Property values pick up speed in year, says QV

[muppet]

Property values pick up speed in year, says QV
5:00AM Monday September 10, 2007

Property values increased at a greater pace over the past year in an astounding show of strength, shrugging off expectations of a slowdown, Quotable Value said in its monthly report.

National property values rose 13.3 per cent for the year ended August, picking up from a 12.7 per cent increase in July, to the fastest rate of increase in 16 months.

That was despite rising interest rates, slowing migration, and a volatile currency, QV spokesman Blue Hancock said. Ultimately, a fall in the number of buyers meant there was no downward pressure on prices, despite the smaller number of listings over winter.

The trend has quickened since QV put the rate of annual growth at 8.8 per cent in January. The market rose to a record high $394,397 over the period, up from $381,298 in July.

"It's just that confidence with people having dollars in their pockets and jobs, and if the market's rising at this pace they've got to get in now if they can afford to pay that interest bill ... " The data in QV's monthly report is based on sales over the three months ended August, compared with a year ago.

The figures do not reflect the recent finance company collapses, which have dented market confidence and panicked investors into putting their money into other assets.

Auckland's property values rose by 12 per cent over the past year, up from 10.2 per cent in July. Wellington was up 14.5 per cent from 14.7 per cent, and Hamilton rose 14.1 per cent from 13.6 per cent.

More housing data is expected in the next few weeks from the Real Estate Institute, which has shown a decline in the national median house price for two consecutive months after hitting $350,000.

- NZPA

http://www.nzherald.co.nz/section/8/story.cfm?c_id=8&objectid=10462680

[OllyN]

Mixed Signals

Some body is not telling the truth. How can these widely different views be all right?

NZ Herald 10th Sept:
"Owners of many inner-city Auckland units are taking a big price bath when they sell. In one auction of four units last week, two owners lost a total of $169,000 - the difference between what they paid in 2004 and 2005 and what they got last Wednesday. One owner at the City Sales auction lost $90,000"....

NZ Herald 10th Sept.
Property values increased at a greater pace over the past year in an astounding show of strength, shrugging off expectations of a slowdown, Quotable Value said in its monthly report.
National property values rose 13.3 per cent for the year ended August, picking up from a 12.7 per cent increase in July, to the fastest rate of increase in 16 months.... the market rose to a record high $394,397" ......

NZ Herald 10th Sept:
"Bollard to leave OCR unchanged as housing slows"...

NZ Herald 10th Sept:
"more housing data is expected in the next few weeks from the Real Estate Institute which has shown a decline in the national median house price for two consecutive months after hitting $350,000"....

NZ Herald 10th Sept:
From High End Suburbs to Ghost Town (page A16) the woes of the USA housing market.

Sunday Star Times 9th Sept.
"Market Has That Sinking Feeling" (D7) describes the residential auction at Barfoots last Wednesday when almost nothing sold .

I am interested to know which set of facts is correct
The word on the street is that property prices are slowing. Some of the reported facts say otherwise The data as reported is contradictory.

Are the facts being manipluated? Is there an agenda we are not aware of?

Your views please.

Olly Newland

[Dean@Massiveaction]

Is this not completely typical of this market Olly?? You've been around longer than most of us, I thought media confusion was very "normal" when the market has no clear direction.

[Gatekeeper]

You've got to remember that these stats are history already. What's important is what's happening now at the coal face. Too many get caught out because once it's in the news it's history and a bit late to act to gain the best advantage.

There are disadvantages in following the herd, when changes are afoot.

I had a bit of a chuckle reading the contradictory pieces this morning, one after the other

[whitt]

The media will always report what they want (or are told to in the case of conspiracy's).

The fact media is reporting a slow down while the stats show otherwise is very interesting. I was actually alerted to this a while back. ( see my comments in this thread http://www.propertytalk.com/forum/sh...ad.php?t=12445 )

I still have not worked out the reason yet but talking the market into a slow down may be the best option.

[tricky]

Isn't this quote from the Stuff site give a clue who's behind the rumours of a property slump?

Despite rocketing interest rates and the Government's best attempts to rein in rampant property speculation, house prices nationwide are still nearly $50,000 higher than they were a year ago.

There also seem to be a few vocal PT contributors who are pushing the impending property slump view - I wonder if they are Helen Clark supporters?

[whitt]

Damn my conspiracy theorists idea is out of the bag now. Tricky is onto it too.

They have tried many ways and the "Lets talk the market into a slow down" option is the latest.

Or is there simply no conspiracy and the media are doing what they feel like?

[cube]

Without wishing to be labeled a Helen Clark supporter , then comments from the commentators this morning have agreed with Gatekeeper's

You've got to remember that these stats are history already.

The past 6 weeks have seen minor panic in the finance markets, which has, I imagine, a flow-on effect in to the public psyche.

However, we have had claims of the stats being 'ancient history' before, and still the market marched on and up.

cube

[whitt]

yes Cube. The impact of finance companies failing, The next chapter to unfold.

I think it was Kieran Trass who once said that the property market takes time to change.

And what happens today will take a certain period before it flows into market place.


My 2 cents
The QV stats are till end August so further impacts on market may not be seen for a long time yet. Prehaps early/ mid 2008?

