Auckland Housing Affordability

[Perry]

Didn't you just warm to this bit?

. . . often by ruthless investors chasing quick bucks.

Ruth was at home with mum.

[Don't believe the Hype]

Well I guess if the speculators weren't there then a family would have bought that house at the initial selling price and lived in it.

Instead of a family buying later for $100k more or so. So for them, it would have been more affordable right?

we don't have the facts but in he current Auckland market I'm assuming there was no listing price... My assumption is that if the final owner was prepared to pay the final price their offer would have been at (or near) that level resulting in no lower price, more cash to the original owner, 2 fewer contracts and less spent on lawyers/Lims .

but I can see your point that with the original vendor clearly undervaluing the property if the FHB was a good negotiator they may have ended up with a home at a lower price.

[Davo36]

Didn't you just warm to this bit?

Ruth was at home with mum.

Oh the journos love that stuff

[McDuck]

I've been reliably informed that its so easy to make money in the housing market that no effort or skill is required. I think the exact phrase was that "a chain smoking monkey driving a pedal car and wearing a fez could do it".
I just needed to share that vision.

The thing that I wonder about is why Australia and Canada are having the same issue. What is really driving this?
If it's really the backwash from China deciding to technologically modernise by becoming the manufacturing house for the western world, then traditional economic models of supply and demand and natural economic corrections just aren't going to work.

Well they eventually will, but only when everyone making money in India and China have displaced all local populations. There are so many people in China and India and so many able to relocate.

[Bobsyouruncle]

I would have thought the Fez would be a hindrance, not as bad as a Burkha mind you :-).

[Nick G]

This sort of thing doesn't help with housing affordability:

http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=11706163

http://www.nzherald.co.nz/business/n...ectid=11706831

Speculating is fine as long as it is fairly taxed. I just bought a property myself in Wellington and I'm speculating that I can renovate and improve the rents dramatically :-) An agent colluding with buyers to get 2 vendor commissions is most definitely not fine....

14K margin on the second deal is almost certainly a finders fee for a property finder who was paid by completing a double settlement. That just seems like a normal fee.

Did 5 minutes of searching on Guru and the NZ companies website.

My guess is the trader was notified early on the quid pro quo agreement that they would give the listing back, put in a quick offer and the vendor was persuaded to accept it, the trader went to his network of people and quickly found a buyer (or in this case, intermediary).

If instead they do an audit and find that the original vendor agent had the relationship with the buyers agent (2nd transaction seller) but there was collusion to bring in a middle man, then the agent is going to be in the sh*t.

Either way in the absence of vendor circumstances where they wanted a quick sale or said "just get rid of it" and accepted a sharp offer from Johnny-on-the-spot, this appears the agent failed in their fiduciary duty to the vendor (well the 2nd scenario is likely a criminal case). It will be interesting to see what comes out of it. The agent will argue that the first buyer had the connections with someone being willing to put money in the property and thus achieved a high on-sell price based on future value, that the vendor would not have got a similar price otherwise.

Some agencies have a minimum time a listing must be on the market before they present offers to try and prevent this.

Anyway, Magill Family Property who bought it in the end is owned by an experienced renovator and PT poster (I'm pretty sure), presumably to renovate/extend and sell again. I wonder what the herald is going to say when it sells well into the 6's 3 months from now!

[Bobsyouruncle]

Haha, Paul is snapped making a living. It's horrendous these nonsense articles. Media just love it.

[McDuck]

Even though it's unfortunate that people are speculating with an essential good like housing, it would still be a problem if they were speculating on a non essential good like tulip bulbs. And particularly illadvised with borrowed money.
But, ahhh, what ya gonna do. Lol.

[Don't believe the Hype]

There is also a chance that the vendor took an easy offer... I have bought many properties albeit in a weaker market at deceased estate sales... One in particular the vendor who was a detective signed my contract for sale ... Through my DD period an offer of nearly 30% higher came in as a back up offer... I completed the purchase and was asked if I wanted to I sell to the back up offer...

