Real estate, post level 4

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#2554939 1-Sep-2020 16:20

Salaries definitely have not kept up with house prices.
(I believe significant wage growth is something we need over the next decade - to bring house prices (& other asset bubbles) - back into line.

*instead of wishing for house price drops - how about wishing for significant wage growth.
(High wage economy also stimulates business efficiency & competitiveness vrs world.

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kingdragonfly

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#2554943 1-Sep-2020 16:26

Handle9: I'd still like to see that quote- I haven't seen anyone in this thread say anything about salaries keeping up with house prices but I could have missed it.

it may have been in another thread. Here's the graphic I used previously, with median salary versus median house prices

Good to see all my fellow boomers are OK with implementing changes to the capital gains tax, since no one's arguing against it.

Otherwise you'd be saying to the previous generations: "sorry kiddo. It sucks to be you, You should have been born earlier ;)

mattwnz

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#2554965 1-Sep-2020 16:30

concordnz: Salaries definitely have not kept up with house prices.
(I believe significant wage growth is something we need over the next decade - to bring house prices (& other asset bubbles) - back into line.

*instead of wishing for house price drops - how about wishing for significant wage growth.
(High wage economy also stimulates business efficiency & competitiveness vrs world.

Where is the money going to come from to pay for wage increases? Inflation is already incredibly low. The only way IMO is to increase productivity.

With historically low interest rates, higher wagest could mean house prices will also increase significantly, if people can afford to service larger mortgages, due to constrained supply of dwellings. So IMO it is unlikely to bring house prices back in line. The only way to do that IMO, is to bring interest rates back to a more normal level, which will then require wages to raise eg 8%. But I can't see any of that happening for a long time.

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#2554972 1-Sep-2020 16:35

Driving wages up is almost certainly going to drive manufacturing off-shore?

wellygary

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#2554973 1-Sep-2020 16:36

kingdragonfly:
Handle9: I'd still like to see that quote- I haven't seen anyone in this thread say anything about salaries keeping up with house prices but I could have missed it.

it may have been in another thread. Here's the graphic I used previously, with median salary versus median house prices

Yeah, but most homeowners don't pay for a house with cash they have, they borrow the money so the cost of financing is also applicable,

On the time period of that chart the "Floating first mortgage new customer housing rate" series from the RBNZ has gone from about 7.5% to 4.4% and will likely fall further...

Handle9

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#2554977 1-Sep-2020 16:47

kingdragonfly:
Handle9: I'd still like to see that quote- I haven't seen anyone in this thread say anything about salaries keeping up with house prices but I could have missed it.

it may have been in another thread. Here's the graphic I used previously, with median salary versus median house prices

Good to see all my fellow boomers are OK with implementing changes to the capital gains tax, since no one's arguing against it.

Otherwise you'd be saying to the previous generations: "sorry kiddo. It sucks to be you, You should have been born earlier ;)

Other similar countries have problems with gross housing affordability. Many of those have capital gains taxes.

There isn't a silver bullet to solve this problem. It's built up over generations and will take generations to unwind.

BlinkyBill

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#2554986 1-Sep-2020 17:03

kingdragonfly:
directed at Blinky

Have you got a quote for that please?

concordnz

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#2554988 1-Sep-2020 17:13

mattwnz:
concordnz: Salaries definitely have not kept up with house prices.
(I believe significant wage growth is something we need over the next decade - to bring house prices (& other asset bubbles) - back into line.

*instead of wishing for house price drops - how about wishing for significant wage growth.
(High wage economy also stimulates business efficiency & competitiveness vrs world.

Where is the money going to come from to pay for wage increases? Inflation is already incredibly low. The only way IMO is to increase productivity.

With historically low interest rates, higher wagest could mean house prices will also increase significantly, if people can afford to service larger mortgages, due to constrained supply of dwellings. So IMO it is unlikely to bring house prices back in line. The only way to do that IMO, is to bring interest rates back to a more normal level, which will then require wages to raise eg 8%. But I can't see any of that happening for a long time.

They both need to happen in tandem.
Wage growth & interest rate increase - that would 'flatline' housing for a decade.

Manufacturing won't go off shore if we support R&D far better (write offs etc), which will give us far better efficiency to pay higher wages. (And attract more leading edge companies like rocketlabs)

mattwnz

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#2555013 1-Sep-2020 17:59

Handle9:

It isn't a real valuation, it's a largely automated estimate that doesn't look at the actual property, just the relative value compared to the area. It's purpose is for calculating rates.

Using it as any sort of objective measurement for the value of a property is fool's Gold.

