a stable economy, including avoiding rampant house inflation or deflation which is probably currently one of the largest internal factors the has associated risks to the wider economy.
Can he totally control the housing market; of course not but he is one who has some influence. I suspect that endeavouring to avoid either continuing rapid house price inflation or a crash is one (if not a significant) factor in signalling maintaining a low OCR in the medium term.
I don't think house prices will move much in Auckland due to the huge inflation in building costs (regulatory and physical) over last 5 years. You just can't build new for less than median value. Prices we see in growing centres (mostly urban and a very few rural) reflect new build costs, and won't move down or up much. In shrinking rural areas prices are far below new build costs.
Further to this, if the govt really wants to bring Auckland house prices down they will end the onorous regulatory (time+money) and reserve contribution schemes of the Auckland Council. Could drop prices by 1-200k very quickly.
Can't see house prices generally going anyway dramatically either way over next decade. Prices are falling in Australia and outside the big 4, the banks are putting up mortgage rates.
On the flip side there remains the supply/demand imbalance.
The once in a lifetime property boom is over and people will have to start to work and save to for that retirement pot.
I don't think we will see a repeat of the rapid growth seen since 2011. However, I do believe that the property clock is going to continue with its normal cycle going forward. I'd say the market is at about 5:30 currently, and we will start to see upturn in 2021/22.
https://i2.wp.com/www.propertynoise.co.nz/wp-content/uploads/2018/05/Pr…
It all depends on wage growth.
Prices cant get to 20 x income, its just not possible.
If prices sit in the long term at between 5 - 8 x income it is entirely sustainable and then house prices can be whatever....
If anyone thinks that house prices can sustainably double every 10 -15 years while incomes increase at a third of that rate are absolutely delusional.
An average value of $2,000,000 in 2030 would require prices to grow from the current average of about $900,000 for 12 years at an average compounding rate of 8%. If you extrapolated current average incomes (say $100,000? Maybe that’s household average) to 2030 at the current rate of growth (3%?) that produces an average income of $138,000.
So what you are saying is that you think in 2030 the average Auckland house will be 14x average income, as against a long term average of 5ish? Does that sound likely to you? Yeah nah me neither
Here’s a fun calculation for you: extrapolating the average income in 2030 as $150,000, and applying the long term average income multiple (let’s take the top of the range, at 6x) would imply that the average price in 2030 would be......$900,000, ie pretty much what it is now in nominal terms, but a 30% fall in real terms. I mean, wow, that shows just how crazy current prices currently are.
Buy yourself a calculator, they can be quite fun
Of course, there are a lot of smart asians. But our han supremacist friend DGZ seems to think they're just wiser across the board. Must be why all those chinese people are purchasing apartments in tier 1 ghost neighbourhoods that fall apart years after they're built.
3rd or 4th? Now I'm even more intrigued. You're counting other chinese languages here? No mainland chinese person I know would ever admit that something like cantonese was a separate 'language', even if though they can't read HK newspapers. You're remarkably enlightened for a product of the PRC education system.
Some Asians are definitely smarter than me. I met an intellectual specimen or two in university. More wise across the board compared to westerners? Nah.
More wise across the board compared to westerners? Nah.
Not sure about "wise" across the board, but "intelligent", yes.
https://app.iq-research.info/img/iq_by_country.png?_g_build_=1530907246…
I assume that excludes the millions of chinese speculators who lost big time in the shanghai composite crash of 2015
https://foreignpolicy.com/2015/05/28/china-stock-market-shanghai-compos…
Its actually normal for that stage of a bubble
https://transportgeography.org/?page_id=9035
Moral of the story, dont be a sheep!!!!
https://iq-research.info/en/average-iq-by-country
Kiwi's don't even feature on the IQ rankings here....were they too smart to do the test ? or does it help explain why it's been so easy for Tony Alexander and his chums to brainwash the 'Always go up' mindset.
Using Excel is far more efficient. I did this last week. -> here
by Nzdan | Fri, 06/07/2018 - 12:50
Anyone with a spreadsheet knows housing is a 1 way bet.
