Financial Armageddon!!

[Chris W]

I don't need an actual number to tell me that there is a shortage.
Just looking at the sale prices and rents that are being achieved is all you need to know there's a shortage.
This is what property people use to plan their moves.

I'm not sure I understand you here. How does looking at sales prices and rents being achieved tell you that there is a shortage?
Can you explain how you are able to do that?

[OnTheMove]

What down turn? Down turn in what? What difference does (whatever it is) make to residential rental incomes?

Sorry Perry, yes I should have been a bit more detailed. Apologies.

Im recovering from MS so Im a bit brain fogged at the moment.

I think rents wont move, so if you a long term investor it means sweet FA. But it could be good news for first home buyers if the big bang finally does happen.

Auckland median price has gone down. But Im not seeing that in cities that contain less than 100k population and low employment rates, holding house prices above nice Auckland suburbs. How long will/would it take for a ripple from Auckland to hit the rest of the country.

IMO most kiwis are oblivious to our personal debt, what is happening to economies that we dabble in and what is happening with the larger scale economies that will impact our economy, ie China vs USA.

Re our economies, what I meant was we produce large quantities of singular type products (grouping butter and milk together etc). And our GDP is produced largely by monopolistic organisations (ie Fonterra).

Basic economics, Health, Education, Small business. We suck badly at all 3 (one could argue Education in SOME upper class areas do well, but as a whole). More importantly, unlike Australia we do not support small business. You start a business there (which many of my school friends have and are retired by 45) and you get a large grant, but most importantly you get a mentor in your field of business.

NZ needs to focus less on property inflation and personal debt and more on how we increase our GDP and how we support those in dire need of much faster public health attention. We are trying to mimic super with kiwi saver, but what we really need is the coffers to hand over a large some every year from our taxes to a medicare based system. All good economies have one. Yes in some countries you get taxed more, ie Switzerland, but you dont have anything to want for.

How can Aus provide mandotory Super with very generous contribution policies and free health insurance from their tax rate which is very similar to ours? And they are in a quagmire and still ahead of our game, when we go back to 73c to their dollar will be when China needs that Iron again.

Sorry bit of an Economics rant. I know you are very Rent/Cashflow focussed. Im refering more to the over all health and prosperity of Kiwis as a whole, not just the landlords.

[Bob Kane]

I'm not sure I understand you here. How does looking at sales prices and rents being achieved tell you that there is a shortage?
Can you explain how you are able to do that?

Supply and demand.
There, something new for you to study.

[Bob Kane]

Agree with you that the number of unoccupied units is an incorrect indicator of a housing shortage or housing surplus. That is the reason for highlighting that Morgan Kelly never used the word "oversupply" in his comments.

250,000 empty house in Ireland - 14% of housing stock:
Either there's more holiday homes in Ireland than I imagine or that's an oversupply.
Do you think Morgan Kelly was suggesting Ireland had a shortage of houses and should build more?

[OnTheMove]

250,000 empty house in Ireland - 14% of housing stock:
Either there's more holiday homes in Ireland than I imagine or that's an oversupply.
Do you think Morgan Kelly was suggesting Ireland had a shortage of houses and should build more?

Perhaps we need to get some Perm Resident visa system similar to Australia going with Ireland haha :-)

And I find NZ cold. But it is beautiful there :-)

[Perry]

I know you are very Rent/Cashflow focussed. I'm referring more to the over all health and prosperity of Kiwis as a whole, not just the landlords.

You may still mis-perceive.

What I'm getting at is that the contemporary and populist gloomy forebodings will - in many cases - have little or no adverse effect on most settled PIs.

Yes, overall economics are not understood by almost all of the population. Especially econ-o-mists and those who really believed that Labour could auto-magically conjure up 10,000 affordable houses in 12 months and voted accordingly. Most people vote on a what's-best-for-me basis. Not on what's-best-for-NZ, something Flyer has oft made mention of.

[ermat]

Personally I think we are already seeing it.

With a down turn in median house price, now just bobbing up and down (indecisive market).

Kiwi homes being a total failure.

People cannot afford to buy homes in Auckland, our price to income ratio is absurd beyond greedy, just absurd.

House sales figures significantly different to 2017, particularly total time a property sits on the market.

Personal debt 150%+ of our very single big player and very fragile GDP.

Im not buying into we will crash like Ireland 2006, although it is possible. I think we have already lost 10%, if an international economic crisis occurs I think we will lose another 20%, but in reality, in 2017 I think we were 40% over priced. So I then think a long slow flat line for 10 years will occur. Not a guru or financial advice but thats what I can see occuring IF things go that route.

