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  • New build price per square meter vs sale price

    Hello,
    Sorry if anyone have asked this before.
    I just returned to NZ for good and the house price has sky rocketed. Wow3.

    To cut the story short, a new build one bedroom, 1 bath, no parking is starting from 650K for about 50-60m2 (2 levels). With latest (as of 2021 google search) per meter square land price in Welly about 3000/m2 and build price about 3000/m2. a 60m2 terraced TH land and home package should be 180k + 180k ..about 360K..

    Amazing to see its being sold at 650k...more interestingly mostly are sold out :-O....is it really worth it?why would anyone buy a highly inflated price (future price). Keen to hear from anyone (whoever have purchased and not)...just to learn from guru's point of view...

    Cheers folks

  • #2
    Originally posted by rupart View Post
    ... why would anyone buy a highly inflated price (future price).

    Cheers folks
    Mostly because people are not rational or good at judging value.


    It might help your understanding to see a house as not just one thing, but several things.

    For example, while the primary function of a dwelling is to keep the rain and wind out, and to have a place to store belongings etc etc..

    Buying a house, next to a prestigious school. might change the primary function of that house into an admission ticket into the social circles of the rich.


    Another function a house could fill, in an ascending market, is that of a speculative token.
    Buy, hold , sell at a profit.

    Or, if for example your central bank (wink wink Mr. Orr), is watering down the buying value of your paper money, by diluting the pool with undervalued debt money, then a house may fill the primary function as a store of value, or a hedge against hyperinflation, as it is technically known.

    Some have said, and I'm not sure how accurate this is,
    That the primary function of housing in NZ is to keep the bribe money paid to corrupt Chinese officials safe from the Chinese government.

    A slight twist on the store of value aspect.

    Hope this helps.

    (There's also a more twisted function, to do with businesses undermining local wages and our education systems, buy exploiting immigrants and needing to store those "slave labor units" somewhere, if you want the detail, just ask and ill do my best.)

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    • #3
      Good infos McDuck...the one I see in welly not at posh areas..like Taita, Trentham etc...still snapped up..so your other points makes more sense on why ppl buying....by the way...i am not sure if this 1b,1b,0p will hold value...only time will tell...

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      • #4
        Originally posted by rupart View Post
        Good infos McDuck...the one I see in welly not at posh areas..like Taita, Trentham etc...still snapped up..so your other points makes more sense on why ppl buying....by the way...i am not sure if this 1b,1b,0p will hold value...only time will tell...
        I agree,

        personally, I find the whole thing very interesting.

        There are so many drivers of price, that it would take day to go into them all.

        Price changes tend to start from the main centers, and slowly move outward over time.

        It's called "crowding out", in economic terms.

        Loose Monetary policy from the RBNZ in Wellington, caused price surges in Auckland, and crowding out in Auckland, which caused a domino like wave that reflected back and finally reached Wellington.

        It's delightful to see, as it follows Newton's Third Law: For every action, there is an equal and opposite reaction.

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