Kiwi Residential Property is Toast. Australia to follow shortly.

[gomangosteen]

NZ houses #2.

Wellington again, friends sold their property to a developer @ $1.15m, bank withdrew developer's finance the day before settlement end of June.

A chain of events as they had a conditional offer on another property, as did those vendors and so on. 

Now unsold @$950k. It's a 'development opportunity' for demolition / build apartments but finance for developers apparently no longer an option. 

 

Edited November 21, 2022 by gomangosteen

[Lucky Bones]

On 10/25/2022 at 11:59 AM, 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.

????????

 

 

Why are you constantly tracking the value of your house?

Has One-Roof done a walk through of your house? Only partially relevant if intending to sell or borrow more money.

At the end of the day you will only get what the market is prepared to pay, be that a good or bad price.????????

 

[Paul Catton]

12 minutes ago, Lucky Bones said:

Why are you constantly tracking the value of your house?

Has One-Roof done a walk through of your house? Only partially relevant if intending to sell or borrow more money.

At the end of the day you will only get what the market is prepared to pay, be that a good or bad price.????????

 

Gives us an indication of equity held in New Zealand.

As we are both nearing retirement age with many options available, liquidation of NZ assets could always be a consideration. 

 

[Lucky Bones]

6 minutes ago, Paul Catton said:

Gives us an indication of equity held in New Zealand.

As we are both nearing retirement age with many options available, liquidation of NZ assets could always be a consideration. 

 

If you don't yet have a set plan then relax.

Constant valuations can mess with your mind and lead to ulcers.????????

 

[Paul Catton]

1 minute ago, Lucky Bones said:

If you don't yet have a set plan then relax.

Constant valuations can mess with your mind and lead to ulcers.????????

 

25 seconds visiting a website and updating a spreadsheet, conversely gives peace of mind. 

[Lucky Bones]

16 minutes ago, Paul Catton said:

25 seconds visiting a website and updating a spreadsheet, conversely gives peace of mind. 

Fair enuff.

I'm told it's all toast anyway.????????

[Adumbration]

39 minutes ago, Lucky Bones said:

Fair enuff.

I'm told it's all toast anyway.????????

Are you going to add something useful to the discussion here or just carry on as a worthless troll?

[Adumbration]

1 hour ago, Paul Catton said:

Gives us an indication of equity held in New Zealand.

As we are both nearing retirement age with many options available, liquidation of NZ assets could always be a consideration. 

 

I have an xl spreadsheet of my personal net worth.  It is updated monthly to reflect investment income and also when I push money around between different asset classes.  I imagine you do the same.  Just ignore the ill informed troll posts or put the member on your ignore list.

Edited November 21, 2022 by Adumbration

[Paul Catton]

46 minutes ago, Adumbration said:

I have an xl spreadsheet of my personal net worth.  It is updated monthly to reflect investment income and also when I push money around between different asset classes.  I imagine you do the same.  Just ignore the ill informed troll posts or put the member on your ignore list.

I update the "Financial XL Spreadsheet" on a more frequent basis (usually twice a week) as it contains our "Budget" as the leading "Worksheet" being in a calendar type format with projected wages v utility expenditure for 6 months.
Our "budget is a target", and never set in stone, and consequentially almost always being missed.

When whole rump steak being under NZ$13.00 kg, buy now. Whole fillet steak being under NZ$26.00 kg, also is a buy now.

Similarly it applies for specials relating to Chicken, Pork, Lamb and Seafood.

Having a significant "Fruit and Vegetable Garden" gets us back on track to aspirations of meeting our budget.

I use the Spreadsheet for our known impending bills that are forthcoming, and thus able to organize assistance payments Ex Gratis to my progeny being the "wolves at the door". 

 

I digressed.

 

Running the household under a spreadsheet with ten minutes data input per week, benefits me  

[thaibeachlovers]

On 11/21/2022 at 3:59 PM, Adumbration said:

Are you going to add something useful to the discussion here or just carry on as a worthless troll?

I could add something useful, but it would all be negative and somewhat scornful of those that buy property as an "investment" opportunity, rather than as a home ( which in the opinion of many is the cause of the house prices in NZ rising to insane levels ), so I will not.

[Paul Catton]

Closing for the month of November.  

I have had to shave on the XL spreadsheet, another NZ$10,000 of equity in our home in 10 days, using my preferred "median price checker".