Based on current trends (2% wage inflation and 8% house price), in 30 years from now the average salary in Auckland will be a whopping $145k and the average house price will be a mere $9.2 million.
A person on the average salary will need to save $1.8 Million for a 20% deposit on an average house or 13 years salary. That leaves them with a $7.4 million mortgage, by then we will have 1% interest rates and 60 year loan terms so the weekly mortgage payments will be $3154 out of the $2000 per week they take home.
The problem is, in 13 years time when the person finally saves up that $1.8 million for a deposit the average house price is now $25 million and salary is $190k. The banks go "yeah okay you have a good savings history 7% equity is fine", so they lend them $23 million at 1% over 60 years. Mortgage payments are now $9804 per week out of their $2600 take home pay.
I suspect building codes will need to be modified, enabling people to maximize the number of people living in a dwelling.
An average double bed takes up 2.6m2, you should be able to stack these 3 high within an 8 foot stud height. If you allow 30m2 for Kitchen, Laundry, Bathroom + Toilet then a 100m2 building should be able to house up to 80 people in a triple tier configuration.
Bobster
The really interesting thing is to observe and understand the context, conditions and thought process as to why the majority (and herd mentality) are being led to believe that the property prices in Auckland can continue to rise indefinitely without any constraint whatsoever. It is certainly difficult to believe anything can be different if you've never experienced anything else in your own personal life. Also there is an abundance of property promoters (real estate agents, property buyers, property mentors, bank economists, mainstream media reporting property price rises driving FOMO & wealth envy) which are drowning out the few who are warning about the level of house price in Auckland (and these people have stopped giving warnings as they have been wrong about the timing for a period of time).
The rationalisations that they are making certainly seem very logical - growing population and immigration leads to ever growing demand. Ever growing demand leads to housing supply shortages and house price increases. Here is that logic in action ...
https://www.irishtimes.com/news/estate-agent-sees-13-property-hike-in-2…
https://youtu.be/Gd6ZwqLePC0?t=4m29s
It will be certainly be very interesting to look back in 10 years time at the Auckland real estate market with the benefit of hindsight ...
I wonder if there will be any apologies like this one - http://www.thepropertypin.com/viewtopic.php?f=4&t=29833&start=0
That apology by Jim Power and the admission as to what he missed is incredibly insightful. Here is the key part of that apology:
" I now realise that I was totally duped by what the regulator and the banks themselves were telling us about the health of the banking system. I had no idea that the banks could possibly engage in the quality of lending that they did or indeed that they could possibly get away with the quality of guidance that they were providing up until very recently. I also realise that i need to educate myself on the workings of a bank balance sheet and the credit cycle."
Yeah don’t disagree with any of that. Funnily enough I had quoted that Jim Power apology before, it was quite something. All power to him though. Check out his debate with Morgan Kelly which seemed to kick this all off. Watch it if you haven’t already, it’s spooky how Jim power could pop up in Auckland 2018 and feel right at home......I reckon tony Alexander has lined himself up for a decent amount of time in the pillory, I hope he likes the taste of tomato
I am pretty sure we will look back in wonder at how in the period 2003 to ? the entire country was in the grip of a national property investment hysteria. People will chuckle at how the govt of the day spent a large part of its time focussed on how to build crappy houses for vast sums of money. People attended investment seminars run by banks to see how they could get on the path to guaranteed riches. Anyone who owned an investment property considered themselves to be an investment genius on par with warren buffett. And people will marvel at what a huge waste of time and money it all turned out to be.
An essential element underlying all of this is the amount of credit financing by the banks to finance house purchases. If household credit growth and commercial lending growth for real estate purchases had been in line with inflation, then house prices in Auckland would be much lower and much more affordable for owner occupiers and the stability of the financial system at less risk.
Of course, given profit growth incentives, the bank CEO's will try to maximize bank profits during their CEO tenure so that they are able to earn large bonuses and stock options to enrich themselves so they are unable to contain themselves. After all the financial mess can be left to the next CEO. The bank regulator needs to have the power and tools to do it's job as well as the willingness and courage to act when necessary.