[Julian]

Olly,

This reminds me of a book on my bookshelf published back in 2004. The writer, talking about the New Zealand property market, in his opening preface said the following, "This book is meant as a timely warning to readers and investors who, like me, believe that the property market has over-reached itself and is due for a major correction."

Since that book was published the market, as we now know, has gone from strength to strength, and anyone who heeded that warning would have stayed out of the market, and as a result would have rued the day they read it.

If the market was long overdue for a major correction back in 2004 we must surely be headed for the biggest slump of all time now that it's late 2007, and over the intervening three and a half years we have experienced nothing but relentless growth.

It could be that the author was possibly trying his damnedest to cool the market to boost his own buying opportunities for the continuing boom in values, but I, for one, aren't that cynical.

The book, "The Day the Bubble Burst" and the author, Olly Newland.

I would suggest Olly might just have got it so very wrong, as he has before with Landmark, and as we are all inclined to do from time to time.

My point is that that it is hard to believe anything one reads, but it is nonetheless astonishing when an investor/commentator ridicules others when his own track record is less than exemplary.

Julian

[Davo36]

Strong words Julian, but not entirely undeserved!

I too read Olly's book back in 2004. At the time I was carrying a lot of debt and immediatley sold 1 property. It had been on the market for some time with not much interest being shown. I wanted $800k and got just less than that. 3 months later the vendor stuck it back on the market for $1.3 million i.e. $500k higher. He didn't manage to sell it for that, eventually withdrawing it from sale. It's still not worth $1.3 million but it is probably worth say $1 million to $1.1 million.

I bought it for $475k, did a whole bunch of work to it and probably made around $300k in capital appreciation and rent over a 3 year period. So I did OK. And by selling I get to keep that profit in my pocket and have no further risks associated with that property.

The thing is (as I have said in another thread) it's been nigh on impossible to buy anything else at a vaguely realistic price since then. I should have just held it, and I would have made say $200k to $300k in capial appreciation on that property.

My gut feeling is that Olly has in fact not called it wrong, but called it early. Very very early!

And Julian, I do reckon we could be in for a very hard landing, not just a little 'dip'. Olly will be hoping so too, so he can say "I told you so" (instead of "well, it's definitely coming, it's still coming, it's still coming... well I think it's still going to happen, I hope it isn't too bad, I now think it might not be too bad etc....")

The media commentators are all over the place. I laughed out loud when I saw the 2 contradictroy headlines on the NZ Herald's website. There's so much 'talk' out there at the moment that it's very hard to tell wtf is going on. And I guess I'll (albeit continuing to look for well priced property to buy) be staying out of the market whilst that's the case.

[Julian]

Davo,

And as I have said on this forum it is still possible to find good deals out there. I have done so recently as I mentioned.

I remembered freaking out a bit after reading Olly's book, but fortunately held my ground and didn't rush off and sell everything/anything because of it.

These days I pay little attention to forecasters - it seems so few can get it right. As an example, two years ago my bank was saying they expected interest rates to be dropping after 12 to 18 months, so I only fixed for two years, and now I am re-fixing at a much higher rate.

I don't hold the bank responsible. I hold myself responsible for believing that it might have been possible to predict what the future might hold. It plainly isn't possible for anyone to predict the future as there are too many variables.

I realise that history demonstrates that most things operate in cycles, but it is just too damned difficult to determine when a cyclical change is going to happen. There are those that are making big money trying, but few will succeed over the long term.

Better to proceed with caution, and with gearing levels that are comfortable ie to do one's best to mitigate the risk, and to have strategies in place should things take a turn for the worse.

Julian

[cube]

The media commentators are all over the place. I laughed out loud when I saw the 2 contradictroy headlines on the NZ Herald's website. There's so much 'talk' out there at the moment that it's very hard to tell wtf is going on. And I guess I'll (albeit continuing to look for well priced property to buy) be staying out of the market whilst that's the case.

Headlines are never supposed to tell the whole story, and the copy within the story holds no contradictions.

QV's measure show a strengthening of growth up to the end of August.

Appartment sales last week were weak.

No contradiction there, just facts.

cube

[OllyN]

Julian
It's a shame that you find in necessary to abuse the messenger rather than debate the message.

My book "The day the Bubble Bursts" did not say that 2004 was the end of the boom. It pointed to the future and what a prudent investor should do in the coming years. It correctly predicted the finance company collapses, unexpected interest rate rises, the carnage in the cheap apartment market, share market breaks, slowing immigration, fluctuating foreign exchange rates, falling business confidence, median prices dropping, and tax changes just to mention a few.

Be patient. Real estate is by its very nature, a slow mover, so being a year or two out is neither here nor there.

People like you are cannon fodder for people like me. Just keep on buying, risking all and whistling in the dark.

There will be bargains aplently sooner or later.

In the meanwhile I shall be content to remain in the background waiting
quietly for you and others like you for just the right moment, and for just as long as it takes.
Cheers

Olly Newland

[Tucker]

Julian
My book "The day the Bubble Bursts" did not say that 2004 was the end of the boom. It pointed to the future and what a prudent investor should do in the coming years. It correctly predicted the finance company collapses, unexpected interest rate rises, the carnage in the cheap apartment market, share market breaks, slowing immigration, fluctuating foreign exchange rates, falling business confidence, median prices dropping, and tax changes just to mention a few.

Olly Newland

What you said here most of which happens in every cycle so you are bound to get it right sooner or later.