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617 posts

Ultimate Geek
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  Reply # 2083725 4-Sep-2018 12:15
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quickymart:
Dulouz:

 

You can whine about the property market all you like but history suggests nothing is going to change anytime soon. It's a cliche but you need to get on the ladder anyway you can. Beg, borrow, scrimp and save for a deposit for a postage stamp sized placed and you'll be on your way. If you wait for the Govt to help you'll be waiting a long time.

 


Good-o's, and if I'm already doing that and making absolutely no headway?

 

Don't give up and try harder. Cut expenses, increase revenue. How do you do this? Get creative!!





Amanon

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Ultimate Geek
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  Reply # 2083755 4-Sep-2018 12:40
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ShiroHagen:

Here’s my weekend experience.

 

4 Bdrm Open home in Central Auckland.

 

Last sold in Sep17 for 799K according to homes.co.nz. Cross lease section, circa 350 - 400sqm, 90’s era ex-monolithic clad leaker. Has had full weatherboard reclad (Feb18) and orig framing replaced or treated with product. Agent expects auction to get over 1.2 million. $400k+ gross profit (minus repairs of course) for a year’s work. Not too shabby. Even for a leaker.

 

So going back to OPs line of questioning, as long as people continue to see housing and property as a commodity to be profited off, the status quo will continue into the forseeable future because it’s simply a natural consequence of human behaviour.  

 

IMHO pretty much the way Auckland houses could fall to a $200-$300K level is if the volcanic field became active again. Drive down the long term demand for people to live/work/play in Auckland and the prices will follow / shift to another NZ city as Aucklanders flee to another part of NZ. Short of natural disaster the cat has been well and truly let out of the bag for far too long for prices to ever drop that low again. 

 

 

A full reclad would consume a significant portion of that 400K "profit " so prehaps not a good example

 

 

But you do touch upon a good point which many Kiwis preference with property as an investment over over more productive investments

 

 

 

 


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  Reply # 2083815 4-Sep-2018 13:09
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xlinknz: many Kiwis preference with property as an investment over over more productive investments

 

 

 

are you distinguishing between "profitable" and "productive" here?

 

 

 

I doubt there's ANY reliable investment that's more "profitable" than AKL housing, but definitely many that are more "productive"... depending on your definition of PRoductive, of course!


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  Reply # 2083818 4-Sep-2018 13:13
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Buy a rental in Featherston. Prices have increased 62% and yet the average is still only $320,000!

 

 

 

It'll go up more I think - it's taken people some while to realise you can live in the countryside and yet commute to Wellington in 50 minutes...






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  Reply # 2083820 4-Sep-2018 13:19
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Geektastic:

 

Buy a rental in Featherston. Prices have increased 62% and yet the average is still only $320,000!

 

 

 

It'll go up more I think - it's taken people some while to realise you can live in the countryside and yet commute to Wellington in 50 minutes...

 

 

Agree. Lower price, higher yield. Buy it, bank it, and continue the supply/demand problem!  :-) 


460 posts

Ultimate Geek
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  Reply # 2083826 4-Sep-2018 13:30
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Geektastic:

 

Buy a rental in Featherston. Prices have increased 62% and yet the average is still only $320,000!

 

 

 

It'll go up more I think - it's taken people some while to realise you can live in the countryside and yet commute to Wellington in 50 minutes...

 

 

Interestingly, I did consider this.

 

We are renting in Johnsonville, where you now need around $600k for your basic 1970's weatherboard house that still requires modernization.

 

A couple of things stopped us:

 

1) I work in Wellington, whereas my wife does not work. So I'd still get that daily interaction with others, but for my wife, she'd lose that interaction with the school mums\friends during the school pickup.

 

2) The kids current school is putting in a heck of a lot of effort in helping out one of my kids, and it's not right to take all the hard work the school has done and go somewhere else, or risk having to go through the process\system all over again.

 

If you're a professional couple, I'd say ditch the Wellington rat race, and move over to Featherston.