Auckland Council and QV in stoush, thousands of property rates valuations affected.
These valuations are incredibly important for ratepayers as they obviously impact the size of our rates bill!
Glad Auckland Council is withholding payment until it’s sorted out...
https://www.stuff.co.nz/business/105527774/Auckland-Council-and-QV-in-s…
As anticipated, the housing market is proving resilient.
Sales volumes remain relatively flat but selling prices have continued to creep up through much of the country.
Even in Auckland, which showed hefty price gains during the 2014-16 market upswing, prices have remained pretty firm. Demand pressures for good houses in the inner-city suburbs remain particularly strong.
So, nothing new really. Business as usual.
TTP
Tothepoint.. or round and round like a roundabout in a kids playground. You've got a good spin on there!
Sales volumes remain relatively flat = "However in most other major centres, sales were significantly down in June compared to May and to June last year, including Waikato (down 14% compared to June last year, Wellington (-11% compared to a year ago), Canterbury (-8%) and Southland (-8%)."
but selling prices have continued to creep up through much of the country. = "Across the country median prices declined in nine regions compared to May, rose in six and were unchanged in one."
Hi Pragmatist,
Today's item reads:
"The regions where median prices rose compared to May were Auckland, Waikato, Gisborne, Wellington, Marlborough, and Southland....."
Those regions, for sure, account for MUCH of the country - just as I said above.
You make a desperate attempt, Pragmatist, but not nearly good enough. You'll need to try much harder in future.
TTP
Oh, the median rose out of the depths of winter.. how bout year on year.
"The median price was below where it was in June last year in four regions - Auckland, Tasman, West Coast and Canterbury,"
Auckland and Canterbury being the two most populous regions must account for about half of NZ all by themselves..
And the reasons are perfectly clear: after the earthquake sequence 2010-2013, the existing planning rules were superseded by the LURP. This freed up the formerly restrictive planning regime and has resulted in a swathe of new subdivisions, building and general activity. It also helps that there was fierce inter-TLA competition for those new residents and buildings, because it was clear that new revenue and economic activity multipliers would follow their choices.
Unfortunately, for Awkland, none of these happy preconditions exist:
- There is no local equivalent of the Big Change Event - unless Gaia decides to tickle up them Volcanoes...
- There is no local equivalent of the LURP - the Unitary Plan is all ya got.
- There is only one TLA, so no chance of inter-TLA rivalry unless ya decamps entirely - to Hamilton, Northland, Tauranga - a much bigger move than just the fractionally longer commute most ex-Christchurch types faced
And to emphasize price differences: (oh, all right, yes, to Rub them In...)
- Plot prices start with a 1
- House+plot prices start with a 3 (Ravenswood) or low to mid 4's (most everywhere else).
To be fair Waymad in Greater Christchurch you only have to travel 12-15 km from the city centre and you are in farmers fields. In Auckland the distances are much, much further. Geometrically what this means is that the land 5-10 km further out from where suburbia ends is a smaller ratio of land in comparison to the amount of land within the city for bigger cities like Auckland.
Auckland needs to work out how to make the best of its intensification margin (building up) as well as the extensification margin (building out -like what Christchurch did).
It is easy to intensify where there is not so many site assembly problems -like the HNZ properties in Mangere.
The difficulty is how does Auckland affordably intensify tens and tens of square kilometres of sprawling low density suburbia -where those properties are in separate private ownerships -over 1/2 million property titles in Auckland..
I propose some solutions here.
https://medium.com/land-buildings-identity-and-values/can-great-design-…
I tweeted about this here.
https://twitter.com/brendon_harre/status/1017554389362282497
Of course having some competitive entities out on the periphery of Auckland would help too. This analysis is about having both -not choosing one or the other (or at least the government not favouring one over the other -let supply follow demand I say).
