Real estate, post level 4

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#2615259 3-Dec-2020 06:46

mattwnz:

I remember one reason for the deposit for first home buyers, was that it showed that the first home buyer was able to save. In fact I recall property experts saying that if people can't put together and save for a deposit, then they should wait until they are able to do this. This attitude from property experts seems to have changed in recent years, perhaps because it would take too long to save for a deposit these days, due to the high prices. It does seem people want things now, rather than waiting and saving.

When I was working at Westpac it was called hurt money. That's why you won't get a mortgage even if you have 50% deposit if it wasn't your savings. This may have changed as I haven't worked for a bank for a few years now. There was a whole thread on it here, I think the poster was trying to buy in Dargaville? And had a really grunty deposit that he was gifted.

The logic was that people who were gifted deposits were more likely to walk away from their home loan than someone who had saved the money up themselves.

tdgeek

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#2615265 3-Dec-2020 07:20

mattwnz:

What they should have done is regulate the rises. Which they could have done by including it in the inflation figures.

I do know a building company in my area who are now building reasonably low spec basic houses in a small subdivision, and now looking for long term good quality tenants, rather than selling them. They see the money is in their longer terms capital gain, and the tenants are just for maintaining it. But many people that are forced to rent, would prefer to buy if they could.

How can you regulate house prices? Tie them to GV? Supply and Demand is the problem, any artificial means wont work.

Re the building company, doesn't matter what they do with them, that they are building, is adding stocks, and that's the only solution.

tdgeek

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#2615267 3-Dec-2020 07:31

mattwnz:

Heard quite a few people overseas say that NZs housing market and the attitude and greed of people is obscene.

I think that and every other greed comment is way overrated. Do you own a house? I do. Are we both greedy? The vast majority of us bought a house to live in. I didn't cause the capital gain on every house Ive owned. Overseas buyers being happy to buy at any price, immigration with no Govt ensuring house builds match that, and low interest rates are the past and/or present causes. Its always happened, but now that we are happy to be a low wage, low inflation economy, it caught up.

martyyn

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#2616541 5-Dec-2020 08:46

My MIL lives in a basic 1970's, 2 bed, 1 bath, one garage semi detached place in a group of six around a driveway. A mini retirement village really, the old biddies all chat over their little fences when hanging their washing.

Four years ago one sold for $175k which we thought was pretty reasonable and we thought about buying it to rent out.

In Feb this year one sold for $385k and then another for $375k in Sept, although I don't think it had been redecorated since it was built.

Today another one has been staged to within an inch of its life and put on the market for $485k.

The market around us is off the charts at the moment with subdivisions starting every week. Another block of 45, 110m2, 2 bed homes on 300m2 sections is around the corner with prices starting at $600k.

All being bought by out of towners looking to rent with locals all having to move away because they can't afford to buy or rent.

There is no downturn to the economy around here.

alasta

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#2616600 5-Dec-2020 12:37

Out of interest, where are you based Martyyn?

martyyn

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#2616657 5-Dec-2020 13:22

Kapiti

tdgeek

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#2616858 6-Dec-2020 08:50

Some people need to think about there rash opinion piece article before writing it

https://www.stuff.co.nz/life-style/homed/real-estate/123574971/that-was-then-this-is-now-is-this-house-price-boom-bigger-than-the-last

"net migration had slowed considerably and was not as big a driver as in past cycles. " How many returning Kiwi's have there been this year???? Id also expect many ex pats to be cashed up

"“Owner-occupiers, including first-home buyers, make up the bulk of the market and it is harder for first-home buyers now." Ive read often recently that FHB were at a high level.

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mattwnz

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#2617012 6-Dec-2020 15:05

At the moment the problem seems to be that there aren't many houses actually on the market. It seems people just are't selling, but there are a lot of mum and dads with cash waiting to buy, as they want a better yeild than backs are offering on TDs. Houses that were previously not able to be sold due to problems with them, or the seller wanting too much, and had been on the market on and off for years, are now selling.

In my town there are less than half the number that are normally on the market at the moment, and I have been regularly analyzing houses in my town for quite a few years. People also need to realise that prices can fall back. So people buying today could end up in negative equity if they aren't careful. Or these mum nad dad buyers who are paying cash, could end up losing money.At the moment there is a big FOMO, and expecting house prices will go up. When prices could go sideways for years.

I know people who are buying houses in identified 1% flood zones, when in the future they may have difficulty getting insurance which may mean difficulty selling .Some people are potentially opening themselves up to problems in teh future by just rushing out and buying, without thinking and doing a lot of research first. Just hope they don't expect a taxpayer bailout when things go wrong. Already houses down by the sea have potential insurance problems due to the higher risk of inundation.

mattwnz

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#2617018 6-Dec-2020 15:28

alasta:

It is really going to depend on the prevalence of forced sales over the coming months. If the market gets flooded by mortgagee sales then it's entirely possible that we could see price drops up to 20%, but I don't think it's a likely scenario.

