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Thread: Beware New Zealand Real Estate Prices

  1. #21
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    My OH and myself have been in NZ over 40 years and although occasionaly there have been small corrections, we have never had a major fall, in fact over the years our homes (5 of them) have increased in value by more than the incomes that the two of us have earned between us by working. Thank for the warning though!!

  2. #22
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    Gran, you have interestingly long story to back you up, wonder if you can share more about maintaining such houses. Say each year what might be the cost for owning such a house. That would give us (migrants) clearer picture of total cost for owning and renting.

    @Adam P, you made very sharp points. I saw some comments similar to that here http://www.nzherald.co.nz/business/n...ectid=10838656. However, I thought the speculation might be more of effect on larger scale properties, should it be correct? People still need home anyway ...

  3. #23
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    Quote Originally Posted by Beachcombers View Post
    Look mate, not everyone has come to this country with a million dollars, some of us started from scratch and worked our way on to the housing ladder.
    My main worry is for migrants who come here with equity from their homeland and blindly run headlong into a house purchase when there is a lot of risk based on all measures. So whether it is a million or $100,000 in equity, for a lot of migrants that is all the money they have and all the money they will ever have. If one wants to buy a property, after becoming aware of the risks, I'm not bothered by that at all. I'm mainly bothered by the fact we only hear one side of the story: that this is a property ladder than only goes up.

    Many immigrants will find that after five years they want to go back home. That is much more difficult if they're in a property which has gone down significantly in value. They might even be under-water. It's a scenario we've seen time and again. Being an immigrant is hard enough. Financial strain can make things a lot harder. New Zealand has so much to offer, and I think people should seriously consider all the financial and personal benefits of renting, so that they're free to enjoy these things in their new country, rather than being a slave to a mortgage.

    Quote Originally Posted by Beachcombers View Post
    If my house value drops 20%, I won't be wailing or gnashing my teeth. It provides us our home, a place to raise my kids.
    We're raising our kids in our gorgeous rental house. It's working out very well. But there is an emotional bond people have with real estate. That is fine, as long as people know that it CAN drop 20%. That's great if you're okay with that. For a lot of people, that would be financially devastating. Not to mention that 20% might be the least it could fall, based on a lot of statistical measures.

    Quote Originally Posted by Beachcombers View Post
    I am glad I am paying my own "delusional" mortgage, rather than renting and paying someone else's mortgage.
    Ironically, at current rent-vs.purchase ratios, the landlord is currently subsidising my rent, not the other way around. That is, my rent is much less than the cumulative costs of her mortgage interest, upkeep and repairs, and property taxes. When you factor in the healthy interest that Kiwi banks offer to us in a term deposit, it is even more attractive at this point in time. It is very hard to get 4.5% guaranteed interest from any other bank in the world. It's why the Kiwi dollar remains stubbornly high--overseas investors borrow in Japan at half-a-percent and invest it here to make an easy profit.

    Quote Originally Posted by Beachcombers View Post
    Your listen-to-me-I-know-best demeanour is going to rub some people to wrong way. Nice way to start with us all.
    No matter how I say it, telling people that their houses are dropping in value isn't going to exactly make me any friends. I don't speak about this fact out loud in Kiwi circles, because all my Kiwi friends are in way over their head in real estate, and it simply becomes too emotional a topic. Given that immigrants aren't going to hear from their Kiwi neighbours nor from the NZ Herald about the serious risks inherent in current property prices, I felt I really had to speak up and give another point of view, especially given the state of the global economy. Everyone is free to make the choices that suit them best. It can't hurt to weigh a contrary perspective when you're about to plunk down half a million bucks on a roof over your head. Once it's spent, there is a chance a lot of it is gone for years and years to come. Buyer beware and all that.

  4. #24
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    Hi TTTA to be honest the cost of rates and water rates in Auckland has become quite expensive since the Auckland Council took over,
    You can check the rateable value and value of any house on the council website.

    http://www.aucklandcouncil.govt.nz/E...tesSearch.aspx

  5. #25
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    Hi Adam

    Evidently not everyone is happy with the points you raised and for obvious reasons that (in my view) have nothing to do with the demeanour of your post or it being your first. No-one wants to hear bad news and after all, you don't really have a crystal ball to substantiate your points. I for one think that some of your points are valid and that they should at least be considered before buying a home.

    Another aspect that may be worth considering is the current strength of the NZD against other currencies. When we bought our house in Wellington for cash in 2008 the rate was 2.65 NZD to 1 GBP. When we sold it (for the same price, minus solicitor and agent fees) in 2012 the pound has weakened considerably so the exchange rates (buying pounds with dollars) were strongly in our favour. Now the situation is quite different. If you exchange your pounds for dollars today you may find yourself a few years down the line facing a weaker dollar and a hefty loss, even if your house maintained its value.

