Unethical local investors the real cause of AKL (and now NZ-wide) house price boom?

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mattwnz

20147 posts

Uber Geek

#1777179 7-May-2017 15:09

I have read that cheap overseas money is one major cause for this bubble in Auckland. You can see this now, because that flow has somewhat slowed down, and there is less auction activity occurring, and prices have fallen back to what they were a year ago. Anyone who purchased a house in Auckland in he last year potentially could be in negative equity if they paid too much.

Looks like it is time for regulation in that market.

Wheelbarrow01

1723 posts

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Chorus

#1777183 7-May-2017 15:30

mattwnz:

I think the world has changed a lot since the early 2000's.. I think also due to this housing crisis and property bubble, people are taking a lot more notice of professionals.

I am not sure I necessarily agree. In the early to mid 2000's, the property market was as much on the boil as it is now- it's just that prices were at a lower starting point. It was hard graft securing investment properties, with much competition amongst investors and first home buyers, and many properties were selling well above GV. It didn't really simmer down until the GFC hit. I think we are now seeing a recurrence of that Pre-GFC property hysteria nationwide (and even more so in Auckland). I made a few savvy investments in the 2000's and comfortably rode out the GFC as I never over extended myself. I've done alright out of it, but I haven't gone to the extent of making it a full time job.

Property investors have always taken notice of the professionals. We read books, we go to seminars, we buy monthly magazines to keep up with the trends, we take advice from our contacts in the real estate and finance industries. You don't get investors buying blind. Not successful ones anyway.

mattwnz

20147 posts

Uber Geek

#1777188 7-May-2017 15:38

Wheelbarrow01:

mattwnz:

I think the world has changed a lot since the early 2000's.. I think also due to this housing crisis and property bubble, people are taking a lot more notice of professionals.

I am not sure I necessarily agree. In the early to mid 2000's, the property market was as much on the boil as it is now- it's just that prices were at a lower starting point. It was hard graft securing investment properties, with much competition amongst investors and first home buyers, and many properties were selling well above GV. It didn't really simmer down until the GFC hit. I think we are now seeing a recurrence of that Pre-GFC property hysteria nationwide (and even more so in Auckland). I made a few savvy investments in the 2000's and comfortably rode out the GFC as I never over extended myself. I've done alright out of it, but I haven't gone to the extent of making it a full time job.

Property investors have always taken notice of the professionals. We read books, we go to seminars, we buy monthly magazines to keep up with the trends, we take advice from our contacts in the real estate and finance industries. You don't get investors buying blind. Not successful ones anyway.

I was meaning more the NZ society has changed, and the way people treat others. As well as what society now thinks is acceptable. For example in the early 90's we were still allowing corporate punishment in schools, and teachers were allowed to cane the students! These days that would be considered abuse.

We are also talking about assets worth many times more than the average wage, than 2000 and earlier. It was really after labour came in last time in 1999? that prices started to rocket, and apart from the odd GFC blip, it has been relentless. But these things do run in cycles. But overseasbuyers have had a part in this bubble, you only need to look at Queenstown, where a large percentage of properties are overseas owned, and this has been shown by the council who has to sent rates demands overseas.

surfisup1000

5288 posts

Uber Geek

#1777196 7-May-2017 15:58

I don't believe that the 7D's thing has anything to do with high prices. But it doesn't paint these people as good humans in that they are trying to ripoff naive and distraught people.

The auckland boom is drive by low interest rates, insufficient supply, and specifically chinese immigration .

surfisup1000

5288 posts

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#1777197 7-May-2017 16:01

mattwnz:But these things do run in cycles.

Not always, black swan events disrupt normal cycles. Which I think has occurred in NZ. Usually we'd have had another downturn but outside events blocked it.

surfisup1000

5288 posts

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#1777198 7-May-2017 16:02

Wheelbarrow01:You don't get investors buying blind. Not successful ones anyway.

Probably I disagree, anyone active in the auckland housing market since early 2000's should have done pretty well, even stupid people.

mattwnz

20147 posts

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#1777215 7-May-2017 17:16

surfisup1000:

Wheelbarrow01:You don't get investors buying blind. Not successful ones anyway.

Probably I disagree, anyone active in the auckland housing market since early 2000's should have done pretty well, even stupid people.

I think a lot of it is luck for those buyers. But also opening the flood gates to quickly increase NZs population in recent years hasn't helped, as we haven't had the supply of houses to house them in. If you look at Western Australia, their prices are now dropping a lot. That appears to be related to the end of the mining boom etc. But in Auckland at least, a lot of the value is in the lands potential in the future. eg Bulldozing 8 properties to build a more intensive housing unit block, which will house upto 10 times as many people. There are a lot of these ugly developments being built in my area, and they have the potential to be the ghettos of the future.

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mattwnz

20147 posts

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#1777216 7-May-2017 17:19

surfisup1000:

mattwnz:But these things do run in cycles.

