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Drop in Market Not Far Off...

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  • Drop in Market Not Far Off...

    LIKE EVERYTHING ELSE IN LIFE, NOTHING LASTS FOREVER

    The dip in the market is definitely, without doubt on its way within 12 months in residential property:
    • Banks are lending ridiculous sums to new buyers and the self employed like events leading to the 1987 sharemarket crash
    • Friends of mine who are big contracting income earners are making twice their normal salary and are spending everything they have on stuff...they are not worth the income they are getting at all
    • The young people (age 25-35) have never been through a crash and don't know the pain or the nature of a market economy
    • Interest rates are very high and possibly rising, perhaps not as high as the past but current prices are higher than ever before in relation to income % which offsets this
    • Prices are way higher than current building replacement cost
    • The Chinese sharemarket is about to crash big time, like 1987 in NZ, who knows what this will do
    • I have noticed a few properties around town being resold within 9-12 months, speculators are on the up more than I have ever seen and are trying to cash out
    • I went to an open home close by in Brooklyn, Wellington and have never seen such a small amount of people, there was only one other person there which has been unheard of over the past 5 years
    • A Valuer who I know has been in the game for 30 years recently told me he has had signs from agents and is hearing things similar words from them like before the last big crash
    • I believe the market is dipping as I write this, current economic info is 3-6 months behind
    • In Sydney the prices have dipped by up to 40% in Parramatta (Sydney) and out West in average suburbs
    Prediction
    • Little drop in good areas, large drop of up to 30-40% in bad areas within 12 months, e.g. Wainui and Porirua
    • Overgeared investors (leverage 80%+) could go under if they have a portfolio is undesirable areas or in apartments that are in average locations
    Someone can have a go at me in 12 months time but you won't have to....good luck everyone.
    Last edited by Commercial Dan; 03-06-2007, 11:40 PM.

  • #2
    Hmm, So your advice for someone trying to get into the market?
    James

    "Time is the great equalizer. It will either promote or expose you." -Jeff Olson

    Comment


    • #3
      Don't buy in the following areas in the Wellington region (could be a few more)

      Naenae
      Wainui
      Taita
      Waiwhetu
      Most of Upper Hutt
      Most of Porirua


      They are unbelievably over-valued and are fools gold over the shortish term.
      Last edited by Commercial Dan; 04-06-2007, 09:32 AM.

      Comment


      • #4
        Originally posted by Commercial Dan View Post
        Don't but in the following areas in the Wellington region (could be a few more)

        Naenae
        Wainui
        Taita
        Waiwhetu
        Most of Upper Hutt
        Most of Porirua

        They are unbelievably over-valued and are fools gold over the shortish term.
        I notice that you haven't mentioned suburbs like Karori,Lyall bay and most of the eastern suburbs.
        Paul.

        Comment


        • #5
          Originally posted by Commercial Dan View Post
          Don't buy in the following areas in the Wellington region (could be a few more)

          Naenae
          Wainui
          Taita
          Waiwhetu
          Most of Upper Hutt
          Most of Porirua


          They are unbelievably over-valued and are fools gold over the shortish term.
          I tend to agree however where can someone starting out buy then in Wellington/Lower Hutt?
          James

          "Time is the great equalizer. It will either promote or expose you." -Jeff Olson

          Comment


          • #6
            Anywhere close to the city should hold its value reasonably well. But be careful of South Karori, Tawa, Whitby, Aotea and possibly Churton Park; these areas are ok long term but could have some short term abberations as prices are so inflated there.

            Same could go for Auckland, I'm unaware of the market up there but I would not buy in Otara or any other poor areas. These will be very very volitile shortly.

            Brace yourselves everyone....keep the debt levels to sensible levels and make sure you have quality holdings.

            Comment


            • #7
              We're with you James....we're still looking - we know it's there - we just keep going... the numbers have to be right
              "I not only use all the brains that I have, but all that I can borrow." Woodrow Wilson

              Comment


              • #8
                The likelihood of Dan's scaremongering predictions being accurate I would rate at less than 5%.

                Virtually everything in Auckland sells way below replacement building costs. Even the inner city CBD apartments have definitely bottomed out and started to show hints of recovery.

                Our net migration is not going to stop due to the growing workforce shortage not to mention the impending growth in retirement.

                The best time to buy property in any main centre in New Zealand is now!!

                Stcik to main centres and but at wholesale and you wil find it hard to get into trouble.

                Waiting is a good way to pay a lot more for property!!

                Comment


                • #9
                  Recession - who would it impact the most?

                  For the sake of argument, let us assume that NZ goes into a recession.

                  Traditionally, recessions have hammered the poor, who don't tend to have savings to tide them through tough times. Perhaps partially offsetting this effect is the fact that welfare payments are unlikely to be cut by a Labour government in recessionary times. Beneficiaries will still presumably be able to afford the rent.