    A second point: when we bought our house we planned to settle in NZ. We believed that buying (rather than renting) will make us feel "at home" more quickly. A year later our circumstances have changed and we decided to leave. In hindsight, renting for a year or two before buying would have saved us a lot of headaches.

    Third: our net rental income from the house (once we left NZ and until we sold it a few months ago) was lower than our income would have been if the money was invested in a term deposit account earning 5%.

    Regardless of whether or not people are happy with the tone of your post, thanks for raising some important issues.

    Hila

  6. #26
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    I think "Adam P", troll or not, needs to realise that NEW ZEALAND IS NOT THE USA!!!

    We did not have a subprime crisis here, that was created by the lack of banking regulations in the USA, thankssomuchforcreatingtheGFC...

    Adam P, please read what Thomas Jefferson said about the Federal Reserve, and ponder the implications for the rest of the world's economy, then come back to us. Thank you for reading, have a lovely night.

  7. #27
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    I don't know about anyone else but I'll be happy just to make my money back on selling my UK house, so coming across with any equity is probably out of the question . Fingers crossed though for selling up in 10 months time that the uk market has picked up a little bit along with the exchange rate, I can but dream!

    I don't have a dream NZ city or suburb as thats mainy driven by what we can afford and where the jobs are, so changes constantly! As echoed by countless others though we plan to rent for the first 9-12 months so we can get a feel for the area we want to settle in rather than for monetary reasons. Am I right in assuming that like the UK, you would need to be in a job for at least 3 months before you could apply for a mortgage in NZ? (sorry slightly off topic!)

    More on topic, my sis moved to nz back in 2006 and settled into their rental in devonport, it's only now that they are moving out and buying a place after finding something suitable at a price they were willing to pay. They are the first to say what a wonderful thing hindsight is and how if they had moved their money from the UK back in 2006 they probably would have bought sooner and paid less. But as with everything else you don't have a crystal ball and can only do whats right for you at the time and hope it's right. Only you know whats right for you and your family at any given moment in time. For us we, bought at the wrong time in the uk and will sell at the wrong time and no doubt buy at the wrong time in NZ! I hope to be happy though or none of this process would be worth it. Additional pennies would help but heh thats the sorry of our lives!!

    Waiting longingly for the move to NZ and getting to meet lots of the great people on here

    Jen x

  8. #28
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    I think part of the reason housing markets in Vancouver and Canada have cooled off is directly related to the "Mortgage rules to be tightened further by Ottawa" - http://www.cbc.ca/news/business/stor...tightened.html

    Is it a good thing (idk)?.....but the market has cooled off in Canada (at this time) due to someone putting on the brakes.

  9. #29
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    Manks is offline Serial procrastinator and general busybody
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    I think there are some widely sweeping generalisations that Adam P has made that just rub people up the wrong way.

    The title, for a start, may be well-intentioned, but that, and a lot of the other content (style and "facts") assumes that we're all numpties who are spellbound by NZ and it's "biased media" to the extent that we can't think for ourselves.

    The assertion that:
    Many immigrants will find that after five years they want to go back home.
    is, quite frankly, BS, and I'd like to see some stats that back this up. No, not everyone will find their happy place (see what I did there? ) in NZ, but I feel that the majority of migrants do settle.

    Does everyone rush headlong into a crazy mortgage? No. We've been here two years. We have some of our equity still sat in our UK bank because I'm reluctant to bring it over for such a crap exchange rate. But the main reason we haven't bought is a) We wanted to give ourselves time to settle, figure out if Wellington was the place for us, and then decide if we wanted to "commit". We aren't the only ones either.

    I've seen various stories in the media during our time here that indicate housing prices going up AND down. We live in the capital where there are numerous, well-paid, public servants. So the housing market remains quite buoyant here. The suburb we live in (and would ultimately like to buy in) is highly desirable and therefore expensive. So we may have to look at moving because we're realistic and don't want to stretch ourselves too much. We could afford it, but I'm not willing to go that far. There. That blows Adam P's theory about all migrants blindly throwing themselves into excessive mortgages.

    Most people do their research before they move here. I think that's why the tone might not have gone down too well.

  10. #30
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    We moved from the US 1 yr ago, got caught in the housing market crash and have learnt a painful (and costly) lesson. However I would not compare NZ to the US 5 yrs ago. The US is full of people who were being lent ridiculous mortgages (we were not those) and then lost their houses as adjustable rates went up or value of houses dropped. In our case our house lost its value and we got hit by the not so wonderful tax system.

    We waited a year in a rental and have just bought a house with a smaller mortgage as we wanted to get on the property ladder again and not just throw money towards someone else's mortgage.

    I appreciate your post as good advice for recent immigrants and I respect your decision to rent for now. I just respectfully disagree on the comparison between the US and NZ!

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