This equates to approximately THB 219,500 and now represents 19.64 devaluation.

Being "freehold" would only have an impact if required to sell

 

Beware.

 

https://www.stuff.co.nz/business/money/300751714/anz-house-prices-will-drop-32-in-real-terms-from-their-peak

 

And worse.

 

https://www.stuff.co.nz/business/money/300753093/property-investors-ready-to-have-some-fun-hunting-discounts-banking-strong-yields

 

 

[Paul Catton]

On 11/25/2022 at 11:35 AM, thaibeachlovers said:

I could add something useful, but it would all be negative and somewhat scornful of those that buy property as an "investment" opportunity, rather than as a home ( which in the opinion of many is the cause of the house prices in NZ rising to insane levels ), so I will not.

Please add your "Scornful" comment to the present situation of "Monopoly tm " regarding NZ property.

 

Rents are still increasing!

Recent persons of home ownership are now facing significant Negative equity!

 

First home buyers of today, are now faced with a myriad of challenges.

 

 

 

[Adumbration]

4 hours ago, Paul Catton said:

Please add your "Scornful" comment to the present situation of "Monopoly tm " regarding NZ property.

 

Rents are still increasing!

Recent persons of home ownership are now facing significant Negative equity!

 

First home buyers of today, are now faced with a myriad of challenges.

 

 

 

I was reading a number of articles from Australia last night.  There is a huge crisis at the moment with people being evicted because they can not meet increased requests for rent.  And not no hopers either.  Just regular Joes and Janes.  There was one guy project engineer on 120K AUD per year and could not get a place to rent.  Another pensioner who had rented the same house for 16 years served notice of eviction dated for Christmas eve.

 

Housing in Australia and NZ is a catastrophe now because of retarded political decisions.

 

This is because the boomers comprise the largest voting mandate.

 

The only hope for the future is that the boomers start to die off and the younger voters start to outnumber them.  But that is a decade or more into the future.  Gen X Ys and Zs are absolutely screwed and will never own their own home unless they have rich parents.

 

Something has to snap here.  I keep thinking of the lie flat and let it rot movements in China and other parts of Asia.  The smart kids have realised they will slave their lives away without any chance of their own home and family.  So they are just doing nothing.

 

Same thing will start to take hold in Oz and NZ.  The young kids are not going to slave away paying tax for their whole lives knowing they will never have a house to call their own.  Huge political policy mandate right there but stands no chance at the moment until the boomers die out (or are eaten by the disenfranchised youth).

 

Edited November 30, 2022 by Adumbration

[Adumbration]

15 hours ago, Adumbration said:

I was reading a number of articles from Australia last night.  There is a huge crisis at the moment with people being evicted because they can not meet increased requests for rent.  And not no hopers either.  Just regular Joes and Janes.  There was one guy project engineer on 120K AUD per year and could not get a place to rent.  Another pensioner who had rented the same house for 16 years served notice of eviction dated for Christmas eve.

 

Housing in Australia and NZ is a catastrophe now because of retarded political decisions.

 

This is because the boomers comprise the largest voting mandate.

 

The only hope for the future is that the boomers start to die off and the younger voters start to outnumber them.  But that is a decade or more into the future.  Gen X Ys and Zs are absolutely screwed and will never own their own home unless they have rich parents.

 

Something has to snap here.  I keep thinking of the lie flat and let it rot movements in China and other parts of Asia.  The smart kids have realised they will slave their lives away without any chance of their own home and family.  So they are just doing nothing.

 

Same thing will start to take hold in Oz and NZ.  The young kids are not going to slave away paying tax for their whole lives knowing they will never have a house to call their own.  Huge political policy mandate right there but stands no chance at the moment until the boomers die out (or are eaten by the disenfranchised youth).

 

@Paul CattonPlease keep posting your updates here.  It is great to have some genuine feet on the ground data.

 

I would also be very interested in what your annual council rates (and insurance) are on the property you are referring to so that there is also some perspective on your holding costs.

[Paul Catton]

17 minutes ago, Adumbration said:

@Paul CattonPlease keep posting your updates here.  It is great to have some genuine feet on the ground data.

 

I would also be very interested in what your annual council rates (and insurance) are on the property you are referring to so that there is also some perspective on your holding costs.

Rates @ NZ$2068 pa, House Insurance premium NZ$809 pa

[Adumbration]

8 hours ago, Paul Catton said:

Rates @ NZ$2068 pa, House Insurance premium NZ$809 pa

Your rates are much cheaper than I envisaged.