The interesting thing in the table I mentioned is Chch with 5-year CAGR of 2.1% is dramatically below everywhere. Even cities which could be assumed to have plenty of space to expand into like Hamilton is up at 10.5%, Palmerston North at 6.8%, Invercargill at 6.1%, Hastings 10.5%. New Plymouth is the second lowest at 6.0%.
One possibility is Chch had an uptick immediately before this data started between the quakes in 2011 and 2013 and the lower growth since then represents a reversion to the mean.
For whatever they're worth, the ever changing Median prices is one of the indicators of market prices, still showing that the Main driver (AKL) is stable and up on the bottom of July 17.
However, the Auckland market has been flat for the last 2 years, Median hovering around the $850k average line.
Waikato, the growing region which usually lags behind AKL by few years, has shot up by 65% since July 2014 and counting, it is catching up fast and still has more potential to grow.
There is no Crash and prices are stable ( despite all the noise) which is what RBNZ looking for - with that in place, buyer affordability on all levels will improve as we gear up for the next cycle ... it is business as usual - no surprises today, and that is Good.
I don't agree with your rosey outlook. Things may get more affordable, but it will never become objectively affordable without a massive correction. And Auckland isn't London or San Francisco or Hong Kong - we don't have a real economy lucrative enough to prop this kind of thing up indefinitely.
'When compared directly' What are you talking about BuyLowSellHigh. That comment is one of the daftest you've ever made and you've made a few doozies over the last couple of months.
When compared directly 'to how much cheese the population eats'
When compared directly 'to the number of houses of ill repute'
When compared directly 'to the number of idiotic comments made about property prices'
When compared directly 'to how many buildings were made by the three little pigs.'
What are you comparing directly with?
Noncents
‘It is a valid point, as at this point in time we have zero barriers to entry with regards to residential property.
People can and do buy here from overseas.’
It’s not valid at all noncents, it just means that in a Chinese gambling den that all you see is a price rather than any reality of each markets true fundamentals - which is why some Chinese gamblers are getting burnt on ghost cities in China, others in Sydney, Toronto and The really silly ones bet on Auckland (where no one really earns the big coin to keep the fundamentals going). Nor is there really a shortage of property other than the one the mainstream media hype up to keep the debt going.
So. ‘As at this point we have zero barriers to entry’. But it’s coming and the indigenous poplulation aren’t as stupid as the gamblers... they voted for change ... hence the gamblers are about to get a massive ‘debt inspired’ haircut....
Translation for overseas investors - a massive haircut is where you lose 30-50% off your initial investment. In some countries (democracies) it may lead to bankruptcy and effect an individuals ability to borrow (ever again). In other countries the penalties are more harsh. Arab world - it’s very painful, hands and feet and are rarely recoverable, in a communist state... where the shame would be massive? do you know what, I don’t know!
You got to know when to hold em, know when to fold em, know when to walk away, know when to run... you never count your winnings when your standing at the table, there’ll be time enough for counting, when the crash has come!
What are you struggling to understand? Use your words - exactly what do you find so upsetting and/or perplexing about my statement? I assure you it is objectively true.
Nic, I sense a lot of anger and frustration in your comments, veiled by embarrassingly poor attempts at wit. I’m going to diagnose you with a severe case of property envy. I’ll prescribe 100 doses of DGZ property porn. May seem excessive, but it’s the only cure for a case as miserable as you.
That’s a tenuous link. But if it’s the best you can do I’ll give you a pity point for trying. All that property envy clouding your ability to think straight? Barely having two brain cells to rub together probably doesn’t help either.
I thought you were going to explain to me how Auckland property isn’t cheaper than London, San Fran or Sydney. That’s shame, would’ve been a laugh. Like watching a monkey pretending to know how to use a calculator.
I’ll call you Nic ‘Property Envy’ Johnson. I know it’s not a play on words, but it’s funny because it’s true.
BLSH - you really aren't smart enough to play this game, unless of course you have the wallet of the PLA behind you and are purchasing forward bases for the invasion?