Yes, there is a lot of pain out there, but a large chunk of those who've lost their jobs will be younger people on modest incomes who wouldn't have been property owners anyway. In recent times property ownership has been skewed towards older people with lots of equity so they'll just sit tight.

The big unknown is whether property investors are going to start selling up so that they can free up capital.

I am guessing that is one reason why there is very little on the market at the moment.

It is unlikely to be months imo. Also still quite a lot of people on mortgage holidays. It think it will be a good year down the track before negative effects take effect. Banks also won't want mortgagee sales. So may offer other options.

But these people who have lost their jobs and are younger people will be paying rent. They therefore may struggle to pay their rent, and then these property owners maybe under financial stress if they can't get the rent they need. Rents may drop, when they should really be going up a lot, inline with house prices. Also when interest rates rise, the same issue could occur, where rents need to increase to cover mortgages. Potentially huge problems down the track.

mattwnz

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#2617020 6-Dec-2020 15:36

tdgeek:

Some people need to think about there rash opinion piece article before writing it

https://www.stuff.co.nz/life-style/homed/real-estate/123574971/that-was-then-this-is-now-is-this-house-price-boom-bigger-than-the-last

"net migration had slowed considerably and was not as big a driver as in past cycles. " How many returning Kiwi's have there been this year???? Id also expect many ex pats to be cashed up

"“Owner-occupiers, including first-home buyers, make up the bulk of the market and it is harder for first-home buyers now." Ive read often recently that FHB were at a high level.

The media has been saying there is a lot of FHB 'activity' at the moment. But that doesn't mean they are succeeding in buying them. Don't know if there are even stats kept on how many FHBs are actually buying. Guessing banks have some stats, but not sure if they share them. Many buying appear to be mum and dads moving money out of the bank as interest rates drop, and into houses, where they hope they can at least make a better yield on capital gains. This is shown by the number of people who moved their money our of term deposits as they matured, and into on call accounts, which means that money then needs to be used for something,. Many mum and dads will be waiting to use the money for somthing that can earn them a reasonable passive return. But due to the problem is where they put that money, and some seem to thin housing is the easy option. I understand 1/3 of houses are owned buy mum and dad landlords in NZ, and Is suspect that is growing.

The number of returning kiwis long term isn't very high, so that narrative from the media earlier this year for pushing up prices, which the government also used, doesn't appear to be correct. The problem is falling interest rates and a lack of houses being sold on the market IMO. I think we could have a huge glut of apartments being sold and dropping apartment prices in the next few years.

tdgeek

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#2617092 6-Dec-2020 18:37

mattwnz:

The media has been saying there is a lot of FHB 'activity' at the moment. But that doesn't mean they are succeeding in buying them. Don't know if there are even stats kept on how many FHBs are actually buying. Guessing banks have some stats, but not sure if they share them. Many buying appear to be mum and dads moving money out of the bank as interest rates drop, and into houses, where they hope they can at least make a better yield on capital gains. This is shown by the number of people who moved their money our of term deposits as they matured, and into on call accounts, which means that money then needs to be used for something,. Many mum and dads will be waiting to use the money for somthing that can earn them a reasonable passive return. But due to the problem is where they put that money, and some seem to thin housing is the easy option. I understand 1/3 of houses are owned buy mum and dad landlords in NZ, and Is suspect that is growing.

The number of returning kiwis long term isn't very high, so that narrative from the media earlier this year for pushing up prices, which the government also used, doesn't appear to be correct. The problem is falling interest rates and a lack of houses being sold on the market IMO. I think we could have a huge glut of apartments being sold and dropping apartment prices in the next few years.

Mate come on! :-) I doubt NZ is adrift with Mum and Dads buying everything. As I read on the daily articles about houses, FHB are high. I dont read articles on activity, its sales.

How many Kiwis have returned due to Covid? IIRC, and I dont follow it daily anymore, a good while back it was 70,000. I WFH and from my desk I see incoming flights, regular internationals. IIRC MIQ is fully booked? If so that's incoming travellers, not movie starts but Kiwis. Id wager that this effect is far more than immigration ever was. And while there will be returning backpackers, Id also wager there are many cashed up ex pats

There are not many on the market now, agreed. Lots of uncertainty.