[Paul Catton]

17 hours ago, Adumbration said:

Your rates are much cheaper than I envisaged.

In my opinion rates are far too high from any tangible services that Opal and I are able to utilize.
Core "Local Governmental Services" are basically a weekly "general waste" wheelie bin collection and a fortnightly "recyclable" wheelie bin collection. 

Occasionally, we might venture out to the many "Green Spaces" being the "Botanic Gardens" for inspiration.

"Water supply and Sewage" was privatized under Watercare for Auckland and removed from Council auspices and is now subject to interference from the Central Government with  3WaterPolicy trying to push through legislation.

 

   

[Adumbration]

On 12/2/2022 at 12:25 PM, Paul Catton said:

In my opinion rates are far too high from any tangible services that Opal and I are able to utilize.
Core "Local Governmental Services" are basically a weekly "general waste" wheelie bin collection and a fortnightly "recyclable" wheelie bin collection. 

Occasionally, we might venture out to the many "Green Spaces" being the "Botanic Gardens" for inspiration.

"Water supply and Sewage" was privatized under Watercare for Auckland and removed from Council auspices and is now subject to interference from the Central Government with  3WaterPolicy trying to push through legislation.

 

   

I used to have the same feeling back in Oz.  I had significant rates on a residential acreage that I owned, but I had not built a house on it and did not live there.  The only thing I got for my money was a bit of light from a pole up the road a bit from my block.

[Paul Catton]

Latest "Their Estimate" I use for my tracking purpose is down to NZ$630,000 from the NZ$840,000 peak, early last year.

If my math is correct, that's a 33% shave.

Being "Freehold" it will not have any effect for us, unless we find the need to liquidate, and then our war chest wont be quite as full.

However, many people will have bought just either side of the peak, and are now facing a large "Negative Equity", compounded by significant Home Loan Interest Rate increases throughout last year and finally are now being battered by "rampant inflation" and the rise of "cost of living" escalating daily. 

My personal view is things don't bode well, especially when you can't buy an egg in your local Supermarket.

[Adumbration]

Things are just getting starting.  During the next three months in Australia 40% of all mortgages are about to reset from 2-3% covid lows to 7-8%.

 

After a CPI print near 10% last week the RBA should be raising interest rates at least .75 points at its meeting next Tuesday.  

 

But they will not because it would burst the residential property bubble well and truly.  A .25 point raise is forecast.  But I entirely expect Lowe and his fellow criminals at the RBA to not raise at all.

 

I have posted this many times already.  There is not a single time in recorded economic history were inflation was brought under control without first raising the cash rate to AT LEAST the CPI print.

 

That means that the cash rate in Australia should currently be 10%.

 

The common view in the MSM is that inflation will abate later this year and then central banks will begin cutting rates.

 

For the record, my opinion is that inflation will cool a little moving into the end of the year but then it will resurge in 2024 and will remain high and for longer than most commentators, economists and politicians currently expect.

Edited February 2, 2023 by Adumbration

[KhunHeineken]

On 2/2/2023 at 6:54 AM, Paul Catton said:

Latest "Their Estimate" I use for my tracking purpose is down to NZ$630,000 from the NZ$840,000 peak, early last year.

If my math is correct, that's a 33% shave.

Being "Freehold" it will not have any effect for us, unless we find the need to liquidate, and then our war chest wont be quite as full.

However, many people will have bought just either side of the peak, and are now facing a large "Negative Equity", compounded by significant Home Loan Interest Rate increases throughout last year and finally are now being battered by "rampant inflation" and the rise of "cost of living" escalating daily. 

My personal view is things don't bode well, especially when you can't buy an egg in your local Supermarket.

If you have that property as a base in case something goes terribly wrong in Thailand, like your health, then sure, keep the property regardless of the market.  However, if that property is purely an investment, why hold onto it.

 

Here's an article showing house prices dropping $1000 in Sydney.  You wouldn't keep shares if they were performing that badly.

 

https://www.smh.com.au/property/news/house-values-falling-nearly-1000-a-day-as-rba-warns-of-uncertainty-ahead-20220831-p5be8w.html

[Adumbration]

Diana Mousina, a senior economist at AMP, has put out a special note on the level of mortgage stress in Australia.

