Kiwi Residential Property is Toast. Australia to follow shortly.

[Adumbration]

And things are just getting started:

 

 

[metisdead]

Moving to the Australia & Oceania Topics and Events forum as this is not Thailand related. 

[Celsius]

Do you realize that every time the recession ends assets like real estate hit new highs?

 

 

[Adumbration]

42 minutes ago, Celsius said:

Do you realize that every time the recession ends assets like real estate hit new highs?

 

 

That's fine if you house is all paid for and you can ride out the lows.  How many people in Australia or New Zealand own their home outright.

[thaibeachlovers]

On 10/22/2022 at 10:53 PM, Adumbration said:

That's fine if you house is all paid for and you can ride out the lows.  How many people in Australia or New Zealand own their home outright.

I don't know how many in NZ do, but with the prices I don't expect many young people will be buying in near future.

I, for one, am hoping for a house price collapse, as it might bring rents down from the stratosphere.

Entirely forseeable when thousands of immigrants come in and not enough houses being built.

I heard on radio that many thousands of families in motels as no state houses for them and can't afford rents.

One of the most stupid thing a previous government did was sell off state houses.

[Patong2]

Its a pretty normal part of the cycle and yes some properties sell but usually they are by vendors who have pressing reasons to sell such as divorce, death, financing a business, going overseas etc, 

 

Seen this before and will probably sell a house in Auckland early next year at whatever the market dictates. Fed up with being unable to evict tenants that frighten neighbours, too many restrictions on good and competent long term landlords.

 

People have an expectation of what their house is worth, Joe's house down the road sold for $1.2m

so ours must be worth $1.4m. They put it on the market but only get offers of $1m so they decide to stay, pull the house off the market, add on a basement and pool and over capitalise the place.

 

Eventually they get too old, have to go into a retirement home and sell at the real market price which will have gone up on the upwards side of the cycle.

[Paul Catton]

On 10/22/2022 at 10:53 PM, Adumbration said:

That's fine if you house is all paid for and you can ride out the lows.  How many people in Australia or New Zealand own their home outright.

Opal and I do, put a deposit down 11 years ago and paid the mortgage off last Xmas.

It's still worth 3.18 times what we paid for it, so plenty of liquidity left to Hemorrhage if things completely tank. 

[Paul Catton]

2 hours ago, Patong2 said:

Its a pretty normal part of the cycle and yes some properties sell but usually they are by vendors who have pressing reasons to sell such as divorce, death, financing a business, going overseas etc, 

 

Seen this before and will probably sell a house in Auckland early next year at whatever the market dictates. Fed up with being unable to evict tenants that frighten neighbours, too many restrictions on good and competent long term landlords.

 

People have an expectation of what their house is worth, Joe's house down the road sold for $1.2m

so ours must be worth $1.4m. They put it on the market but only get offers of $1m so they decide to stay, pull the house off the market, add on a basement and pool and over capitalise the place.

 

Eventually they get too old, have to go into a retirement home and sell at the real market price which will have gone up on the upwards side of the cycle.

For tracking purposes of our equity, I use the latest house valuation from One Roof - House for sale in New Zealand

They quote four valuation scenarios, being indexed as Low, Rateable Value, High, and lastly, Their Estimate.

I garnish my figures for tracking from "Their Estimate".

Their website is continually updated as data becomes available from source.

Over the last two months I have wiped $140,000 ( 3,038,000 THB ) from our equity spreadsheet, representing the devaluation.

????????

 

 

[Adumbration]

9 hours ago, Paul Catton said:

For tracking purposes of our equity, I use the latest house valuation from One Roof - House for sale in New Zealand

They quote four valuation scenarios, being indexed as Low, Rateable Value, High, and lastly, Their Estimate.

I garnish my figures for tracking from "Their Estimate".

Their website is continually updated as data becomes available from source.

Over the last two months I have wiped $140,000 ( 3,038,000 THB ) from our equity spreadsheet, representing the devaluation.

????????

 

 

What percentage fall in price does the $140K haircut represent?

[thaibeachlovers]

On 10/25/2022 at 3:04 PM, Patong2 said:

, too many restrictions on good and competent long term landlords.

Correct. My sister had to end renting to tenants and move into the house herself as government making it too expensive and rent would have been too high for tenants to pay. She had been renting herself in a more convenient location to work.

[Paul Catton]

On 10/26/2022 at 3:21 AM, Adumbration said:

What percentage fall in price does the $140K haircut represent?

16.66%, however, some Bank economists are predicting up to 27% might get wiped off valuations.

