Kieran Trass Market Predictions APIA 8th Feb 2011

[Bluekiwi]

Okay the statement is that we "Are in the middle of the slump".
Whereas a lot of people thought perhaps we were coming to the end of it.

Their is more to fall in the market, then an recovery in 2012 ?? or 2013.
He was very good predicting the dead cat bounce second half 2009 and said prices and the market would come down 2010 and he was right.

What are peoples opinions on this, maybe from people who were there as well.

[CJ]

I dont think he necessarily said prices would fall, but in inflation adjusted real terms, property would lose value. I guessed 4 when he asked as the time.

The current 'rental boom" in Auckland is an anomoly. ie. I agree with Keiren
He didn't meantion the RWC. I think that will affect the cylce in a minor way but not the long term cycle.
He also predicted the slump would go on for a while. There is a shortage of houseing in auckland so I actually think we will come out of it soon that he predicted, though he was doing it on a national basis which was probably accurate.

Good advice though. Sort out your stuff and get ready to jump in.

[Keithw]

As much as i would like to think we are at the end of it, as would the Govt, I think we are in for more sideways for a couple of years, perhaps with further smaller drops in some areas.

The economy is not recovering
(start of spiral)
More businesses are closing down or reducing staff numbers
High $ makes NZ produce uncompetitive
It is also helping to push up food prices
Aussie economy much stronger than NZ so those that can are moving to Aus, leaving behind skills shortage.
Immigration (a major driver in house prices) is slow & theres no jobs for those that do come.
Petrol price is high & will stay high because of weak US$ due to massive amounts of money being printed.
High petrol price affects just about everything in NZ, so business costs & cost of living are rising, while incomes remain the same, or drop
Govt doing everything it can to stop investment in housing
Businesses associated to housing industry (lawyers, accountants, brokers, banks, builders, building suppliers -materials, windows, carpets etc, surveyors, roadbuilders, all the associated building trades- sparkies, painters, plumbers etc and many others) are struggling, so money is not flowing in the non housing areas
Its a Downward spiral - return to (start of spiral) above

ie WE ARE SCREWED - but the Govt doesnt want to let on & makes absurd statements that we are out of recession & recovering !!!!

[Keithw]

The current 'rental boom" in Auckland is an anomoly. ie. I agree with Keiren.

I also agree, I think it is the immediate impact of Govt discouraging rental investment. The shortage will remain, as will the higher rents, but they will stop rapidly increasing & stabilise at a point that is still well below reasonable yeilds. All the other costs (rates- insurance -maintenance- compliance) keep being added or increasing.

He didn't mention the RWC. I think that will affect the cycle in a minor way but not the long term cycle.

I dont think the RWC will have a big impact on housing, just a short blip in the rental market & hotel/ motel accomodation.
These big events are always hyped, & the reality is that while business increases for the short period & a bit after while tourists have a nosey around, it is not sustained, & with the high NZ $ tourists will be put off by both the cost of travel to get here & the living costs here.
I see it much like a xmas period- will help some in the short term, but not make a huge impact for most of NZ

[halfempty]

The current 'rental boom" in Auckland is an anomoly. ie. I agree with Keiren

I don't mean to be argumentative but when resource consents are at a historic low, and immigration creates a pent up demand in prime areas isn't that just supply and demand rather than an anomaly?

[Bluekiwi]

I don't mean to be argumentative but when resource consents are at a historic low, and immigration creates a pent up demand in prime areas isn't that just supply and demand rather than an anomaly?

My property manager confirmed to me today, that in the last 2 weeks rental property supply has shrunk dramatically.
She had 200 people through a viewing last week, and this was not central auckland.

Large 6 bedroom houses in South Auckland are also in short supply apparently

[CJ]

I don't mean to be argumentative but when resource consents are at a historic low, and immigration creates a pent up demand in prime areas isn't that just supply and demand rather than an anomaly?

You are a contradition as you appear to be a glass halffull type of person. We will see whether this rent boom is sustained. I dont see it surviving the winter.

lets hope it does.

[halfempty]

You are a contradition as you appear to be a glass halffull type of person. We will see whether this rent boom is sustained. I dont see it surviving the winter.

lets hope it does.

Thats the idea....the glass is always full.

Its just that sometimes its half full of water and half full of air.

[Wayne]

My property manager confirmed to me today, that in the last 2 weeks rental property supply has shrunk dramatically.
She had 200 people through a viewing last week, and this was not central auckland.

Large 6 bedroom houses in South Auckland are also in short supply apparently

short supply because there are less rentals or because there are less rentals vacant with increasing numbers wanting them?

At some stage occupancy will increase (more people per house) as the cost will be too high - people can't pay what they don't have!

[Bluekiwi]

short supply because there are less rentals or because there are less rentals vacant with increasing numbers wanting them?

At some stage occupancy will increase (more people per house) as the cost will be too high - people can't pay what they don't have!

Demand greater than supply = short supply.

That means price increase to get back to equilibrium.

But yes, a higher price will affect demand, and if that level of demand does not have support at a certain price level, then price will move back down.

[cube]

short supply because there are less rentals or because there are less rentals vacant with increasing numbers wanting them?

At some stage occupancy will increase (more people per house) as the cost will be too high - people can't pay what they don't have!

Ummm - does everyone know that Uni starts again soon!

Doesn't that happen around this time every year.

[WGN ex-property manager]

These "people can't pay more than they can pay" arguments only really apply to the bottom of the market.

Where tenants are well salaried, they still shop around to get the best bang for their buck, but they will pay for quality when they find it.

Once you get far enough away from the minimum wage / student / WINZ market, rents are increasing (in Wellington)

[Bluekiwi]

These "people can't pay more than they can pay" arguments only really apply to the bottom of the market.

Where tenants are well salaried, they still shop around to get the best bang for their buck, but they will pay for quality when they find it.

Once you get far enough away from the minimum wage / student / WINZ market, rents are increasing (in Wellington)

The bottom of the market just shack up together.
So I think it applies to them.
My WINZ tenant in Clendon just sprung another baby so should be able to extract some more money out of them.

Tenants need to get a bit smarter, they told me they would stay until I sell the house, I said I wasnt selling, they said in that case where staying for a very long time.
What I was hearing them say is "Put up the rent".

Another one told me "We are saving up now, for when the rents increase"

[SwissKiwi]

Another one told me "We are saving up now, for when the rents increase"

Very good, I like this.

[Davo36]

You cold hearted mercenary bastard BK. Fancy trying to get some of your tax dollars back via rent.

It's people like you who go to work and try and build up investment portfolios on the side that are taking money out of the poor people's pockets.

Surely you should provide this housing for free to these poor people who have no way to stop breeding. I think the government should confiscate your properties and give them to the poor people you stole them from.