How high is too high - for property prices (relative to income)?

[McDuck]

I've been enjoying the side show between those who say "the property situation is unsustainable and will lead to a rather painfull correction", and those who say.."nothing to see here move on".

It got me wondering where will it all end.

How high could prices relative to wages go? 10 times, 20 times, 50 times, or is there no limit?

[Don't believe the Hype]

What happens in markets like NYC and HK? In my time in these cities there is rarely any media or discussion on property prices and affordability.

[Bobsyouruncle]

The most likely answer, as happens world wide, is a growing rift between those who have and can afford to live in certain locations and those who can't. I can't think of a country where this isn't the case, except communist nations and New Zealand. 20 million dollar homes on the gold coast, 100 million dollar home sin New York. It's just the way of the world.

[eri]

At number 10 is Shanghai, where $1m will buy you just 46.2 square metres' worth of luxury property.

For $1m, you can buy 43 square metres of upmarket space in Moscow

$1m will buy 41.7 square metres' worth of space in Paris

$1m will measure around 41.2 square metres Sydney

40.2 square metre property New York

Geneva, where you can expect to buy 34.7 square metres

Singapore, $1m will only net you 32.6 square metres

London $1m only equalling 25.2 square metres

Hong Kong $1m means a home of 20.6 square metres

Monaco. Here, $1m is only equal to 15 square metres of space

http://www.telegraph.co.uk/finance/property/international/10675352/The-worlds-10-most-expensive-cities-to-buy-property.html?frame=2841563

auckland doesn't make the top 10

neither do, melbourne, vancouver or san francisco

some would say

"what about average earnings in those most expensive cities?"

i doubt; moscow, shanghai + singapore have higher average earnings than auckland

but it would be an interesting comparison for someone to dig out

the suggestion seems to be that in a global market place for a global commodity

there isn't much link with local affordability

is this ideal?

no

but is the answer to make everyone poorer

so the poorest feel less left behind?

[Kbkiwi]

At number 10 is Shanghai, where $1m will buy you just 46.2 square metres' worth of luxury property.

For $1m, you can buy 43 square metres of upmarket space in Moscow

$1m will buy 41.7 square metres' worth of space in Paris

$1m will measure around 41.2 square metres Sydney

40.2 square metre property New York

Geneva, where you can expect to buy 34.7 square metres

Singapore, $1m will only net you 32.6 square metres

London $1m only equalling 25.2 square metres

Hong Kong $1m means a home of 20.6 square metres

Monaco. Here, $1m is only equal to 15 square metres of space

http://www.telegraph.co.uk/finance/property/international/10675352/The-worlds-10-most-expensive-cities-to-buy-property.html?frame=2841563

auckland doesn't make the top 10

neither do, melbourne, vancouver or san francisco

some would say

"what about average earnings in those most expensive cities?"

i doubt; moscow, shanghai + singapore have higher average earnings than auckland

but it would be an interesting comparison for someone to dig out

the suggestion seems to be that in a global market place for a global commodity

there isn't much link with local affordability

is this ideal?

no

but is the answer to make everyone poorer

so the poorest feel less left behind?

The examples you provided only apply to a tiny section of those cities, and in NO WAY provide a guide in general for property in those cities.

[Bobsyouruncle]

The examples you provided only apply to a tiny section of those cities, and in NO WAY provide a guide in general for property in those cities.

Yes, just like Auckland......

[eri]

The examples you provided only apply to a tiny section of those cities, and in NO WAY provide a guide in general for property in those cities.

that fact that you disagree with the telegraph story

no matter how strongly

doesn't add anything to the conversation about max supportable prices

if you are worried about their methodology

take it up with them

or provide a workable alternative

[Bobsyouruncle]

KB is wrong anyway Eri. Sydney for example.
Median $1,013,258 AUD
You have to drive 30kms west to get where medians drop to $500,000 AUD.

Every city is the same as Auckland pretty much. Except that we are cheaper than all of them.