If however you are just another over-leveraged escapee of the regime, then I think I have a good chance of winning... Or at least of still finishing the game with all my hands and feet...
UK average price in May was £227,000 - or at todays equivalent exchange rate £1: $1.95 = NZ $439,000..
NZ median price in May was $650,000.
So, Shall we talk about size of economy, population. Number of houses to people... need for houses because of climate.. access to Europe, Culture, Democracy, freedom? Mortgage rates already in the 1%'s in The UK and London prices already falling again in this new cycle?
BuLL Shit...... I have no property envy.... just a desire to make sure that the country my family live in doesn't become a state where only a few people do well whilst the rest of the population work to pay for them... I'd like all my kids and their friends to have a start in life at 22-25.
Cheers Boobster
I lived in London for a while. Over there, the “average” house refers to a 3 bedroom terraced unit. This is gong to cost in the order of $900k NZD. If you have a stand alone 3 bedroom house in London, equivalent to what we would call an “average” house in Auckland, you are the landed gentry. This will cost you at least $2M NZD (probably substantially more depending on the suburb). This is more than double the value of the equivalent house in Auckland. My original comment is objectively true, and I’m glad you find it brilliant enough to warrant bottling.
Haha, I think you need to turn your sarcasm detector up. I would wish to bottle your comment in the same sense as one would wish to bottle a prodigious queef, so that people would know in the future that such things were once done.
You view property as a widget, with all widgets being the same, so why not buy a widget in Auckland. Whereas the value of property is related to the income it produces, which is principally related to the incomes of the people who live in the property. The value of properties will ultimately be linked to the income the population that lives in them. This dictates the rent that can be paid for the property, or the amount of debt that can be serviced by the occupants. London is nominally “expensive” relative to us cos incomes in London are substantially higher than here. Same for San Francisco. Merely because nominal prices here are less than London does not therefore make Auckland “cheap”. When you compare it to incomes and rentals, we are definitely not “cheap” compared to London.
And Hong Kong’s a real outlier. Chinese money, big restrictions on land, I don’t think a comparison with Hong Kong is worth the breath
“Queef”, there, I’ve said it, I’ve had my Germaine Greer moment
Hold on a second. You want to bottle queef?
Do you agree that my statement is objectively true? I simply can’t see how this is deniable. When compared directly, NZ is much cheaper. A house in Auckland costs $900k. The same house in London costs $2M. The one in Auckland is, quite simply and undeniably, cheaper. The definition of “cheaper” is “lower in price”.
Hi Eco Bird,
You're absolutely correct: there's no crash. And not the slightest sign of one.
And interestingly, most of the DGM who hang around here have now given up talking about a crash. So we need to be fair to them about that. (A few of them, nonetheless, talk about a "slow crash", which is just as silly as it sounds.)
Whatever, the latest REINZ statistics are hardly good news for the DGM - despite desperate attempts by a few of them (above) to put a negative wash on things.
Notably, each time the REINZ statistics are published, the DGM take a hammering. The middle of each calendar month is, indeed, a very awkward and uncomfortable time for them........
It only serves to increase their er... ar... um........... doom and gloom.
TTP
*And interestingly, most of the DGM who hang around here have now given up talking about a crash.*
Doom and Gloom is having houses stay unaffordable to ever, driving kiwis out of their own country and leaving an empty shell comprised of the impoverished and property speculators. Wanting affordable housing is not doom, nor is it gloom.
Hi saving_for_auss,
I don't disagree with you - I know what it's like not to own a home and be in GENUINE need. I've been there.
Great if houses become more affordable for those in genuine need - but it's not clear to me that that can (or will) be achieved anytime soon.
The DGM I take exception to are those who would like to see a mother-of-all-crashes: one which would destabilise the economy, causing low profits and business failures, high unemployment, in turn causing people to default on their mortgage payments - leading to poverty and general social havoc.
These DGM are self-centred; many of them looking to pick up a cheap (investment) home, without having to scrimp and save for years - like most others have had to go through. They want a house served up to them on a platter, without having to work for it. They have a sense of entitlement - but attract no support from me.