What Im more interested in is when will the down turn and slowing market hit the rest of NZ, prices in Whakatane asking $900k etc, come on. I mean I love the place but the rest of NZ now seems to be out pricing Auckland.

I think you are correct here about house prices in the regions. i.e. Whakatane etc. I believe the recent regional surge has done it's dash.

[flyernzl]

I fought for years to survive in small businesses that (in my view) would benefit the country.
However, when you try that you find that everything is stacked against you - the difficulties of finance ("What real estate can you offer as security for that business loan?"), the punitive legislation and vulnerability if you dare be stupid enough to employ staff, and the peculiarities of the tax system (I once had to pay $40k provisional tax on zero income).

Eventually I saw the light. No point in trying to be 'useful' or 'productive'.
Better go with the flow and play the game as the rules dictate, however 'unfair' that they may seem.

[Davo36]

So what are you saying here flyernzl? Sounds like you've sold up and gotten out of the game.

[Perry]

I think you perceive wrongly, David, and I imagine Peter will explain.

[flyernzl]

So what are you saying here flyernzl? Sounds like you've sold up and gotten out of the game.

What I mean is that when I realised what is really going on I ceased trying to be useful and productive and just joined the ranks of work-shy and greedy.
(No, not public servants and politicians - residential landlords).

[Cpt707]

Knowing when to walk away....one life's best Aces !!!

[OnTheMove]

Eventually I saw the light. No point in trying to be 'useful' or 'productive'.
Better go with the flow and play the game as the rules dictate, however 'unfair' that they may seem.

And that sucks right. What if the Government was giving you grants and bigger players to help you through scenarios? I bet that would have helped. Id rather give a small business $20k or even $50k and the help of a bigger player as a mentor, than pay $350 per week to an arrogant multi millionaire who has no possible need for $350 a year. Especially if they made their money in property or ASX.

The only way we improve our GDP and lower that debt to GDP ratio is get more functional small-medium sized businesses supported and functioning in good and bad times.

In 2008 we bailed out the property market, how much of that money went to Small business? Id rather have had a 40% loss in our property market and see out GDP sore. Because then we can afford things like Health (free health insurance) and Schools along with a proper retirement system set at 9% like Australia not some half and attempt at 3.5%. Kiwi Saver at the moment reminds me a lot Kiwi Homes. No money to do it the proper way because we do not support small business and we do not support health care and we do not support free education.

Instead we are a consumer society that generates TAX via spending. How much longer can that last at average household income of $53k?

Properties in every city are now pretty much near their limit.

We have damning reports on us being the most unsustainable property market in the world, or 2nd. Look at our Graphs and tru and argue with the facts.

The scary part is we do not generate enough GDP to even cover our personal lending if a financial crisis hits, let alone our property market.

No I do understand you Perry. You feel settled. You think most Property Investors are not worried about what some are saying is coming. YOu feel there is no way their portfolio could be wiped out by facts that havnt occured yet. Of course you are right. But Im not here to scare people Im just saying it how it looks. And if it does occur the only sympathy I have is for young people trying to get ahead buying a $900k house with $200k deposit and suddenly losing $350k on their dream, not only have they lost $200k, they are no in debt for $150k and oh no interest rates rose from 3.5% to 20%. Forclouse. I have no symptahy for PI's because they will have their investments baracded behind some for of trust fund and they can just sell up to keep a few in positive gear or wait for the rebound which imo is usualy quick for the first 10%.

Of course just because we have shocking property indicators, doesnt mean armgageddon will happen. Auck could bubble like this for the next 20-30 years and if incomes increase we may just come out unscathed.

[Perry]

No I do understand you Perry. You feel settled. You think most Property Investors are not worried about what some are saying is coming. You feel there is no way their portfolio could be wiped out by facts that haven't occurred yet. Of course you are right.

I don't think I'm right, at all. But tell me why PIs with low-to-no debt should be worried?

What I'm getting at is that sweeping statements about the future are unwise prognostications.

Ten thousand affordable houses per year being the best current example that we've seen.

[Chris W]

But tell me why PIs with low-to-no debt should be worried?

It depends on each individual property investors objectives. For example:

1) income oriented
2) capital gain oriented
3) total return oriented (combination of income and capital gains)
4) tax oriented property investors - due to ring fencing losses of property losses against taxable income from other property rentals.
5) other

Some property investor objectives may be more at risk of not being achieved, than other property investor objectives.