[Kbkiwi]

KB is wrong anyway Eri. Sydney for example.
Median $1,013,258 AUD
You have to drive 30kms west to get where medians drop to $500,000 AUD.

Every city is the same as Auckland pretty much. Except that we are cheaper than all of them.

incorrect.

the price quoted for Sydney was $1 million for 41.2 square meters, an obvious incorrect price for houses in the Sydney inner city suburbs.

[Davo36]

I think as McDuck said, we have 2 polarising sets of opinions here and never the twain shall meet.

I can sort of see both sides:

On the 'plus' side:

1) It's a global world, Auckland is a good city, we're just going to have to pay the global price for property from now on.

2) Building is expensive. Auckland Council is still chock full of people who are absolutely sure that stopping every development they can is there life's mission. Materials are dear and staff are thin on the ground.

3) Interest rates are cheap and are going down. So this reduces borrowing costs, which increases the amount people can afford to borrow, which increases prices.

4) Immigration is high. This totally supports house prices.

On the 'minus' side:

1) People who live in houses here either have to pay a mortgage or have to pay rent. And with incomes only going up very slowly (especially when compared to house prices) rents can only go up to a certain degree. So prices are tied to rents to some degree.

2) There are many things that could happen to bring about a new collapse. Will the Chinese stockmarket take a dive at the start of next year like it did this year? Will something else happen to bring about GFC2?

3) Your average punter can't buy in Auckland now. By average punter I mean a middle class person on a middle class wage. In fact a couple of them still can't afford to buy.

I'm sure others could add to both lists.

I'm still on the bear (minus) side.

[chris_gee]

There are people in NZ who make a $1000 per hour from charges to their clients and who charge $200 plus for someone still wet behind the ears with one or two years experience. Non taxable capital gains top this up. On a lower level some charge out an apprentice at 60+ per hour. That it seems to me is an entitle-mist economy.
Much the same is seen here where making a capital gain through leverage is seen as automatic, ignoring the fact that any fall means a greater loss with increased leverage. I.E you profit going up but the money you lose going done is yours. Tee hee but let's not think about that.
The bottom line is that if people cannot afford something demand falls as they adapt so do prices.

[eri]

"incorrect.

the price quoted for Sydney was $1 million for 41.2 square meters, an obvious incorrect price for houses in the Sydney inner city suburbs."

it's not about houses

it's about "property" dead centre of the city

for sydney that would mean an apartment overlooking the opera house, bridge + harbour

Hong Kong

Don't pack too much if you're moving to Hong Kong. Here, $1m means a home of 20.6 square metres.

have you actually read the article?

http://www.telegraph.co.uk/finance/property/international/10675352/The-worlds-10-most-expensive-cities-to-buy-property.html?frame=2440091

ak seems to be about nz$1,000,000 for a good 100m2 apartment downtown

quay west

$1.07m 2101

2Bed 2bath+c

111m2

may2016

so us$1,000,000/nz$1.390,000 should buy

100 - 150m2 in the best buildings in the best parts of auckland

3 times moscow's 43m2 (and moscow was only 10th on the list)

perfect example on tm right now

3bed 2bath + car 155m2, for $1.65m, again in quay west, arguably the best apartment building downtown





and at the bottom on the ad 3 recent sales in quay west

• $1,360,000 – 1804/8 Albert Street, ......136m2 facing north west view of harbour +bridge, dble decks
• $1,360,000 – 2004/8 Albert Street......... "
• $1,550,000 – 2704/8 Albert Street.........152m2 facing north east, view of harbour + bridge

[P.Bateman]

Currently I don't know who can afford the average AKL house price of $1m. I think we will see a shock if Labour/Greens gets elected next year and when interest rates eventually rise. The AU economy also picking up steam in 2017 will see more Kiwis go to work there and ease housing pressures here at home

[AndreyPavlov]

Small studio (25 m2) on the edge of Moscow is <100K NZD (bought a couple of years ago)

[eri]

how old?

but excellent value compared to auckland

can't buy/build a small studio on the edge of auckland - (pukekohe, massey, orewa) for that

but that's not what the telegraph story is about