Then there are the DGM who claim money is better off in bank term deposits - and tell first home buyers to do the same. Shonky advice - but, fortunately, most fhb's are smart enough to ignore it! I suspect some of these DGM are simply trying to force house prices down so, again, they can purchase (investment properties) at a sizeable price discount.
A unifying factor across many of the DGM who come here is that they are greedy, rather than genuinely needy. And some of them are stupid and lazy (and illiterate) as well. Worse still a few of them easily become bombastic and tell lies habitually.
TTP
Hi Auckland,
It's an indication of DGB mentality that they'd sooner invest in popcorn than property.
If the DGM fools saved their money (instead of blowing it on trash) then they might be able to afford property.......
Then they wouldn't be hanging around here moaning.......
TTP
TTP, Auckland house prices are falling, and you seem to be getting more desperate by the day. It's easy to spot the connection between said events and someone whos on the receiving end. This is just how some people learn what not to do (sigh) The key question is - what on earth have you done?
could we have a year where the wishing is just to break even, this wont make good telly
This year's Block contestants will struggle to make a profit
Any show which is predicated on the expectation of making a gain over the expected market value is setting it's contestants up to fail," Mr Church said.
https://www.oneroof.co.nz/news/this-years-block-contestants-will-strugg…
How long will NZ be diffrunt? Are we really diffrunt or more naïve? Our banks have caused all sorts of issues over the ditch, the unwinding of which appears to be gathering pace.
https://www.businessinsider.com.au/australia-property-house-prices-apra…
someone pasted this link a few weeks back. Daily podcast which is analysis (mainly) Aus property.
Worth posting again for those that missed it...he makes for sober commentary - how anyone thinks NZ will avoid a housing 're-adjustment' is beyond me...
The ChCh market is how a real estate market should be behaving.
Prices are extremely stable and gives everyone a chance to own a home if they have the desire to.
Since the earthquake there have been thousands of new homes built in the many new subdivisions on the outskirts of Chch.
First home buyers have the opportunity to buy good quality homes and investors are able to buy that gives them a reasonable rate of return.
There is nothing surer than the prices in Chch will continue to rise once the many thousand of people who continue to come in take up the slack in the housing stock.
There has been too many new houses built since the quakes but at least we do t co timid to moan in Chch about how overpriced housing is.
Steady as she goes and that is the way it should be!
I am trying to refrain from replying to The Boy's latest comment but his latest one contains material that is so far from the truth and reality in relation to the Christchurch property market that I have to post factual material from the latest REINZ statistics in relation to Christchurch. i.e. "Prices are extremely stable" and "steady as she goes " and "will continue to rise".
1. monthly sales are down 11.5% from June 2017 and a whopping 31.4% from May 2018.
2. prices are down 3.4% from June 2017 and 6.5% from May 2018.
He will say the REINZ have got it wrong but the above data speaks volumes. Obviously people are still leaving for greener pastures.
Hi Gordon
I tried to refrain too but it's difficult when the lie is so blatant.
I just read the REINZ report too and the Christchurch market is, on the basis of the very recent numbers, in what can only be described as a free-fall. If anyone knows who THE MAN2 is, will they please drop by his home and make sure that he's okay. I fear that judging by the way he has constructed his last post (recognising that his English is often poor at best), that he may have had a stroke.
TTP, Ecobird, Double GZ, are any of you available to go and see him. I know that he'd do the same for you if your markets showed a similar monthly median crash of over 6%.
Pretty sure The Man 2 takes all the good stats from surround areas and applies that to Christchurch.
"Christchurch is basically Hurunui District, 22% month on month price increase".
Actually I lie, I think he just chucks all the negative and positive percentage numbers into an excel vertical column and auto-sums it.
Ashburton -1.5
Christchurch -6.5
Hurunui 22.0
Mackenzie 0.3
Selwyn 4.4
Timaru 10.6
Waimakariri -0.8
Waimate -11.4
= 17.1 % median increase for Christchurch.
