What's the best way to short the Auckland Housing Market?

[Kbkiwi]

Real estate agents trying to put a spin on falling Auckland house prices by calling January figures "a change in sales patterns"

http://www.nzherald.co.nz/business/n...ectid=11584483

the average sale price fell 6.6% from December.

percentage of properties costing more than $1 million fell from 35% to just 21% - a huge fall in just one month.

People are finally realising paying a million plus for an average Auckland house is completely bonkers.

[Kbkiwi]

Do you short NZX securities? If so, what broker do you use?

No I only trade on US markets, I much prefer using options to long/short equities - small defined risks with huge upsides.

[Kbkiwi]

good point re insuring yourself. So I presume you have properties and you are trying to reduce your potential losses?
but could that help if fail, if you had a load of people betting on it too fail?
Would a better strategy not be to just sell up and buy back if it crashed?

sparxNZ touched on the shorting, something I only vaguely understand, but how does the prediction markets work, is that more like gambling websites?

no I only have peoperties in Wellington, but if I had any in Auckland I would definitely be selling them at present. If there was actually a good liquid market for an insurance product against Auckland house market specifically I would keep Auckland properties and be paying the premium for that insurance until average sale prices fell to reasonable valuations.

[Kbkiwi]

Yes I have an account with iPredict - they are looking to transfer their operations to a US prediction market instead.where operations will resume as normal.

they have a section devoted to Auckland housing, where you either buy or sell the outcome of Auckalnd average house prices ever reaching $1 million before January in a particular year:

eg: This contract pays $1 if the Average Auckland House Price for January 2019 or any month prior is greater than $1,000,000.

For instance for 2019 the price is .75 - if you buy a contract (for .75c) and it reaches over $1 million before that date, then your contract is worth 1.00 (a 33% return). if you sell a contract (you pay .25c) and it remains under $1 million on that date, then the contract is worth 0.00 and you pocket the difference in price between when you sold and when it closed (0.75 per contract) which is a 300% return.

so if someone were to sell $10,000 worth of contracts, they would get either a return of $40,000 (if they are right) or lose the lot.

[HattrickNZ]

Tks.nicely explained. Presume gains would be taxable or does intent come in here?
What do they use for the 1mil Stat because i'm sure that would vary from the different sources?
Is setting up account straight forward from nz, the usual paper work, driver licence...etc?

[Bluecoat]

I know I know , buy a lottery ticket!

[Bluecoat]

Real estate agents trying to put a spin on falling Auckland house prices by calling January figures "a change in sales patterns"

http://www.nzherald.co.nz/business/n...ectid=11584483

the average sale price fell 6.6% from December.

percentage of properties costing more than $1 million fell from 35% to just 21% - a huge fall in just one month.

People are finally realising paying a million plus for an average Auckland house is completely bonkers.

From where I am standing, prices are steady or going up, not falling. Forget DEC/jan/feb stats.

[Anthonyacat]

Tks.nicely explained. Presume gains would be taxable or does intent come in here?

This is a REALLY interesting question! "Intent" has nothing to do with it, but would the gains be taxable? The answer, as so often, is "It depends".

I'd imagine the IRD looks at this like gambling. That's essentially what it is, after all. You may as well place predictions on which segment a roulette ball will land on, or which balls will come out of the Lotto machine.

As such, your gains are not taxable, and your losses are not deductible, unless you are 'in the business of gambling'. Which is a matter of judgement. How much time and money you spend on the activity, mostly, and whether you're using the winnings to fund your lifestyle.


The 'intent' law only comes into play if you purchase the bet with the express intention to sell it. But presumably you would be buying them to hold them and see what the payout is, and the ability to sell them later is merely a secondary option. Of course, if you were buying and selling a lot ('trading') and developed a pattern, and if the numbers were material, the IRD would probably take an interest.

[BigDreamer]

K kiwi - are we even reading the same article? Jan 2016 property sales were up 4% the same time last year.

As for why Jan and Dec sales are less than Nov, it doesn't take a rocket science to figure out that every year holiday season is *slower*

[Nick G]

^ This is true. Primarily because solicitors and bankers are away to be honest.

[eri]

+ 1/2 of council is on extended holiday

making it hard for buyers to do due diligence

[Kbkiwi]

K kiwi - are we even reading the same article? Jan 2016 property sales were up 4% the same time last year.

As for why Jan and Dec sales are less than Nov, it doesn't take a rocket science to figure out that every year holiday season is *slower*

The volume of sales were up, the average value of those sales was down significantly month on month.

not sure what others talking about council being closed on vacation etc have to do with average selling prices, that would only affect volume of sales, not average prices.

[Damap]

Chinese back strong in East Auckland, my agents are all smiles again :-)

[Davo36]

You see their smiles from Fiji Dean?

[Damap]

Yes Dave they are very happy. Seems to have turned the tap back on like crazy. Good for trading but hard for buying.