That is what trademes online valuer and homes dot co use as well, but they based on very recent sales. Agents seem to be also using it too to get an estimated sale price for clients. Previously people used to use the CV / RV to get an idea of what they should pay, but people now seem to be using these more recent online systems, which often value a property significantly higher than the CV, as the CV is often several years old. I wouldn't be surprised if these more recent online systems are one reason why homes are going for more these days, because people are now using them as a bench mark, and sellers often expect to get more than any expected E-Value.. These E-values do seem to be fairly accurate based on houses I have seen sell for recently, with houses selling for around the E-value or higher, but certainly well above a CV that is a year old.

Handle9

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#2555014 1-Sep-2020 18:04

mattwnz:

Handle9:

It isn't a real valuation, it's a largely automated estimate that doesn't look at the actual property, just the relative value compared to the area. It's purpose is for calculating rates.

Using it as any sort of objective measurement for the value of a property is fool's Gold.

That is what trademes online valuer and homes dot co use as well, but they based on very recent sales. Agents seem to be also using it too to get an estimated sale price for clients. Previously people used to use the CV / RV to get an idea of what they should pay, but people now seem to be using these more recent online systems, which often value a property significantly higher than the CV, as the CV is often several years old. I wouldn't be surprised if these more recent online systems are one reason why homes are going for more these days, because people are now using them as a bench mark, and sellers often expect to get more than any expected E-Value.. These E-values do seem to be fairly accurate based on houses I have seen sell for recently, with houses selling for around the E-value or higher, but certainly well above a CV that is a year old.

Agents provide it as people ask for it. It doesn't make it particularly useful and then they complain when the sale price is wildly different (evidence: this thread).

TL/DR version: CV is almost meaningless if you are buying a house. Use other sources to get a current value for a house.

concordnz

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#2555103 1-Sep-2020 19:24

Use something like a 'registered valuation' - to get an accurate value....
that takes into account improvments(bathroom/kitchen etc) or maybe even a re-roof or open plan change..
Registered valuers look into sale prices of surrounding properties & what their condition/refurbishments have been.

If you don't want to pay for this ($1000 on a million dollar property - $600 on a 600k property.).
Spend 6 months going to open homes & check out the interiors/refurbishments & attend the Auctions to see what they sell for & those that sell outside Auction - check Homes website 6 weeks later for recorded sale price. (All for 1 suburb - repeat exercise for a 2nd/3rd suburb)

Put all that into a spreadsheet & you have enough info to accurately assess a properties price/value.
(For 3-6mo - after that you would have to redo exercise again as market has moved)

My time is worth more - I'd rather pay the Registered Valuer - (sometimes before Auction) - as I know I'll need to provide the bank with one anyway.

kingdragonfly

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#2555179 1-Sep-2020 19:53

Seems reasonable.

QV is charging for their full service. If it's not even close to being accurate, then how do they stay in business?

concordnz

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#2555207 1-Sep-2020 20:46

Because people don't know any better.
Caviate emptor - let the buyer beware)

(You read real estate forums (or on here) to to learn what Is good/accurate & what is not, before spending money on some of these services.)

concordnz

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#2555208 1-Sep-2020 20:52

Word of warning - Even if you provide the bank with a registered valuation, they take the lower of your 'actual purchase price' or the Registered Valuation.

Even if you buy 'below market value' - you will only be able to borrow 80% of your purchase price.
Not 80% of 'Registered market value'. - that was a shock to me & prevented me doing some needed reno for 6mo.

(After 6mo you can get a new 'Registered Valuation' & borrow up to that 80%. (If you can service it of course)

mattwnz

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#2555226 1-Sep-2020 21:33

concordnz: Use something like a 'registered valuation' - to get an accurate value....
that takes into account improvments(bathroom/kitchen etc) or maybe even a re-roof or open plan change..
Registered valuers look into sale prices of surrounding properties & what their condition/refurbishments have been.

If you don't want to pay for this ($1000 on a million dollar property - $600 on a 600k property.).
Spend 6 months going to open homes & check out the interiors/refurbishments & attend the Auctions to see what they sell for & those that sell outside Auction - check Homes website 6 weeks later for recorded sale price. (All for 1 suburb - repeat exercise for a 2nd/3rd suburb)

Put all that into a spreadsheet & you have enough info to accurately assess a properties price/value.
(For 3-6mo - after that you would have to redo exercise again as market has moved)

My time is worth more - I'd rather pay the Registered Valuer - (sometimes before Auction) - as I know I'll need to provide the bank with one anyway.

The last house I tried to purchase, the registered valuation I commissioned for it was way off. The house ended up selling for more than double the valuation and I offered significantly more than the RV because I knew it was to low. I wasn't in the top 3 bids at tender, although I wasn't far off. I did my own research and speadsheets and knew the valuers price wasn't realistic. When the new RV came out a few months after it sold, it was also double.

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