I might apply same maths logic, adding all my limbs and appendages from surrounding areas together to make my dick sound bigger than it really is!
Right arm
Left arm
Left leg
Right leg
Penis
Thanks NzDan it works, I now have a member that is significantly over 2.5 feet! Still not as big a Dick as some others that like to post though!
TM2
Are you okay? You've gone quiet and I'm worried that you have had a stroke.
Hell, 6.5% fall in the median price in just a month is not so bad... It is only a problem if it carries on - which it could.... but more importantly are you okay? After all, it's only money TM2. I mean the banks money.. not yours. Do you think they'll want it back? You've only got one or two investments though hey? Could be worse, can you imagine seeing 6.5% come off a portfolio where you owed $5,000,000. That would be expensive.
Do let us know that you're okay?
Nic
TM2 – I’m genuinely not looking for an argument – but am curious.
I wonder how many new houses have been built since the quakes, and assuming that the answer represents “too many” – then in your mind what was the correct or appropriate number that should have been built – and just how should that have been determined?
I ask because moving forward there could be some “ramp up” in building activity across the country – will that also lead to the building of “too many new houses” – who should decide how many is too many – the market, local council, government, or….??
According to a recent survey, younger generations of Asian investors are far more globalised and increasingly appreciate the importance of transparent wealth preservation and planning.
https://buff.ly/2NHGIxD
According to a recent survey, no one really gives a rats arse about bogus surveys of younger generations of Asian investors made up by tax havens touting for business
Dude, seriously, stick to the property porn, it’s what you are good at. And at least it has comedy value.
The Thickest Person, shows what a lunatic you're, someone who finds it hard to understand stats..
falling sales is a sign of a healthy market???
time to go back to school..
you dumbwit, let me paste this from the article..
""Price growth has taken a step down over the past year with weakness centred on Auckland where prices have fallen for the last four months," he said."
Property investors do not want spiralling prices as they are not able to buy property with attractive yields.
We buy attractive property and don’t sell property that is giving us returns over 6% and they always have upside. Our returns are from approx. 6%up to 15% and average around 9% so pretty good all round I would say.
Don’t give a rats what the stats show as far as sales no.s or prices are month to month as we are not selling anything.
We like to maintain our properties and spend a helluva lot each year for,obvious reasons.
Not sure what the figures are showing month to month but what I do know is that Christchurch is looking far more advanced than what it did a year ago and anyone that wants a better life need to seriously look at moving or investing in Christchurch
Not the case for every chch landlord. This guys clearly a geeza
https://i.stuff.co.nz/the-press/news/103695596/charity-locked-into-leas…
As per usual The Boy responds with platitudes and generalities. In the past he has often mentioned that he has mentored people and that this site is a vehicle to help other people get ahead in life financially. God help those who have listened to him. Any punter who bought in Christchurch a year ago relying on his advice is now 3.4% down on their original purchase price which is not a great start for them. 12 months ago I told family and friends to buy A2 Milk and Xero shares. Those who took my advice are more than happy. It pays to be diversified.
Around early 2017 I suggested to some family that they should put ~1% of their home equity into Ethereum. That's such a small amount percentage wise, and not a major change to their lifestyle even if it dropped 50%. So far even with the recent crash it's still up around 30X.
It definitely pays to have an open mind towards everything. For most people, that means at least taking a look at shares.
Whew... lucky...nearly brought a house/shoebox in NZ 6 months ago for $60 million. Bloody missed a bullet there! Now in Perth making double the wages and the rents about the same as what I was paying in the whoops for a 3 beddie...only warmer, flasher has 7 rooms oh and a pool!! Take your degree and/or skills and get the hell out of NZ... btw just had a broccoli for my family that I brought for 40 cents...fricken $3.50 at pack n save when I left.... you CANNOT get ahead in NZ unfortunately....
Hi BackToPerth.
My name is actually saving_for_aussie_house, unfortunately the site truncated it which I didn't know would happen.