 

[Patong2]

I have a pretty simple attitude to investing.

As an example I bought a 2 bedroom brick and tile unit in a good suburb for $200k in Sep 1997

Peak of the market and I paid too much.

 

Have rented it out since.

 

But the value??

It is still only worth what a 2 bedroom brick and tile unit in a good suburb sells for, no more.

Valuation today - $820 - $1m showing in market survey but say $700k for a fire sale.

In effect though, you have not had an increase in your asset value because you can only afford the same value property, a 2 bedroom unit in a good suburb, you can't now afford the 5 bedroom sea view property in a prime suburb.

 

Sure, you use the rent to cover mortgage etc and you pay the mortgage down ASAP but that is your choice in spending what unencumbered money you have.

 

 

 

[KhunHeineken]

On 10/28/2022 at 4:47 AM, Patong2 said:

I have a pretty simple attitude to investing.

As an example I bought a 2 bedroom brick and tile unit in a good suburb for $200k in Sep 1997

Peak of the market and I paid too much.

 

Have rented it out since.

 

But the value??

It is still only worth what a 2 bedroom brick and tile unit in a good suburb sells for, no more.

Valuation today - $820 - $1m showing in market survey but say $700k for a fire sale.

In effect though, you have not had an increase in your asset value because you can only afford the same value property, a 2 bedroom unit in a good suburb, you can't now afford the 5 bedroom sea view property in a prime suburb.

 

Sure, you use the rent to cover mortgage etc and you pay the mortgage down ASAP but that is your choice in spending what unencumbered money you have.

 

 

 

Somewhere over the last couple of decades houses, which should have been "homes" for Aussie families, became "investments" for all property owners, especially with negative gearing.

 

Fast forward to 2022, and you have the situation the housing market is now in, which is not unlike what happened in America in 2008.

 

I wonder how exposed some Aussie banks are. 

[thaibeachlovers]

18 hours ago, KhunHeineken said:

Somewhere over the last couple of decades houses, which should have been "homes" for Aussie families, became "investments" for all property owners, especially with negative gearing.

 

Fast forward to 2022, and you have the situation the housing market is now in, which is not unlike what happened in America in 2008.

 

I wonder how exposed some Aussie banks are. 

Agree. I'm not sure when greed became the new norm, but it's not going to end well IMO.

When, in NZ, motels have become "home" for hundreds, if not thousands of families, something is rotten in the "system".

[Patong2]

3 hours ago, thaibeachlovers said:

Agree. I'm not sure when greed became the new norm, but it's not going to end well IMO.

When, in NZ, motels have become "home" for hundreds, if not thousands of families, something is rotten in the "system".

Greed? but on whose part?

When I bought my 1st rental property in NZ the upper tax rate was 66%. The govt let me keep 34c in every dollar I earned. Out of that 34c I had to pay 12.5% GST on all my food, local taxes, everything.

Yes greed it was but by incompetent bureaucrats let loose by even more incompetent politicians.

 

As to the "motel" situation in NZ now, it is corruption and so often in NZ people are blind to it.

So widespread that the NZ Herald reported 5 separate prosecutions in one week recently. But any "Kiwi" will tell you there is no corruption in NZ. Many heads in that "Long White Cloud"

 

 

[Adumbration]

On 11/1/2022 at 10:53 AM, KhunHeineken said:

Somewhere over the last couple of decades houses, which should have been "homes" for Aussie families, became "investments" for all property owners, especially with negative gearing.

 

Fast forward to 2022, and you have the situation the housing market is now in, which is not unlike what happened in America in 2008.

 

I wonder how exposed some Aussie banks are. 

Very exposed.  To the point where the RBA has taken their foot of the interest rate increas peddle entirely.  Yesterday they raised the cash rate just .25 basis points.  The Australian dollar collapse as a result.  They are screwed either way.  Raise rates sufficient to reign in inflation and the Ponzi scheme that is Australia residential property will collapse entirely.  Don't raise in line with US then AUD is heading for 40 cents on the dollar.

[KhunHeineken]

On 11/1/2022 at 10:22 PM, thaibeachlovers said:

Agree. I'm not sure when greed became the new norm, but it's not going to end well IMO.

When, in NZ, motels have become "home" for hundreds, if not thousands of families, something is rotten in the "system".

Negative gearing had a big role to play in it.  Mum and Dad investors got onto the gravy train that they could use the Australian tax payer to help fund their investment in residential housing. 

 

Negative gearing was originally about having investors supply houses for renters.  It became a rort where people went on to negative gear a small portfolio of properties, as there were no limits on it.