Not always, black swan events disrupt normal cycles. Which I think has occurred in NZ. Usually we'd have had another downturn but outside events blocked it.

NZ hasn't had a recession for quite a long time. The thing is that the longer a boom goes on for, the further it potentially could bust. The same thing happens with the share market, when you get big rallies, then you often get a big correction which causes panic selling. A lot of it is due to fear and greed. Booms are fear of missing out. eg If you don't buy a house now you will never be able to afford it. Then when it busts, some people panic sell, because if you don't sell now, you could be in negative equity and make a huge loss if you sell later.

ubergeeknz

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Vocus

#1777563 8-May-2017 10:24

cadman:

joker97:

ubergeeknz:

He evidently puts forward tactics such as making low bids under *false names* to reinforce the idea that the property is worth less. That is fraud. Targeting mortgagee, divorce, deceased estates etc is just smart business IMO

Unethical yes, lying yes, but IANAL -is it really fraud?

I'd say it's no more fraud than say pretending you don't have the financial means to meet the seller's price expectations when you in fact do but you simply don't wish to.

Just to be clear - making a lowball offer is fine of course - any investor would be foolish not to.

However, making multiple lowball offers whilst pretending you are actually multiple would-be buyers, in order to mislead the vendor, is definitely shady. You're essentially running a scam at this point.

driller2000

935 posts

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#1777589 8-May-2017 11:12

Agree with many posters - here i.e. what they do is probably not illegal ( it could be argued its good business in many cases) - but imo it is unethical, especially re the group approach re multiple low offers / or pretending to be several different people.

Attended a function where Roy was to my left at dinner and he is a nice enough guy. Kiwi through and through - tried his hand at multiple things incl. the family market garden and launching the Tofu Shop etc.

He sees what he does as helping his students to get ahead. The investment model relies heavily on buying properties low (no sh%t) and then doing some low cost renos e.g. adding another bedroom to increase income and also getting it revalued to release more capital to swing into the next one. It ain't rocket science but it does work - especially in a rising market like we have experienced over the last few years.

As to whether this is THE reason for AKLs (and NZs) house price boom - it is part of it i.e. kiwis do love investing in property, but it is not the sole reason IMO.

There are in fact SEVERAL other factors in play - incl record low interest rates, favourable tax frameworks, land use rules, immigration (domestic and international), under building, offshore investors and pent up demand post GFC as people waited for prices to crash (they didn't in NZ @ approx 15% only 2008 - 2011) - that have also driven the spike of the last few years.

Which is why their is no one silver bullet for what is a crisis in my view - even if the Nats don't think so.

tripper1000

1617 posts

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#1777829 8-May-2017 14:58

Yeah, watch out and protect you old relatives when it comes to this kind of rubbish. Never accept an offer without an independent valuation from an assessor, selected and hired by yourself not the buyer.

My Gran (94 y.o.) has a large section in Mt Wellington (Auckland) and regularly (3-4 times per year) has people show up on her door step with pre-filled in purchase/sale agreements for her to "simply sign". Luckily she defers all financial decisions to my Mum & Dad, who have given a number of the thieving pricks, kicks up the bum. They're not just cheeky privateers - my parents have paperwork from real-estate agents working for big name real-estate companies, purchasing for themselves, not a client. They're always paltry offers under G.V.

I shudder to think how many old-trusting people get ripped off.

As others have said, I don't think this behaviour is pushing prices up. The shortage of supply (council) and excess of demand (immigration) is driving prices and encouraging unscrupulous investors.

Wheelbarrow01

1723 posts

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Chorus

#1777894 8-May-2017 15:29

tripper1000:

Yeah, watch out and protect you old relatives when it comes to this kind of rubbish. Never accept an offer without an independent valuation from an assessor, selected and hired by yourself not the buyer.

My Gran (94 y.o.) has a large section in Mt Wellington (Auckland) and regularly (3-4 times per year) has people show up on her door step with pre-filled in purchase/sale agreements for her to "simply sign". Luckily she defers all financial decisions to my Mum & Dad, who have given a number of the thieving pricks, kicks up the bum. They're not just cheeky privateers - my parents have paperwork from real-estate agents working for big name real-estate companies, purchasing for themselves, not a client. They're always paltry offers under G.V.

I shudder to think how many old-trusting people get ripped off.

As others have said, I don't think this behaviour is pushing prices up. The shortage of supply (council) and excess of demand (immigration) is driving prices and encouraging unscrupulous investors.

Wow that is low. She should have her own paperwork prepared to make her counter offer next time they knock on the door - perhaps with an extra zero on the figure......

Changing the subject ever so slightly, these reverse mortgage companies targetting the elderly also grind my gears.

tripper1000

1617 posts

Uber Geek

#1777931 8-May-2017 16:16

Yeah I was thinking I should laminate a valuation and put it in the front window to ward off the vultures i.e. Owner is not one of the "dummies" Mr Wong advises is rip-off-worthy. Given the current crazy rates of property price inflation, I'd have to redo it every 3 months.

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