Anyway I'm strongly considering perth myself, due to the plethora of reasonably priced double brick houses. Although brisbane is also tempting - seems better economically, and has better flights to both NZ and the Asia Pacific region.
I've been to Brisbane and not Perth, but really should make an exploratory visit. Could you compare Perth to say Auckland? How is it in terms of crime/safety/police presence? public transport?
Gidday mate! Depends on skills of work... Im in the mining sector as plenty of other Kiwis...in essence its about to boom again as there is 103 billion of projects sign off to commence! At the moment property is cheap... a decent 3 bedroom house in a desirable but quite far from Perth centre is approx 300k.. property has been pegged to grow in value over next 2 years (when boom finished many people left the region... now its about to pick up...) transport is amazing. Train system is 2nd to none (on it now as I write!) Imeet many kiwis who say the same- living the dream. And i advise all to come over if you wish to get ahead. All i felt in NZ was the stinging effects of poverty and now Ihave a way ahead!! Come on over...haere mai!
Gidday mate! Depends on skills of work... Im in the mining sector as plenty of other Kiwis...in essence its about to boom again as there is 103 billion of projects sign off to commence! At the moment property is cheap... a decent 3 bedroom house in a desirable but quite far from Perth centre is approx 300k.. property has been pegged to grow in value over next 2 years (when boom finished many people left the region... now its about to pick up...) transport is amazing. Train system is 2nd to none (on it now as I write!) Imeet many kiwis who say the same- living the dream. And i advise all to come over if you wish to get ahead. All i felt in NZ was the stinging effects of poverty and now Ihave a way ahead!! Come on over...haere mai!
Hawkes Bay Ambassador ( and owner of the Ray White Franchise ) Elanor Macdonald says the rise in median house prices is positive for the region. Hawkes Bay Today Wednesday July 18. Geee now let me think, good for the region or good for Elanor Macdonald the owner of Ray White ???? LOL.
You don't have to be a Nasa engineer to work out where we are at. Sales volume is down, auctions results are also way down, listings are up, and prices in a lot of cases are edging down. Looking at the stages of a bubble that puts us at....
Stage 1: Mania -- Prices rise at an accelerating rate as factors like excess central bank liquidity/low credit standards/hot foreign money drive a virtuous bidding cycle well above sustainable affordable levels.
Stage 2: Peak -- Increasingly jittery owners attempt to sell out before the party ends. Supply jumps as prices stagnate.
Stage 3: Bust -- As inventory builds, sellers start having to lower prices. This begins a vicious cycle : buyers go on strike not wanting to catch a falling knife, causing sellers to drop prices further.
Head winds still building. One notes that the Overseas Amendment Act is making fine changes around whats constitutes an "ordinarily resident in New Zealand". See the flow chart. https://www.parliament.nz/resource/en-NZ/52SCFE_ADV_75755_1083/3705da65…
As well as living in NZ for 183 days you must also be a tax resident - overseas specuvestors will love this one. If you dont live here for the required time you have to sell. Also see changes to protect the legal conveyances from getting sued as they pass knowingly dodgy transactions by simply getting the buyer to sign a form saying its not dodgy - weak.
Hi Averageman,
More BS from you.......
If you kept abreast of what's happening in the housing market, you'd know that auction clearance rates are rising - and that FHB's are out in force.
You're not an "average man" - you're way below average. (As low as Rhetoric Poppy.)
Either get real - or get out of here. (Nobody with any brains will miss you.)
TTP
Average man presents a valid argument with facts.
And the best you have is, Im not sure really. Abuse for nothing but a great comment.
Clearance rates are not rising, and you were the one that said clearance rates mean nothing. Rates are fluctuating between 30 - 50. Depending on which Auction and which RE agency. Far from the 100% with frenzied bidding that occurred.
I personally don't want prices to fall, but at the moment it does look like prices are slowly dropping. I would be happy with a long stagnation, with building costs decreasing and regulatory costs decreasing. While incomes increased.
We will wait and see, but NZ housing is not affordable currently and maybe we are just realigning with the current market.
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