"it will take 30 years to recover"

[Baron Silas Greenback]

There's never been such a property hype as the latest one.

So this time its different?

[67910241]

Yes and no

So this time its different?

No in the sense that it was just a protracted "big" boom in real terms, and there have been others of its magnitude before and there may be others like it in the future.

Yes in the sense that the boom was rather global and nearly perfectly synchronised accross most Western countries (especially in the Anglophone ones) and that it was very substantial in all markets where it occured. The new level of interconnectedness and availability of information allowed by the existence of Internet and electronic communication, as well as many currencies and economies now floated against each other and therefore freely and transparently available to overseas investors and, finally, more relaxed international property investment rules than ever before in several participating nations allowed for the bubble to be spread more or less evenly accross different regions and countries.

So, it's been the first GLOBAL property bubble ever. That bit IS different. And it's already burst in many bigger markets. That is what the bubbles normally do (not too different). Net effect? A global bursting as opposed to a local one. It may not be a perfectly synchronised popping, nor will every single area be affected equally, but this country was a part of it and it's unreasonable to believe it will be spared as 90% of the causes and symptoms of the boom here were the same as overseas where it has already burst, even if they were not as grave.

So, I don't think that it's different this time. It could be a bit more transparent (with nominal value falls instead of just real value falls) but not really different.

[Green Fish]

A very good point. The whole market has become globalised. Twenty years ago, there was no way that some Yorkshire panelbeater could buy a "villa" in Spain. And there was no possibility of Shania Twain buying a sheep station in New Zealand.

[Gatekeeper]

Likewise I believe there are a significant number in NZ who used their home equity to fund trips and buy consumables. For example; last October, at that sorry religious festival in Cardiff, I was surprised at the number of Kiwis who openly acknowledged to me they "put the trip on the house"

Sounds easy doesn't it, putting your trip on the house.
But in reality they have drawn down on future production (capital not yet made). By using debt, rather than increasing their childrens chances of a good life, they have stolen from their future. When it comes down to the crux of the current global problems, we have collectively, globally sold our future. That's all well if we can increase production to pay for it over time.

Where this crisis is deadly serious and vastly different from previous "Cycles", is production of our basic needs (food & energy) have not kept up with our population growth, now Asia wants their share. How can we pay back the "interest"?

Nature certainly has it's own way even in "Eco"Nomics.

[SmallBrain]

http://www.financialsense.com/Experts/2008/Brussee.html

I recommend people to listen to the 2006 recording (at the bottom of the link above)... amazing as the guest was talking (back in 2006) about events he thought would happen in 07/08 just like what are happening now.

Then listen to the 2008 recording (at the top of the linked page), which was a revisit last week with the same host and guest and they talked about what would likely to happen in the coming years. Given that they had predicted in 2006 mostly correctly what would happen in 07/08, they're worth listening to...

[Gatekeeper]

Excellent, thanks Smallbrain

[Austrokiwi]

Excellent, thanks Smallbrain

I agree: One quote really resonated with me: Your home is an expense, it is not your savings.


I only listened to 30 minutes of the interview but it was reflecting other commentators of that time.

One thing that I have noticed is the shift in lifestyle in NZ........I hope I communicate this adequately:

Nowadays most people buy at a Supermarket and most meals are of the fast sort ( Please someone tell me I'm wrong). I believe this is a sign of people feeling richer and not wanting to "waste" their leisure time.

In comparison: when I grew up in the 60s and 70s in a slightly below average middle class suburb in Christchurch. Every one we knew had their own Vege Garden, some even chickens. Now in the last few weeks I have read that more people are buying vege seeds and growing their own Veges). Doesn't this match some of the points in the interview?

[essence]

An interesting viewpoint

Nowadays most people buy at a Supermarket and most meals are of the fast sort ( Please someone tell me I'm wrong).

Like all portions of society, there are some who buy all their meals pre-packaged from the supermarkets. With the effects of petrol price rises and the on flow to grocery prices etc, I think you'll notice that a lot more people will be making their meals from "scratch".

I believe this is a sign of people feeling richer and not wanting to "waste" their leisure time.

No, it's just a sign that people are lazy.

Every one we knew had their own Vegie Garden, some even chickens. Now in the last few weeks I have read that more people are buying vegie seeds and growing their own Vegies). Doesn't this match some of the points in the interview?

Yep, we too had the vegie garden and the chickens. I must admit that my garden isn't as extensive as my Dad's 1/2 acre plot (!) and I don't have chickens (that's more Council rules than my decision). There is something therapeutic in vegie gardening and knowing that when a meal is prepared, that a vast majority of the food on the table, I have grown.

I wouldn't say a lot of people are getting back into gardening but there are a few more people growing vegies in pots to supplement their weekly groceries. More of necessity to stretch the budget that out of any real desire to be gardeners.

[princess]

We've started a vegie garden - and would love to have chickens or even a milking goat! Not just to save money now but to protect ourselves from future price shocks.

We're buying a scooter for the same reasons.

[Shalodge]

Most NZers don't have a mortgage?

I guess this is true if you are talking about individuals but when talking about households that changes?

The stats seems to flop back and forth and add to the confussion but I am going to suggest that....

Most (more than 50&#37 of NZ families (as in 1 or more persons living together) living in their own home have a mortgage..

[Perry]

We've started a vegie garden - and would love to have chickens or even a milking goat!

The price of chicken feed has increased *

However, chickens are a great waste disposal
crew, and they give eggs in return. Save on
eggs, save on rubbish bags, etc. Careful manage-
ment is important. (I've kept hens for over 20 years)

*From an average of $20/25Kg bag to $25 in
the last six months. Worse to come, I suspect.

[princess]

Hi Shalodge i have to disagree.. NZ Stats measure tenure of households, so they are interested in the number of HOUSES that are owned etc.

When you take into account the huge number of over 60's, many of whom own their home, the original stat does make more sense. When you're in your 30's it doesn's seem like so many people are mortgage free though.

[tricky]

Some figures (but don't quote me...)

You tell me: of four million people, what percentage of New Zealanders does actually have a mortgage?

There's 1.3 million mortgages spread amongst 4 million people.
You work the % out.

The average mortgage is around $135,000.
The average house is valued around at $350,000.
Average LVR = 38%

There are 1.4 million dwellings:
- 900,000 owner occupied:
..... 500,000 with mortgages
..... 400,000 without mortgages
- 500,000 rentals (no idea how many have mortgages)

Not sure if this helps.

[Shalodge]

There's 1.3 million mortgages spread amongst 4 million people.
You work the % out

.

Ok.. How many of the 4M are under 18 years old ?
How many mortgages are in partnerships?
What about mortgages where there is no amount owing but the bank hold the papers in case of future finance needs?

Im confused! 1.3M mortgages is a lot. Even allowing for several on a property. Is that residential or are we counting comercial as well?

Its never as simple as you think...

[Badger]

this graph show that property values in the 70s were almost the same as in Early 2000.

definitely contradict the theory that P.I values duple every 10 years.

say a property was worth 50k in 1975, and 100k in 1985, 200k in 1995.

am I missing something?

You havnt really made anything since its stealth inflation!

Buying and selling houses with more and more fresh paper money issued from central banks is not capitalism since nothing new is being invested in!

Most here are living in an illusion of misleading media and fraudulant leaders!

http://www.financialsense.com/fsu/ed...2008/0620.html