 

However, if you've got primary school children, its a big decision to take the kids away from there friends. Some kids make friends easily, and some don't

 

 


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Ultimate Geek
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  Reply # 2083828 4-Sep-2018 13:36
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What concerns me with the NZ property market in general, is how many are so desperate to get on the property ladder, that they've mortgaged themselves to the limit.

 

That may be alright while interest rates are relatively low, but what happens when they go up 3-4%?


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  Reply # 2083831 4-Sep-2018 13:49
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WyleECoyoteNZ:

 

What concerns me with the NZ property market in general, is how many are so desperate to get on the property ladder, that they've mortgaged themselves to the limit.

 

That may be alright while interest rates are relatively low, but what happens when they go up 3-4%?

 

 

Now don't you go worrying about that.  You've got an entire lending industry (global) and a government regulator (local) looking at this and assuring us that it'll all be just fine.  They're doing that with full knowledge (you'd hope) that if it wasn't going to be just fine, then they'd tell us so.  Of course telling us that it wouldn't be just fine would precipitate an apocalypse. 

 

As a skeptic, I'm reminded of the (accidental?) brilliance of internet troll Ken M - which applies to bubbles (property may be one - we may find out):

 

"If we don't study the mistakes of the future, we're bound to repeat them for the first time".


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  Reply # 2083836 4-Sep-2018 13:57
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Fred99:

 

WyleECoyoteNZ:

 

What concerns me with the NZ property market in general, is how many are so desperate to get on the property ladder, that they've mortgaged themselves to the limit.

 

That may be alright while interest rates are relatively low, but what happens when they go up 3-4%?

 

 

Now don't you go worrying about that.  You've got an entire lending industry (global) and a government regulator (local) looking at this and assuring us that it'll all be just fine.  They're doing that with full knowledge (you'd hope) that if it wasn't going to be just fine, then they'd tell us so.  Of course telling us that it wouldn't be just fine would precipitate an apocalypse. 

 

As a skeptic, I'm reminded of the (accidental?) brilliance of internet troll Ken M - which applies to bubbles (property may be one - we may find out):

 

"If we don't study the mistakes of the future, we're bound to repeat them for the first time".

 

 

I think it's even worse that we think, because we're actively encouraging people on lower incomes via Kiwibuild etc into borrowing big to get aboard the bus. This has worrying similarities to the sub prime mortgage disaster that created the last GFC.

 

 


Mad Scientist
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  Reply # 2083839 4-Sep-2018 14:05
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xlinknz:
ShiroHagen:

 

Here’s my weekend experience.

 

4 Bdrm Open home in Central Auckland.

 

Last sold in Sep17 for 799K according to homes.co.nz. Cross lease section, circa 350 - 400sqm, 90’s era ex-monolithic clad leaker. Has had full weatherboard reclad (Feb18) and orig framing replaced or treated with product. Agent expects auction to get over 1.2 million. $400k+ gross profit (minus repairs of course) for a year’s work. Not too shabby. Even for a leaker.

 

So going back to OPs line of questioning, as long as people continue to see housing and property as a commodity to be profited off, the status quo will continue into the forseeable future because it’s simply a natural consequence of human behaviour.  

 

IMHO pretty much the way Auckland houses could fall to a $200-$300K level is if the volcanic field became active again. Drive down the long term demand for people to live/work/play in Auckland and the prices will follow / shift to another NZ city as Aucklanders flee to another part of NZ. Short of natural disaster the cat has been well and truly let out of the bag for far too long for prices to ever drop that low again. 

 

A full reclad would consume a significant portion of that 400K "profit " so prehaps not a good example But you do touch upon a good point which many Kiwis preference with property as an investment over over more productive investments

 

alternative high yield investments?


4050 posts

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  Reply # 2083840 4-Sep-2018 14:06
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WyleECoyoteNZ:

 

What concerns me with the NZ property market in general, is how many are so desperate to get on the property ladder, that they've mortgaged themselves to the limit.

 

That may be alright while interest rates are relatively low, but what happens when they go up 3-4%?

 

 

This worries me too. I used to work as a corporate financial analyst, so I am fortunate enough to have the skills to stress test my own situation against these types of scenarios. However if I plug some numbers into the banks' indicative mortgage calculators it looks like they would be likely to be willing to lend me $100k-$200k more than my own models show I can afford.

