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  • S#%ts going to hit the fan.

    An agent I deal with sometimes was discussing the current market atm. She mentioned that currently it was not so much FHBs looking to buy but more current buyers looking to downsize. This group had bought in the last 2 yrs at the top of the market but can no longer handle the current interest rate hikes. She said they dont care if they lose 100k just so long as they don’t have to pay the new lending rates.

    They are all looking to downsize from those lavish homes and into something more Manageable! These were buyers who thought it a good idea to buy a 1.5m home for there first purchase.

    Fools…
    Last edited by Frezzinghot; 07-12-2022, 03:22 PM.
    "DEBT BECOMES IRRELEVANT WITH INFLATION".

  • #2
    I’ve always found it odd how the LVR is used to ‘protect’ investors so they don’t get in over their heads - but it is not used in the same for FHBs.

    FHBs should have more skin in the game - not less and this way they don’t have whopping mortgages to service.

    cheers

    Donna
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    • #3
      Originally posted by Frezzinghot View Post
      An agent I deal with sometimes was discussing the current market atm. She mentioned that currently it was not so much FHBs looking to buy but more current buyers looking to downsize. This group had bought in the last 2 yrs at the top of the market but can no longer handle the current interest rate hikes. She said they dont care if they lose 100k just so long as they don’t have to pay the new lending rates.

      They are all looking to downsize from those lavish homes and into something more Manageable! These were buyers who thought it a good idea to buy a 1.5m home for there first home.

      Fools…
      Its going to be carnage next year I am telling ya, i know already some people taking big $500k hits already. One penthouse Apt purchased for $1,250,000 now selling for $700 - 800k IF they can get that.

      Comment


      • #4
        Originally posted by donna View Post
        I’ve always found it odd how the LVR is used to ‘protect’ investors so they don’t get in over their heads - but it is not used in the same for FHBs.

        FHBs should have more skin in the game - not less and this way they don’t have whopping mortgages to service.

        cheers

        Donna
        Yes 100%. But for some reason a fhb is seen as a safe bet.
        "DEBT BECOMES IRRELEVANT WITH INFLATION".

        Comment


        • #5
          Originally posted by chook View Post

          One penthouse Apt purchased for $1,250,000 now selling for $700 - 800k IF they can get that.
          A) Is that a:

          1) completed apartment or
          2) currently under construction and has been sold off the plan?

          B) Also is it a freehold or leasehold apartment?

          Comment


          • #6
            Originally posted by Frezzinghot View Post
            But for some reason a fhb is seen as a safe bet.
            Basel 3, risk weighting for different types of borrower / loan exposures for banks.

            Comment


            • #7
              Originally posted by Chris W View Post

              A) Is that a:

              1) completed apartment or
              2) currently under construction and has been sold off the plan?

              B) Also is it a freehold or leasehold apartment?
              sold off plan, Completed, CCC issued, freehold.

              Comment


              • #8
                Originally posted by chook View Post

                One penthouse Apt purchased for $1,250,000 now selling for $700 - 800k IF they can get that.
                Obviously difficult to see what LVR was used for financing their purchase (if any).

                If owner occupied 80% LVR was used, then the owners are now in negative equity.

                Key question is, can they continue to meet mortgage payments (if any), when they reset to current mortgage rates? Or will they be under pressure to sell?




                Comment


                • #9
                  I read in Stuff Graeme Fowler is paying $20,000 more per month - and plans to sell 20 properties in 2024 to clear all debt.

                  Property cycle in recovery phase in 2024.

                  cheers

                  Donna
                  Email Sign Up - New Discussions, Monthly Newsletter, About PropertyTalk


                  BusinessBlogs - the best business articles are found here

                  Comment


                  • #10
                    Originally posted by donna View Post
                    I read in Stuff Graeme Fowler is paying $20,000 more per month - and plans to sell 20 properties in 2024 to clear all debt.

                    Property cycle in recovery phase in 2024.

                    cheers

                    Donna
                    I would have to totally disagree.

                    2024 will be a terrible year to sell but a fantastic buyers market.

                    If you have read his books he has made some horrendous mistakes and had some mental issues along the way. Also you have to ask why someone at his age is still 'in the game' when many I know in a similar age bracket have made a stack of money and are enjoying life while still having a finger on the pulse and buying any deal cash.

                    One thing I will give him he is honest and puts it all out there.

                    Comment


                    • #11
                      Originally posted by donna View Post

                      Property cycle in recovery phase in 2024.
                      What will those in the privately owned long term residential accommodation business do if the pro-business party fails to become the government in 2023?

                      Especially those who are looking for reintroduction of interest deductibility for tax?


                      Comment


                      • #12
                        Originally posted by Chris W View Post

                        What will those in the privately owned long term residential accommodation business do if the pro-business party fails to become the government in 2023?

                        Especially those who are looking for reintroduction of interest deductibility for tax?

                        The combination of increased loan interest and reduced interest deductibility will present a serious cashflow issue for some investors. Add large insurance premium increases, local tax (rates) increases and more costly maintenance -- with limited ability in some cases to raise rents and situation becomes more dire.

                        So what do you do? Survive. Some investors are extending their loan term to 30 years.
                        Last edited by Sanya; 30-12-2022, 02:12 PM.

                        Comment


                        • #13
                          The key question is how many will be unable to hold on.

                          Comment


                          • #14
                            Some will inevitably fail – which is deeply disappointing when this forum and a number of PIA’s have (for ages) been advising investors to get rid of poor performing investment properties at record high prices and refinance at record low interest rates.

                            Comment


                            • #15
                              Originally posted by Sanya View Post
                              Some will inevitably fail – which is deeply disappointing when this forum and a number of PIA’s have (for ages) been advising investors to get rid of poor performing investment properties at record high prices and refinance at record low interest rates.
                              Surely the government are not that thick that they can’t work all this out. NZ residential investors are getting the crap kicked out of them.

                              Hows this for a concept?
                              Auckland University economist Robert MacCulloch meanwhile warns banks and other large institutions may start purchasing property directly, rather than handing out mortgages.

                              This has already begun happening in the USA and Britain, he says, where it was reported Lloyds aims to be renting out 50,000 homes by 2031. SUPPLIED
                              Auckland University professor of economics Robert MacCulloch says banks may well become direct buyers of residential property.
                              “The big fish are thinking: why should we let this first home buyer buy something which they are going to double their money on in the next five years? The banks are thinking: why don’t we double our money on it?” MacCulloch says.

                              “They are thinking: we should have bought the place instead of them and just rented it to them.”

                              There’s very little that can be done to stop the buy-up if it starts, MacCulloch says.


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