 

Now, in 2022, look at the result, fueled by a decade of cheap money.

 

Australians had a chance to vote against negative gearing, but there were too many voters on the gravy train. 

 

Negative gearing has a role to play, but it should have limits, like no more than two investment properties per title holder, or no more than $3 million worth of property, or something like this. 

 

There was something like 25,000 houses in mortgage stress across Australia prior to covid.  That figure will quadruple, if not more, over the next 12 to 18 months. 

 

Greed and easy money saw them borrow to the hilt, because they could.  Now they are facing rapidly rising costs, and negative equity.  The cliff is fast approaching for many. 

[KhunHeineken]

17 hours ago, Adumbration said:

Very exposed.  To the point where the RBA has taken their foot of the interest rate increas peddle entirely.  Yesterday they raised the cash rate just .25 basis points.  The Australian dollar collapse as a result.  They are screwed either way.  Raise rates sufficient to reign in inflation and the Ponzi scheme that is Australia residential property will collapse entirely.  Don't raise in line with US then AUD is heading for 40 cents on the dollar.

I agree with your summary.  The RBA's baby steps to try and kerb inflation is too little, and too slow.  The Fed raised by 0.75 yesterday. 

 

The RBA will use the excuse that they are treading softly so as to not push Australia into a recession, but they are still fueling inflation, whilst waiting for a miracle to prop up Australia's housing market.

 

You are correct, if they do what really needs to be done to reign in inflation, then they would be increasing rates higher, and faster, but if they do that, Australia's housing market collapses, and there will be homeless people all across the country. 

 

Don't increase rates, watch inflation continue to grow, the AUD slump, and imports, which given Australia doesn't manufacture much anymore, increase significantly. 

 

Australia's housing market is as you say, a Ponzi scheme which is now holding the country to ransom. 

[Adumbration]

15 hours ago, KhunHeineken said:

I agree with your summary.  The RBA's baby steps to try and kerb inflation is too little, and too slow.  The Fed raised by 0.75 yesterday. 

 

The RBA will use the excuse that they are treading softly so as to not push Australia into a recession, but they are still fueling inflation, whilst waiting for a miracle to prop up Australia's housing market.

 

You are correct, if they do what really needs to be done to reign in inflation, then they would be increasing rates higher, and faster, but if they do that, Australia's housing market collapses, and there will be homeless people all across the country. 

 

Don't increase rates, watch inflation continue to grow, the AUD slump, and imports, which given Australia doesn't manufacture much anymore, increase significantly. 

 

Australia's housing market is as you say, a Ponzi scheme which is now holding the country to ransom. 

The RBA are worthless retards.  If they fail to raise inline with the US the AUD will collapse further and then they will be importing inflation anyway.

[KhunHeineken]

10 hours ago, Adumbration said:

The RBA are worthless retards.  If they fail to raise inline with the US the AUD will collapse further and then they will be importing inflation anyway.

I see the UK raised by 0.75% yesterday as well.  December's rise will be interesting.  It's obvious 0.25% is having no impact on inflation, and is only shielding mortgage holders from the inevitable. 

[thaibeachlovers]

On 11/2/2022 at 2:50 PM, Patong2 said:

Greed? but on whose part?

When I bought my 1st rental property in NZ the upper tax rate was 66%. The govt let me keep 34c in every dollar I earned. Out of that 34c I had to pay 12.5% GST on all my food, local taxes, everything.

Yes greed it was but by incompetent bureaucrats let loose by even more incompetent politicians.

 

As to the "motel" situation in NZ now, it is corruption and so often in NZ people are blind to it.

So widespread that the NZ Herald reported 5 separate prosecutions in one week recently. But any "Kiwi" will tell you there is no corruption in NZ. Many heads in that "Long White Cloud"

 

 

Many years ago I believed NZ was not corrupt, but then I read a book that exposed the corruption in the Clark government and I was shocked and saddened. Since then it's just become worse for anyone not rich.

Can it be fixed- doubt it under MMP, the worst thing ever happened to NZ, IMO.

Edited November 9, 2022 by thaibeachlovers

[Adumbration]

1 hour ago, thaibeachlovers said:

Since then it's just become worse for anyone not rich.

 

This issue is global, not just limited to NZ.

 

Google the "let it rot" movement.

 

Kids are on to it.  That is what is driving the great resignation and let it rot movements.  They know that there is absolutely no chance to get ahead now with hard work alone.  So they are just doing nothing.

 

Eventually their numbers (as a mandate) will be greater than the boomer generation.  Once that happens there might be a glimmer of hope in truly democratic nations.  However in dictatorships such as Thailand there is no future whatsoever.