1/3 of houses are owned by Mum and Dad landlords? 2019, 62% owned their home. So 38% didn't. Of this 38%, 33% are Mum and Dads not individual landlords?

mattwnz

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#2617169 7-Dec-2020 00:16

tdgeek:

mattwnz:

The media has been saying there is a lot of FHB 'activity' at the moment. But that doesn't mean they are succeeding in buying them. Don't know if there are even stats kept on how many FHBs are actually buying. Guessing banks have some stats, but not sure if they share them. Many buying appear to be mum and dads moving money out of the bank as interest rates drop, and into houses, where they hope they can at least make a better yield on capital gains. This is shown by the number of people who moved their money our of term deposits as they matured, and into on call accounts, which means that money then needs to be used for something,. Many mum and dads will be waiting to use the money for somthing that can earn them a reasonable passive return. But due to the problem is where they put that money, and some seem to thin housing is the easy option. I understand 1/3 of houses are owned buy mum and dad landlords in NZ, and Is suspect that is growing.

The number of returning kiwis long term isn't very high, so that narrative from the media earlier this year for pushing up prices, which the government also used, doesn't appear to be correct. The problem is falling interest rates and a lack of houses being sold on the market IMO. I think we could have a huge glut of apartments being sold and dropping apartment prices in the next few years.

Mate come on! :-) I doubt NZ is adrift with Mum and Dads buying everything. As I read on the daily articles about houses, FHB are high. I dont read articles on activity, its sales.

There are not many on the market now, agreed. Lots of uncertainty.

1/3 of houses are owned by Mum and Dad landlords? 2019, 62% owned their home. So 38% didn't. Of this 38%, 33% are Mum and Dads not individual landlords?

Yes this figure is correct according to this Newstalk ZB story, and it is more than 1/3 of NZ houses are owned by Mum and Dad landlords.

More than a third of property in New Zealand is owned by mum and dad landlords, new analysis of housing records shows.

https://www.newstalkzb.co.nz/news/business/mum-and-dad-landlords-own-more-than-a-third-of-property/

IMO, this isn't good, and based on what I have seen when looking around open homes these last few months and talking to agents, many of the people looking are mum and dad investors, who can easily beat out any first home buyer.

Not only that, but listening to a property investor and expert on the radio , she said many people buying investment property today, the rent won't cover all the outgoing costs. These investors just expect the capital gains in the future to significantly make up the shortfall, and them to make the profit when they sell the property . IMO this is pretty risky stuff.

tdgeek

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#2617175 7-Dec-2020 06:45

mattwnz:

Yes this figure is correct according to this Newstalk ZB story, and it is more than 1/3 of NZ houses are owned by Mum and Dad landlords.

More than a third of property in New Zealand is owned by mum and dad landlords, new analysis of housing records shows.

https://www.newstalkzb.co.nz/news/business/mum-and-dad-landlords-own-more-than-a-third-of-property/

IMO, this isn't good, and based on what I have seen when looking around open homes these last few months and talking to agents, many of the people looking are mum and dad investors, who can easily beat out any first home buyer.

Not only that, but listening to a property investor and expert on the radio , she said many people buying investment property today, the rent won't cover all the outgoing costs. These investors just expect the capital gains in the future to significantly make up the shortfall, and them to make the profit when they sell the property . IMO this is pretty risky stuff.

I think their use of Mum and Dad landlords is quite loose to put it mildly. Take any street, what you are saying is less than one third that are owned are owned by one home owners? More than one third are Mum and Dad landlords, who in the correct contact are Mum and Dad who have day job(s) So, in your street, 4 out of town are Mum and Dads who own multiple homes and who have day job(s)? If you take into account the average to below average suburbs, the home ownership in the other streets must be the vast majority? Owning 2 to 7 homes each?

Say you are correct, or the news article/opinion piece/clickbait is correct. Who lives in these homes? Renters. If these greedy landlords all were told to sell up, what do renters do? Draw out $200,000 and buy the house?

Housing stocks is the cause. As per an article yesterday which i'll look for if need be, the only periods where housing stock were good was post 1930 Depression and post World War. The Governments of that day Build Build Build. Citizens dont build, I buy your house, you buy mine, it goes round in circles. A few build as they want a new home with the hassle of time and drama that goes with it, but you get exactly what you wished for. According to that article, the only way out is the Government goes on a building program. Like the olden days when it did work. In a market driven economy, there is a low propensity to build. Just a human factor, so Govt needs to take that on.

martyyn

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#2617705 7-Dec-2020 17:29

martyyn:

Today another one has been staged to within an inch of its life and put on the market for $485k.

Just had a closer look at this one.

It's actually the undecorated one which sold in July for $355k and not Sept for $375k (my mistake)

It's been painted white inside, new grey carpets and curtains with a new kitchen (the same as my MIL which cost $5k to do) and is on the market four months later for $485k

$135k in four months could be some nice coin.

quickymart

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#2617781 7-Dec-2020 20:26

Still a pretty good price, to me.

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