Home Affordability

[langers]

It is a good time to buy at the moment but until you are here its hard to sort the market out for yourself.

Not if you're intending on cashing in your pounds to do it

[Wooly_Cow]

personally hate renting as its dead money, and would rather invest in a smaller house and have some free income. .

...asuming prices go up faster than the rate of return you can get on your capital elsewhere.

At the moment house inflation in NZ is about 6% pa with a forecast that it will flatten in the coming months.

[Kiwi Mac]

that happens because banks know that you are a rich guy!

If only!!

At this rate I'll have to sell the yacht and dismiss the domestics.

[Super_BQ]

...asuming prices go up faster than the rate of return you can get on your capital elsewhere.

Exactly! and no one will convince me otherwise that in the past year and in the next year will be a good time to bring your cash out and put it into a house (if you don't already own one).

There simply isn't a better time to buy (or build) a house when unemployment is high (rising) and more distressed mortgage sales (coupled by the leaky house syndrome).

I've explained this simple concept to my elderly folks and they all say "Well that's IF you have the $" - meaning during recession times, there are few people that can take advantage of falling prices. In an economy where in the past, people tend to spend more than they save - i'm glad to be one of the few that "SAVED". Really, I was getting egg on my face few years ago when I saw every person left/right/centre buying their 2nd and 5th house and NZ house prices were skyrocketing mad.

[Wooly_Cow]

Exactly! and no one will convince me otherwise that in the past year and in the next year will be a good time to bring your cash out and put it into a house (if you don't already own one).

There simply isn't a better time to buy (or build) a house when unemployment is high (rising) and more distressed mortgage sales (coupled by the leaky house syndrome).

I've explained this simple concept to my elderly folks and they all say "Well that's IF you have the $" - meaning during recession times, there are few people that can take advantage of falling prices. In an economy where in the past, people tend to spend more than they save - i'm glad to be one of the few that "SAVED". Really, I was getting egg on my face few years ago when I saw every person left/right/centre buying their 2nd and 5th house and NZ house prices were skyrocketing mad.

Wait for 8 days and see what the budget brings....could have a downward pressure on house prices in NZ.

[Super_BQ]

I wish this were true. But since we all know that capital gains tax on real estaet is out of the picture, it's VERY unlikekly the budget would influnce house price down.

Those on the top income tax bracket will welcome a rise in GST to 15% as the top income tax rate drops to compete with Australia's rate. Those on the low and middle tax bracket will be worse off. So it depends on who is really in the market for buying house? (those in the top income or those in the middle or bottom?).

[chocolate cake]

All that said IMHO there is little pressure that will be inflating NZ house prices in the near future. Still high compared to incomes, at the end of the day people need to finance them out of incomes.

If you have the money, no harm in buying now, because you have a house the actual upward or downward trend should have little effect at all, yep - you're new home might go up or down 10%, but so will the prices of others when you come to move too.

It should only be important when you come to exit the market.

[Jolie]

It is a good time to buy at the moment

Well, it is and it isn't.

It is, if you're just looking at the fact that there are more sellers out there than buyers right now.

But in reality it's not. Because many of those sellers, lured by the prospect of becoming quickie millionaires (due to no Capital Gains Tax on property sales), have overstretched themselves massively, and now owe more on their properties than they can get by selling them.

The NZ Real Estate market has to be the strangest thing I've ever seen.

In the U.S., Buyers' Agents and Sellers' Agents are required by law to always act in the best interests of their client. In NZ, Real Estate Agents are pretty much un-regulated (although an independent oversight conduct authority has finally been created now because of the massive number of problems), and it's not at all uncommon for agents to convince their sellers to lower the price of their house -- which is then promptly bought, it turns out later, by the agent themself through a relative, trust, or shell corporation, and turned around and sold almost immediately for $100,000 more. It is also common for the Agent to directly go against the Seller's instructions regarding advertised price, the agents will lure bidders/offers by claiming "owner will consider $X amount and up" -- and $X amount is massively below what the Seller has said they require in order to sell. This wastes the time and energy of both Buyers and Sellers.

There is also no equivalent thing here to the U.S. "Buyers' Agent", who can show you any home listed with any other agent, and represent you in the purchase of any one of those homes.

There is no such thing here as an MLS (Multiple Listing Service), like there is in the U.S., a clearinghouse for ALL listings with ALL agents regardless of brokerage affiliation. Here, agents will usually only show you their listings or the listings of their brokerage. So to find all of the possibilities which meet your requirements, you have to comb through the listings on more than a dozen websites, and contact many different agents (the same is true, unfortunately, for rental listings, although TradeMe is becoming a close approximation of an MLS for rentals).

And finally, home valuations here are not relatively standardised, because they are not really based on statistical qualities the way valuations are in the U.S. -- because there is no MLS, which is where much of that standardised data comes from in the U.S.

Home valuations here tend to be based on what the Seller thinks they ought to be able to get for the property -- and often, that has little basis in reality. And right now, with so many people so deeply in the hole on their properties, they will only sell if they get a price which is ridiculously over-valued for the current market (or if they are going to be foreclosed upon).

Home-buying here (and existing construction) seems to me to be such a Wild-West crapshoot, that if I'm ever in the position to buy again, I would probably want to just have it built for me (with frequent oversight by myself or someone who will make sure for me that the builders aren't taking cheap shortcuts from the spec, like leaving out insulation, in order to make more money).


But then, I know several people here who have bought a home with which they are happy, and they have appparently managed to do so for a price they felt was realistic. So it can be done. But it's a hell of a hard job.

[Kiwi Mac]

A good lot of sense in your post, Jolie.

I would also add that it is very odd here that rents are lower than mortgages. The whole of the UK investment surveying market - plus a zillion private landlords - would be deep(er) in the brown stuff were that the case in the UK.

I also think interest rates here are very high; good for cooling the market for housing, rubbish for helping an export-based economy recover because it makes the NZ$ too attractive to (as my father puts it) Japanese housewives seeking investment returns. When all the major economies in the world have sub-2% interest rates and we have 6% almost, it must be sucking cash into the banks very nicely.

But bad for exports and tourism, the biggest NZ earners.

[IanW99]

...
There is no such thing here as an MLS (Multiple Listing Service), like there is in the U.S., a clearinghouse for ALL listings with ALL agents regardless of brokerage affiliation. Here, agents will usually only show you their listings or the listings of their brokerage. So to find all of the possibilities which meet your requirements, you have to comb through the listings on more than a dozen websites, and contact many different agents (the same is true, unfortunately, for rental listings, although TradeMe is becoming a close approximation of an MLS for rentals).
...

There are several websites that come to mind that list real estate from more than one listing agent including www.realestate.co.nz, open2view and trademe - sure there are others as well. Can't say if there are any that cover ALL properties but certainly these 3 cover most between them.

Ian