Property Cycle Questions

[Rhys]

Hi all,

I've been thinking about this whole property cycle thing, and although I pay attention and know of it, I dont actually keep up with it. but I know a great website where people do

Anyway, I have a couple of questions, well more ponderings really:
assumptions - I'm basing this thought on the general view that the next upturn in the cycle is due in 2010/11. (if this is incorrect then please correct me and just alter any responses to your number) and I'm assuming a 7 year cycle.

i) is the cycle from 2003 (2011 minus 7) until now actually doing the same thing as the prevoius cycles have done?, thus giving a reasonable prediction the 2011 date is still looking good.

ii) what is the general advice on preparing for the next cycle. E.G stock pile cash and equity ready for deposits, or buy loads of property now and sell it when the going is good.

- I already hear the answer (ive used myself) of depends on what your trying to achive mate!... I'm not really after an answer that specfic, its more of a general feal of what YOUR doing so I can then review the answers to see if some other stratergies may be more apropriate than my plan.... ok so i aint got a plan yet, ya rumbled me!! but at least i'm thinking about it

also it may spark one of those classic PT debates on what we should/shouldn't be doing to prepare.

Regards
Rhys.

[whitt]

Leading up to next boom:

Buy in quality areas as these generally move first in the property cycle.
I wrote a investment tips over a year ago which is available through my signature below. I mention at the end of the tips this exact point.

[Gerrard]

Hi Rhys, I'll paraphrase because it's been debated lots of times before:

You'll hear Dean say stockpile now. You'll hear Ron say everything points to the next boom being the "boom of all booms". You'll hear Tony Alexander say (not on this forum, but in his own newsletter) say the economy is in for a soft landing so the property market won't fall apart in a hurry, but neither will it experience the big gains again next time round. You'll hear Kieran say the astute investor is reluctant that this stage of the cycle, but is ready to pounce on any great opportunities. You'll hear Olly Newland saying cash up and prepare for doom and gloom. You'll hear others say to be wary at the moment, keep your LVR down, and be ready to pounce once the next upswing happens.

So you'll hear a lot - what you choose to listen to is up to you!

BTW - no one actually knows when the next upturn will happen. A lot of people are speculating it will be around 2010 (because of the 7-8 year thing), but as we haven't even got far into the slump yet, there is a long way to go til we come out the other side. Don't assume any dates.

The best thing I can suggest is to get hold of Kieran Trass's book "Grow rich with the property cycle" (you can buy it here on PT) to learn more. It's probably the best money you can spend at this stage of the cycle!

Gerrard

[RentMaster]

It seems like the last boom just kept on going, well into 2005. So the next boom could be a while away.

Theory 1. About now it is probably best not to over-extend on finance when purchasing properties. A lower than normal LVR would be a good idea, so you can ride out any possible bumps.

Theory 2. This theory is to buy when everyone else isn't. Get the bargains while everyone else is running the other way, which is outside the boom times.

So those 2 theories tend to contradict each other to a certain extent. So buying slowly and sensibly is probably a reasonable plan.

[leapy]

Here's my sentiment: Buy when you can afford to buy. While trying to time the market can be entertaining, people forget they have to "time themselves" too.

This year you may be healthy, well paid, and have no major life crises going on. But anything can change. An illness diagnosis in your family. An unexpected redundancy. A new child.

My sentiment is if enough things are going right in your personal life right now - then make hay while the sun shines.

[xris]

Here's my sentiment: Buy when you can afford to buy. While trying to time the market can be entertaining, people forget they have to "time themselves" too.

This year you may be healthy, well paid, and have no major life crises going on. But anything can change. An illness diagnosis in your family. An unexpected redundancy. A new child.

My sentiment is if enough things are going right in your personal life right now - then make hay while the sun shines.

Agreed.

xris

[Josko]

Here's my sentiment: Buy when you can afford to buy. While trying to time the market can be entertaining, people forget they have to "time themselves" too.

Nicely put leapy!

[Mikal_NZ]

Here's my sentiment: Buy when you can afford to buy. While trying to time the market can be entertaining, people forget they have to "time themselves" too.

This year you may be healthy, well paid, and have no major life crises going on. But anything can change. An illness diagnosis in your family. An unexpected redundancy. A new child.

My sentiment is if enough things are going right in your personal life right now - then make hay while the sun shines.

Post of The Day Award goes to Leapy.

[Guppies]

NZ government seems to have done a lot trying to cool down the housing market but the median price still goes up and up...

I start to wonder if the next boom is coming very soon. From my experience of stock exchange when everyone's fear index goes up (which is now in the property market) it is a good time to buy.

[LondonKiwi]

NZ government seems to have done a lot trying to cool down the housing market but the median price still goes up and up...

I start to wonder if the next boom is coming very soon. From my experience of stock exchange when everyone's fear index goes up (which is now in the property market) it is a good time to buy.

Not sure the NZ govt has done anything..yet.....The Reserve Bank has raised interest rates to try and cool the market but that is independent of the govt. There has been talk of possible capital gains tax, changes to depreciation rules etc but I don't think anything has gone through legislation yet

LK