                  Wealthier people (and therefore more expensive areas) usually survive recessions in better shape. Wealthier people have on average better savings, and their jobs are not usually the first to go when recession strikes.

                  Nonetheless, could it be different this time? I would note that it appears to me that a significant amount of the "new wealth" built up in recent years has been built on a foundation of what appears to be extreme debt levels. Perhaps it is these middle (and even higher) income earners with commensurately high debts that would be most effected by any recession? I don't know...

                  Personally, I think that the idea that a recession will not affect wealthy or expensive areas is an assumption I would not make. What say you?

                  Regards,
                  *poormastery*
                  Last edited by poormastery; 04-06-2007, 11:13 AM.

                  Comment


                  • #10
                    "The Emperor has no clothes" !!!!!!!
                    If you want to buy property to make money/cashflow, you can forget it for the next decade, I reckon it'll go back to about 2004 levels.
                    Maybe NZ will keep it's record employment levels, but my guess is the credit will dry somewhat. That'll do it!

                    I agree with Dan that the last area's in Wgtn to boom will be first to go. But, prime areas like Boulcott in the Hutt went down 1% over the last year!

                    So attack away, you people who make money from selling yourselves (and your ideas) to others. If you'd been through at least one property cycle, I might listen to you!
                    Find The Trend Whose Premise Is False - Then Bet Against It

                    Comment


                    • #11
                      Originally posted by Commercial Dan View Post
                      • Friends of mine who are big contracting income earners are making twice their normal salary and are spending everything they have on stuff...they are not worth the income they are getting at all
                      When people stop spending watch out
                      Need a website or anything to do with online marketing? Visit Christchurch Web Design.

                      Comment


                      • #12
                        Hi Gatekeeper,

                        Do you agree with Dan's predicted figures?

                        "Little drop in good areas, large drop of up to 30-40% in bad areas within 12 months, e.g. Wainui and Porirua"

                        Personally, poormastery finds a differential of this scale between "good" and "bad" areas unlikely, but there you go.

                        Regards,
                        *poormastery*

                        Comment


                        • #13
                          Originally posted by Commercial Dan View Post
                          Anywhere close to the city should hold its value reasonably well. But be careful of South Karori, Tawa, Whitby, Aotea and possibly Churton Park; these areas are ok long term but could have some short term abberations as prices are so inflated there.

                          Same could go for Auckland, I'm unaware of the market up there but I would not buy in Otara or any other poor areas. These will be very very volitile shortly.

                          Brace yourselves everyone....keep the debt levels to sensible levels and make sure you have quality holdings.
                          Its all well and good saying "anywhere close to the city" but realistically you are looking at property $400-500k plus for an actual house (not apartment).

                          In my mind as a first property purchase I don't think it wise to jump in so deep. Especially only being able to put down 11-13% deposit.
                          James

                          "Time is the great equalizer. It will either promote or expose you." -Jeff Olson

                          Comment


                          • #14
                            pooomba wrote:
                            Even the inner city CBD apartments have definitely bottomed out and started to show hints of recovery.
                            I havent seen any indication that that is happening, apartment values (CBD Auckland) are falling, except for top 5 buildings perhaps. I attend an apartment investors group and there is a realisation that values are softening, you only need to look at recent sales & auction results.

                            pooomba wrote:
                            Our net migration is not going to stop due to the growing workforce shortage not to mention the impending growth in retirement.
                            The same applies to Australia, US and UK but their main centers are still experiencing falling property values.

                            pooomba wrote:
                            Waiting is a good way to pay a lot more for property!!
                            Yes, only when a market is rising. Waiting is a good way to pay a lot less for property - when a market is falling!! Everything operates in reverse.

                            pooomba wrote:
                            The best time to buy property in any main centre in New Zealand is now!!
                            Buying property at the peak of a boom in New Zealand (or anywhere for that matter)has always proved to be the worst time to buy. Historical records prove this.....but this time is different?
                            If you are in the property services industry (seminars, books, mentoring etc), it may not be in your interest for investors to believe that 'buying now' is not in their best interest. The property services industry will dramatically reduce in size.

                            pooomba wrote:
                            The likelihood of Dan's scaremongering predictions being accurate I would rate at less than 5%.
                            The likelihood of Dan's 'scaremongering'?? predictions being accurate I would rate at more than 95%.

                            Comment


                            • #15
                              Originally posted by Gatekeeper View Post

                              I agree with Dan that the last area's in Wgtn to boom will be first to go. But, prime areas like Boulcott in the Hutt went down 1% over the last year!
                              Boulcott down 1%? I find that hard to believe? Really?
                              James

                              "Time is the great equalizer. It will either promote or expose you." -Jeff Olson

                              Comment

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