[Patong2]

19 hours ago, Adumbration said:

This issue is global, not just limited to NZ.

 

Google the "let it rot" movement.

 

Kids are on to it.  That is what is driving the great resignation and let it rot movements.  They know that there is absolutely no chance to get ahead now with hard work alone.  So they are just doing nothing.

 

Eventually their numbers (as a mandate) will be greater than the boomer generation.  Once that happens there might be a glimmer of hope in truly democratic nations.  However in dictatorships such as Thailand there is no future whatsoever.

Not sure I agree

A lot of success (unless you are very lucky or inherit) has got to do with spending habits.

It's not what you earn but what you save and utilise those savings to the best effect.

 

I am amazed, all my tenants had bigger TV's and newer cars than I had until a couple of years ago.

I don't think many young people have the discipline required.

 

[thaibeachlovers]

On 11/9/2022 at 9:29 PM, Adumbration said:

This issue is global, not just limited to NZ.

 

Google the "let it rot" movement.

 

Kids are on to it.  That is what is driving the great resignation and let it rot movements.  They know that there is absolutely no chance to get ahead now with hard work alone.  So they are just doing nothing.

 

Eventually their numbers (as a mandate) will be greater than the boomer generation.  Once that happens there might be a glimmer of hope in truly democratic nations.  However in dictatorships such as Thailand there is no future whatsoever.

If there is one thing that I can be grateful for more than anything else, it's that I was born when I was and not in the past 10 years.

[thaibeachlovers]

On 11/10/2022 at 5:01 PM, Patong2 said:

Not sure I agree

A lot of success (unless you are very lucky or inherit) has got to do with spending habits.

It's not what you earn but what you save and utilise those savings to the best effect.

 

I am amazed, all my tenants had bigger TV's and newer cars than I had until a couple of years ago.

I don't think many young people have the discipline required.

 

Depends. In some countries being an unmarried mother gives one access to the goodies mere single males can only dream of.

Unmarried mother friend of mine had a nice house ( I couldn't afford one ), better car than I had, nice easy life style ( I was working like a dog at the time ). Sweet, and all she had to do was get some guy to impregnate her ( he was nowhere around when I knew her ).

[Lucky Bones]

6 minutes ago, thaibeachlovers said:

If there is one thing that I can be grateful for more than anything else, it's that I was born when I was and not in the past 10 years.

Amen to that Brother.

[Adumbration]

1 hour ago, thaibeachlovers said:

Depends. In some countries being an unmarried mother gives one access to the goodies mere single males can only dream of.

Unmarried mother friend of mine had a nice house ( I couldn't afford one ), better car than I had, nice easy life style ( I was working like a dog at the time ). Sweet, and all she had to do was get some guy to impregnate her ( he was nowhere around when I knew her ).

Your friend was a lightweight.  I knew one single mother back in Oz that had 5 kids....to four different fathers.  She told centerlink that she was drunk at parties and the like everytime she fell pregnant and that she could not identify who the father's were....no risk if having to chase child support...and 100% on the welfare gravy train.

[Paul Catton]

A quick update.

 

I have shaved another NZ$15,000 of equity in our home in just under a month, using my preferred "median price checker" which equates to around THB 330,000.

 

 

 

 

[Adumbration]

8 hours ago, Paul Catton said:

A quick update.

 

I have shaved another NZ$15,000 of equity in our home in just under a month, using my preferred "median price checker" which equates to around THB 330,000.

 

 

 

 

Thanks for the update.

 

330K THB is more than I paid for the house I am currently sitting in.  It is 5 minutes from the beach and on a full chanote block.

 

15K NZ in less than a month is frightening.

 

A while back you posted that your previous 140K haircut was a 16.66 loss in value.

 

That puts the original price at 840K and change.

 

So you are now down 155K and so

 

155/840 = 18.45%

 

By Christmas you might be looking at 25% loss.

Edited November 20, 2022 by Adumbration

[gomangosteen]

NZ houses. And it does vary by region/city in terms of how much the prices have dropped.

I worked in NZ on contract over April-August this year and stayed with a friend in Wellington.

She had received her new govt property valuation which impacts on annual rates payable.

The rateable value was $1.48m up from the previous $1.1m and reflective of the insane prices of late 2021.

She's freehold and not looking to sell.

A reality check from the house two doors along with almost identical house, property size, and valuation. Marketed by a real estate company at $1.4m, reduced after a month to $1.2m and eventually sold at $980k.

The downside in all this of course is for the next three years her rates are based on the now unrealistic $1.48m.