 

Interest rates will stay low for a while yet, but people who have borrowed five times their income are likely to find themselves in trouble eventually.


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  Reply # 2083842 4-Sep-2018 14:10
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alasta:

 

WyleECoyoteNZ:

 

What concerns me with the NZ property market in general, is how many are so desperate to get on the property ladder, that they've mortgaged themselves to the limit.

 

That may be alright while interest rates are relatively low, but what happens when they go up 3-4%?

 

 

This worries me too. I used to work as a corporate financial analyst, so I am fortunate enough to have the skills to stress test my own situation against these types of scenarios. However if I plug some numbers into the banks' indicative mortgage calculators it looks like they would be likely to be willing to lend me $100k-$200k more than my own models show I can afford.

 

Interest rates will stay low for a while yet, but people who have borrowed five times their income are likely to find themselves in trouble eventually.

 

 

It's crazy. I've borrowed twice my (pre-tax) income and that's enough to scare the cr*p out of me.

 

 


280 posts

Ultimate Geek
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  Reply # 2083852 4-Sep-2018 14:35
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When I lived in Dublin the Irish government introduced lending criteria to try to control the housing market and not to have a repeat of the sub prime crash of 2007/2009. 

 

The rules were in simple terms

 

  • Minimum 20% deposit (10% for first time buyers)
  • Maximum 3.5 times combined annual pre-tax income
  • Banks were allowed to approve exceptions but no more than 15% of a banks borrowings could be on exception basis

There was outrage that people were not going to be able to borrow more than 4 times their combined salary!! No amount of education could convince the Irish public that the lending laws were for their own good.


798 posts

Ultimate Geek
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  Reply # 2083879 4-Sep-2018 15:39
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PhantomNVD:

xlinknz: many Kiwis preference with property as an investment over over more productive investments

 

 

 

are you distinguishing between "profitable" and "productive" here?

 

 

 

I doubt there's ANY reliable investment that's more "profitable" than AKL housing, but definitely many that are more "productive"... depending on your definition of PRoductive, of course!

 

 

Batman:

xlinknz:
ShiroHagen:

 

Here’s my weekend experience.

 

4 Bdrm Open home in Central Auckland.

 

Last sold in Sep17 for 799K according to homes.co.nz. Cross lease section, circa 350 - 400sqm, 90’s era ex-monolithic clad leaker. Has had full weatherboard reclad (Feb18) and orig framing replaced or treated with product. Agent expects auction to get over 1.2 million. $400k+ gross profit (minus repairs of course) for a year’s work. Not too shabby. Even for a leaker.

 

So going back to OPs line of questioning, as long as people continue to see housing and property as a commodity to be profited off, the status quo will continue into the forseeable future because it’s simply a natural consequence of human behaviour.  

 

IMHO pretty much the way Auckland houses could fall to a $200-$300K level is if the volcanic field became active again. Drive down the long term demand for people to live/work/play in Auckland and the prices will follow / shift to another NZ city as Aucklanders flee to another part of NZ. Short of natural disaster the cat has been well and truly let out of the bag for far too long for prices to ever drop that low again. 

 

A full reclad would consume a significant portion of that 400K "profit " so prehaps not a good example But you do touch upon a good point which many Kiwis preference with property as an investment over over more productive investments

 

alternative high yield investments?

 

 

A deposit in a passive or active investment fund @ 10% net return per annum is arguably as attractive without all the hassle and constraints of property

 

 

 

 


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  Reply # 2083958 4-Sep-2018 17:14
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xlinknz:
A deposit in a passive or active investment fund @ 10% net return per annum is arguably as attractive without all the hassle and constraints of property





Except that for most people, property is a geared investment. Borrow 500K from the bank, with the deposit being equity in your current house. Even if you only get a 3% return, that is still $15K per year. And even better in that you didn't even have to invest any actual cash, Plus you get tax advantages as well.

If you have $500K in your bank account that you want to invest. I doubt that anyone would recommend that you buy a single mortgage free rental property with that money.





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