This is is not illegal but a switched on agent looking to make a commission to on sell the property I'd just purchased ... Win win win if I'd gone ahead... I'd make 30% on purch price without any cash down, agent gets to double dip commission and the other prospective purchaser gets the house they wanted at the price they were always willing to pay... The loser if you could call it that is the original vendor who accepted my price - but in their mind my price was value to them as they wanted an easy uncomplicated sale at a hard time in their life and I could provide that 'service' to them... If they waited for more offers it would extend their grieving period and if they sold to a FHB the process would likely have been drawn out and more difficulty

Sometimes top top dollar is not worth the heartache.

what the article fails to mention is that while the spectators made a quick $70ish k, if they had held the site for 6months more then sold they'd have make $100k, if they held for a year they might have made $150-$200k ... maybe they should be considered generous for handing over a house now instead of charging $100k + more I a year or so

[Nick G]

Yeah that could have been it. The REAA can look at the agents email text message history and work this out if they want to. Digital forensics is something all licensees are trained on and are told is a tool the authorities will use.

[McDuck]

I suppose the agent is acting as an agent - for the seller, and not for himself.
It would be pretty odd if a Police officer kept a spot speeding fine for himself, or a surgeon removed a kidney because he needed a new one himself.
There are all sorts of opportunities to use a particular occupation to benefit oneself.
Severe peneaties and a very good chance of getting audited would be one way to fix it.

[BlueSky]

Haha, Paul is snapped making a living. It's horrendous these nonsense articles. Media just love it.

Bluekiwi? Haha

I thought he didn't like it when someone else does it -like Chinese buyers ?

I love how the media just loves headlines

So what if you had to sell it a loss ? does it get printed ? POST GFC 30 % were selling below PP.

Big money big risk game not everyone has the guts to play it so those who can good luck

nothing ventured nothing gained right ?

[Perry]

Half Full or Half Empty?

Some cogent points in this latest from Shamubeel Eaqub.

When supply does not respond to price signals, there are clearly deficiencies in the way the market works – whether it is because of regulation or other market factors.

Like gummint factors.

Taking the two-sides-to-every-story perspective on this sentence:

The IMF's analysis shows our house prices have outpaced incomes the fastest of any country. The OECD reckons our house prices are the most overvalued relative to rents and the second most over-valued relative to incomes.

. . another angle could be:

The IMF's analysis shows our incomes have under-paced house prices the fastest of any country. The OECD reckons our rents are the most under-set relative to house prices to and incomes the second most under-paid relative to house prices.

[flyernzl]

Either way in the absence of vendor circumstances where they wanted a quick sale or said "just get rid of it" and accepted a sharp offer from Johnny-on-the-spot,

Exactly what I was able to do a bit less than two years ago.
Divorce-related property, there is always one in there who just says "sell the damn thing right bloody now" and I was able to make an unconditional cash offer on the spot.

So I was of service to them - enabled them to go their separate ways earlier than would otherwise been possible.

what the article fails to mention is that while the spectators made a quick $70ish k, if they had held the site for 6months more then sold they'd have make $100k, if they held for a year they might have made $150-$200k ... maybe they should be considered generous for handing over a house now instead of charging $100k + more I a year or so

Yup, I'm selfish so I still hold that divorce property, which is now valued at 45% more than what I paid for it.

A nice fee for my speedy services.

[McDuck]

Throwing this right back to answer the original question.

I'm standing at the top of one tree hill looking at the grave of John Logan Campbell, that Scottish doctor , considered by some to be the father of auckland.

I ask myself, " What would JLC do?".

The rather whimsical solution presents itself.

Find a nice bend in a nice river three hours out of auckland and create a Chinese style Special economic zone.
Hire Artizans from Las Vegas to build a copy of Oxford or Cambridge.
Populate it with the best educators.
Allow overseas students special economic zone visas to live and study there, but never to own or stay.

It's not a serious reply, but it gets you thinking along some interesting paths.