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  1. #21
    Join Date
    Jul 2017
    Posts
    270

    Default

    Quote Originally Posted by mrsaneperson View Post
    At the time of the crash. I do remember the ""Contributory Mortgage "" companies that setup and many went bust. They were offering far higher rates of return than the banks were on their term deposits.

    Their prospectus told prospective investors, your money with them was covered by insurance against loss . However they didn't mention the fact that they also owned the insurance company...
    Mrsaneperson,

    Just to clarify, which market are you referring to? US? Ireland? Spain?, Portugal?, other?

  2. #22
    Join Date
    Mar 2007
    Location
    Auckland
    Posts
    3,020

    Default

    I bought a property in the late 70s.
    Banks would not lend, so we had to get a Solicitors Trust Account mortgage - 18%pa.

    Over the next few years it rose until it got to 23.5%

    However, the recompense was that house prices were also rising very steeply.

    From my own view of the Auckland market over 40 years, we have had periods of price stagnation (in where those that HAD to sell may have done so at some loss) but generally prices only fell a few percents.

    These lulls lasted just a few years, and then things took off again - but of course the past is not always an indicator of what will happen in the future!

    From what I hear (no direct involvement. thank God) the areas that do suffer significant drops when times turn tough are places where the majority are holiday homes - Northland beach areas, Pauanui, Matarangi, Whangamata etc.

    The worst are the inland towns that were one-industry dependent. These collapse and don't usually recover.

  3. #23
    Join Date
    Jul 2016
    Posts
    101

    Default

    Quote Originally Posted by Davo36 View Post

    The trend is up, but couple of dips there mate.
    I'm no oracle but my take is that the next downturn will be very very different from the previous cycles, on the basis of two-fold:

    1) Cycles - Boom and busy cycles are a natural phenomenon albeit are magnified/curtailed by modern monetary policy. If you take the great ole USA for instance each boom (and subsequent crash) is getting larger and larger as a result of the FED effectively doubling down on their monetary policies in order to inflate their way out of the potential deflationary (recessionary/depressionary) scenario. They are doing this successively with lower and lower interest rates, and money printing (QE). Given interest rates are now at 5,000 year lows, and the Fed Balance sheet is at all time highs ($4.5 trillion) this almost guarantees that the next crash will be more severe;

    2) Demographics - In all prior cycles (since the 1920's) the demographics have been favourable. E.g. in 1987, the boomers were coming into their prime, in 2007 they were maturing to their peak earning power, this time around they are.. oh wait retiring?

    What this means is that if the equities/bond/property markets all go, then suddenly you have ten's if not hundreds of millions of retirees (globally) taking a massive haircut. The logical conclusion to this event is that we want see prices recovering (fully) for a very very long time (i.e. several generations). This factor alone has been evidenced in Japan where property prices are well below their 1992 peak (despite unprecedented money printing from the BoJ).

    Based on both trends I'm confident that we are at or close to "peak asset prices" globally. It will be an interesting world on the other side if these markets finally decide to crack.

  4. #24
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,849

    Default

    Quote Originally Posted by WINZ View Post
    . . then suddenly you have ten's if not hundreds of millions of retirees (globally) taking a massive haircut.
    What sort of 'haircut' are you referring to?
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!

  5. #25
    Join Date
    Mar 2007
    Location
    Auckland
    Posts
    3,020

    Default

    Haircut is economist-speak for the great mass of common (i.e. unimportant) investors being robbed of a significant portion of their money in order to prop up the important (i.e. professional) financial institutions.

  6. #26

    Default

    After seeing all this, if you were in the market to buy a new property in Auckland, what discount would you be targeting? Bearing in mind we could be in for a period of no or declining property prices. If 15% realistic or something less.
    "Remember, people will judge you by your actions,not your intentions.You may have a heart of gold -but so does a hard-boiled egg".

  7. #27
    Join Date
    Sep 2017
    Posts
    193

    Default

    You've got to get over this obsession with discount percentage. What you have to know is what yield you require and go and buy that. That may be 20% over so called retail but if it performs that is irrelevant.

  8. #28
    Join Date
    Sep 2007
    Location
    Auckland
    Posts
    8,305

    Default

    Quote Originally Posted by flyernzl View Post
    Haircut is economist-speak for the great mass of common (i.e. unimportant) investors being robbed of a significant portion of their money in order to prop up the important (i.e. professional) financial institutions.
    Yep.

    Silly mum and dad accidental property investors is how they see it.

    Should have their money with a fund manager who can give it to companies that are creating 'growth'. Cause they never waste the money like Fonterra throwing away $350m to the Chinese (again) or Fletchers or Mainzeal...
    Squadly dinky do!

  9. #29
    Join Date
    Apr 2004
    Location
    Auckland
    Posts
    1,898

    Default

    Or $3Billion wiped off Telecom shares by a Government policy change.
    Oops - Nothing to see here - move along...
    The three most harmful addictions are heroin, carbohydrates and a monthly salary - Fred Wilson.

  10. #30
    Join Date
    Sep 2004
    Location
    Hastings
    Posts
    14,849

    Default The How?

    Quote Originally Posted by WINZ View Post
    . . then suddenly you have tens if not hundreds of millions of retirees (globally) taking a massive haircut.
    Quote Originally Posted by Perry View Post
    What sort of 'haircut' are you referring to?
    Quote Originally Posted by flyernzl View Post
    Haircut is economist-speak for the great mass of common (i.e. unimportant) investors being robbed of a significant portion of their money in order to prop up the important (i.e. professional) financial institutions.
    Quote Originally Posted by Davo36 View Post
    Yep. Silly mum and dad accidental property investors is how they see it.
    I wondered about the exact mechanism.

    If I recall aright, the expression haircut was last used on these forums in relation to people have some percentage of their in-bank funds skimmed off to assist banks' solvency (Oh, and bank shareholder dividends & execs' bonuses, of course)
    Want a great looking concrete swimming pool in Hawke's Bay? Designer Pools will do the job for you!


 

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