Michael Yardney's advice:

[LKSteve]

I don't see how prices for houses in Sth Akl can go much lower than $250k. To create a new section these days would cost around $100k and that's if you get the land for free! It seems high I know but it's truly the case, the councils have created this. And building costs are very high. This is due to a much more stringent building code and the prices of materials and labour, neither of which have dropped in recent times. Residential construction is also just complicated and time consuming now as well. So with all the hassle a lot of people have just given up for the time being.

It's hard to argue against the logic, but markets have been irrational for quite some time now. Houses are changing hands for far less than replacement cost in the U.S., Ireland & Spain. At the same time, we've seen property reach new heights in Australia. Much will depend on the global economic recovery next year. New Zealand, shielded as it is by Australia has escaped the worst effects of the GFC - in effect, it's dodged the bullet. If global financial markets hit turbulence again in 2011 it may not be as lucky second time round.

[Tom]

It's hard to argue against the logic, but markets have been irrational for quite some time now. Houses are changing hands for far less than replacement cost in the U.S., Ireland & Spain. At the same time, we've seen property reach new heights in Australia. Much will depend on the global economic recovery next year. New Zealand, shielded as it is by Australia has escaped the worst effects of the GFC - in effect, it's dodged the bullet. If global financial markets hit turbulence again in 2011 it may not be as lucky second time round.

Well, looking on the bright side...At least 2011 is looking like it will be anything but dull.

Thanks LKSteve.

Cheers

Tom

[Bob Kane]

New Zealand, shielded as it is by Australia has escaped the worst effects of the GFC - in effect, it's dodged the bullet. If global financial markets hit turbulence again in 2011 it may not be as lucky second time round.

You need a group hug every day.

[Dean@Massiveaction]

Davo that's only true if replacement cost is the floor and we have already seen that smashed. I have bought property in Papakura for under replacement cost for years.

There are 127 listings in Manurewa alone at or under 200K as I type this.

And Otara is even cheaper on a good day.

[halfempty]

Interesting idea, is there a bottom value?

What the vendor will accept?

What the vendor paid?

What's owed to the bank?

The replacement cost?

Fire sale value?

[AMR]

High yield? The Akld apartment market seems to have found a floor, I haven't seen an apartment for 30% yield yet.

[Dean@Massiveaction]

A lot of the Railway ones were that and higher AMR.
GRoss of 20% there's plenty like this sort of thing ~ http://www.trademe.co.nz/Trade-me-pr...-320140088.htm

[Dean@Massiveaction]

OR here's one at 40% gross :-)

http://www.trademe.co.nz/Trade-me-property/Residential-property/Houses-for-sale/auction-335020733.htm

[VirtualT]

A lot of the Railway ones were that and higher AMR.
GRoss of 20% there's plenty like this sort of thing ~

Are these a good investment?

[Bluekiwi]

Like my tent, they are environmentally friendly and bring nature to you.
Eco friendly and leaky are actually one and the same didnt you know.

[Tom]

Hi Dean,

Please show me the 3 bedroom, full site, with garage properties in Manurewa for $200 or less... As that was my example. You must be looking in a very different place to me as I can not find a single one, not even close. Occasionally they are being bought at that at mortgagee, but usually requiring a lot of work. Sure, there are plenty of crosslease properties, units and sections, but they were not the variable in my example.

Do you agree too that the way you buy property as a professional property investor and the way the masses buy property are worlds apart? You have been buying below replacement cost because you are a pro, the vast majority are not.

I think your views are really valuable Dean so I hope this doesn't come acccross as anything but respectful as that is the way it is intended.

Cheers

Tom

[Davo36]

OR here's one at 40% gross :-)
http://www.trademe.co.nz/Trade-me-pr...-335020733.htm

You're not tempted at 40% gross Dean?

[whitt]

Hi Dean,

Please show me the 3 bedroom, full site, with garage properties in Manurewa for $200 or less... Cheers

Tom

I can see on TradeMe a couple of 3 BR dogs with carport at 199K. But as you mention no full sites. There is around 30 in the 220K to 240K bracket and a handful of these seem to fit your criteria.

With that in mind you would need to find which vendors are motivated and negotiate well to get under 200K.

[AMR]

Hey, railway campus doesn't count - anyway the yields will be higher next year after the ground rents kick in. Lots more pain in the leasehold sector to come IMO.

[Dean@Massiveaction]

AMR, no idea if they are good investments, just saying you can find high yield apartments.