Auckland Housing Affordability

[flyernzl]

and, according to Bob Jones, checking their cellphones.

[artemis]

One solution - Fletchers erected on site a $2m 3 storey duplex in 4 days. Standard components made in the factory don't need a lot of builders. And the Lego constructors need a different sort of skill too.

This time lapse 2 min video is well worth a look.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11911040

[Davo36]

Trouble is all these factory house building places never seem to last.

And as for 4 days, you'd wait 4 days for one inspection in Auckland just now I'd say.

[flyernzl]

It would appear that one of the problems with factory-built housing in NZ is that the local authority requirements differ from council to council.
As an example, years ago my brother-in-law built an enclosed porch on his place and also at a friends place. He supplied the labour, the friend paid for the materials.

In the Helensville council the timber cladding had to be horizontal (as in weatherboards), but in the North Shore area they insisted that the cladding be vertical.

These sort of demands makes it very hard to produce standard designs that are acceptable country-wide.
(This problem was also mentioned in the Herald article)

[Perry]

Warning to Auckland home buyers: 'The game's over'
29 March 2017

Yet another [failed?] prediction.
Original post here.

[Davo36]

Yes Perry interest rates are not really going up are they?

I don't see how they can. So many people out there in debt up to their eyeballs. So if rates went up, there'd be a property bubble bursting. Then of course rates would instantly be lowered to 0. So they're just cutting out the bubble bursting bit, and keeping rates low for the foreseeable future.

[jimO]

These stories worry me too - but for a different reason.

They usuall include the comment "Our mortgage payments of just over $600 per week are a little more than our previous rent payment of $495 . . ."

Like most renters (and reporters) they seem to be entirely unaware that the previous rent payments included the quite substantial and unavoidable charges for rates, insurance, water charges and maintenance.

So they will, right now, be up for an extra $100 or so each and every week of these costs on top of their mortgage payments.

Oh dear. By renting they were getting a bargain after all.

ah yes but at the end of it all they own it, not just paying LLs mortgage

[Beano]

ah yes but at the end of it all they own it, not just paying LLs mortgage

1: the tenant will only own the property at the end of the day if they pay p and I (on interest only the property is never paid off)
2: For a Landlord who has recently purchased the property (like the last 15years) the tenant is not paying for the LL mortgage.
The tenant is only partly paying for cost of ownership of the property.
3:it has been many years since a newly acquired residential property in Auckland costs have been fully covered by rent.

[Davo36]

1: the tenant will only own the property at the end of the day if they pay p and I (on interest only the property is never paid off)
2: For a Landlord who has recently purchased the property (like the last 15years) the tenant is not paying for the LL mortgage.
The tenant is only partly paying for cost of ownership of the property.
3:it has been many years since a newly acquired residential property in Auckland costs have been fully covered by rent.

Nice to hear this said Beano.

Basically it's all about capital gains. And a lot of people have made a lot of money this way.

Even with most commercial properties prices are at or below the breakeven points now I reckon.

[Beano]

Nice to hear this said Beano.

Basically it's all about capital gains. And a lot of people have made a lot of money this way.

Even with most commercial properties prices are at or below the breakeven points now I reckon.

When you take into account the true cost (vacancies,capX to maintain income etc) then yes even commercial ...can't see value at these prices (would rather stop growing and have a small portfolio based on value than a large portfolio based on trends)

[Don't believe the Hype]

Fully agree beano and I don't think that applies just to Auckland. Can't buy value right now, with a few exceptions/bargains that pop up due to individual sellers circumstances but these are few and far between.

In this market you have to create value, now is the time to improve profitability across existing portfolio by improving current properties and increasing rent price accordingly.

We are in the process of infilling our available sites, fully fencing properties, insulating floor and ceiling, adding heat pumps, units dating kitchens/bathrooms and improving indoor/outdoor flow focusing on ROI delivered on the additions.

If we can achieve the right ROI we proceed. This allows us to improve our quality of portfolio, quality of tenants and portfolio value while we wait for the market to sort itself out.

[Davo36]

I reckon this transition from father to son (will be some mums to daughters nowadays I guess) is a tricky one.

Usually the son disagrees with the dad as to how things should be done. And the old man won't allow the son to take what he sees as risks in areas that are new etc. So the dad doesn't want to give up the power to someone he thinks (rightly or wrongly) will ruin the business.

So then you have the son kinda half running the business with the old man kinda stopping him, so lots of conflict.

Alos, the people who start these businesses are generally workaholics and controlling. It's not in their nature to just stop, walk away and do something completely different.

They often don't have hobbies or interests outside of the business. Their fun and excitement and interests ARE the business.

So I'm honestly not sure how it's done. Can anyone think of a case where it's gone well?

[eri]

the bbc ran a story some time ago about the world's oldest family businesses

japanese but through a kind of cheat

adult adoption is reasonably common in japan

so when an old family company is looking to replace the old man

if none of the sons or daughter's husbands seem to cut it

they often offer a place in the family to their most promising worker

http://www.griequity.com/resources/industryandissues/familybusiness/oldestinworld.html

and guess what

after 40? generations

they got wiped out by overleveraging real estate

http://www.theaustralian.com.au/business/business-spectator/ancient-regimes--the-oldest-family-businesses-in-the-world/news-story/c927b993fb8408df4039784939e94786

[Beano]

the bbc ran a story some time ago about the world's oldest family businesses

japanese but through a kind of cheat

adult adoption is reasonably common in japan

so when an old family company is looking to replace the old man

if none of the sons or daughter's husbands seem to cut it

they often offer a place in the family to their most promising worker

http://www.griequity.com/resources/industryandissues/familybusiness/oldestinworld.html

and guess what

after 40? generations

they got wiped out by overleveraging real estate

http://www.theaustralian.com.au/busi...39784939e94786

Maybe I should write a rule , insert into a envelope for each generation to open
"Preserve your capital "
Thirty nine envelopes may not be enough ...maybe 100 for the next 100 generations :-)

[Davo36]

Cool story eri.

Makes me wonder how many people have been doing just that the last few years.