She says Australian household debt as a share of income is sitting around a record high at 189% of income, which is significantly above most of our global peers, and the majority of this debt is in housing.

"This makes Australian households vulnerable to changes in home prices and interest rates, with the risk of mortgage stress increasing as home prices fall and interest rates are increased," she says.

She says a significant increase in mortgage repayments due to higher interest rates is the biggest risk to household spending in 2023.

Household interest costs (as a share of income) reached a bottom of 4.4% in March 2022 thanks to the decline in interest rates over the pandemic, but they've and have now increased to around 7% (however, that measure also includes households that don't  have a mortgage, so it dilutes the impact for indebted households).

She says the average household in Australia has a mortgage of around $600,000 (across variable and fixed loans). As a rough guide, monthly mortgage repayments are due to increase by around $13,000 per year if we account for the full increase in the cash rate so far (by 325 basis points).

 

But that's underestimating the increase in mortgage servicing costs that will hit households in coming months.

She says variable mortgage holders (70% of loans outstanding) will see repayments changing around 3 months after the RBA adjusts the cash rate and fixed mortgage holders (30% of outstanding loans) are only impacted when the loan term expires, with most fixed loans set for 2-3 years in Australia.

She says the majority of the interest rate impact on mortgaged households will happen this year, as around 880,000 fixed loans expire in the next 12 months and reset to mortgage interest rates that are 2-3 times higher.

Look where things could head (assuming the cash rate hits 4%).

There are other parts to her analysis, but her conclusion isn't great.

"We think that the downside risks to the household sector are greater than the RBA (and most commentators) are estimating," she says.

"In our view, the risk of mortgage stress lies with recent borrowers (those who have taken out loans between 2020 - mid 2022) which is around 62% of outstanding housing loans. These households have not had time to build prepayment buffers, have faced large declines in home prices, have had a very fast repricing of mortgage rates, are more likely to have taken out larger loans and were probably not stress tested for the current increase in interest rates."

[KhunHeineken]

On 3/2/2023 at 3:28 AM, Adumbration said:

Diana Mousina, a senior economist at AMP, has put out a special note on the level of mortgage stress in Australia.

She says Australian household debt as a share of income is sitting around a record high at 189% of income, which is significantly above most of our global peers, and the majority of this debt is in housing.

"This makes Australian households vulnerable to changes in home prices and interest rates, with the risk of mortgage stress increasing as home prices fall and interest rates are increased," she says.

She says a significant increase in mortgage repayments due to higher interest rates is the biggest risk to household spending in 2023.

Household interest costs (as a share of income) reached a bottom of 4.4% in March 2022 thanks to the decline in interest rates over the pandemic, but they've and have now increased to around 7% (however, that measure also includes households that don't  have a mortgage, so it dilutes the impact for indebted households).

She says the average household in Australia has a mortgage of around $600,000 (across variable and fixed loans). As a rough guide, monthly mortgage repayments are due to increase by around $13,000 per year if we account for the full increase in the cash rate so far (by 325 basis points).

 

But that's underestimating the increase in mortgage servicing costs that will hit households in coming months.

She says variable mortgage holders (70% of loans outstanding) will see repayments changing around 3 months after the RBA adjusts the cash rate and fixed mortgage holders (30% of outstanding loans) are only impacted when the loan term expires, with most fixed loans set for 2-3 years in Australia.

She says the majority of the interest rate impact on mortgaged households will happen this year, as around 880,000 fixed loans expire in the next 12 months and reset to mortgage interest rates that are 2-3 times higher.

Look where things could head (assuming the cash rate hits 4%).

There are other parts to her analysis, but her conclusion isn't great.

"We think that the downside risks to the household sector are greater than the RBA (and most commentators) are estimating," she says.

"In our view, the risk of mortgage stress lies with recent borrowers (those who have taken out loans between 2020 - mid 2022) which is around 62% of outstanding housing loans. These households have not had time to build prepayment buffers, have faced large declines in home prices, have had a very fast repricing of mortgage rates, are more likely to have taken out larger loans and were probably not stress tested for the current increase in interest rates."

Something like 30% of property owners in Australia have a mortgage. 

 

Sadly, that minority is being left to carry the inflation burden of the nation, which is crazy, because typically, a mortgagee has less money to spend, therefore, they are not the ones fueling inflation. 

[Adumbration]

4 hours ago, KhunHeineken said:

Something like 30% of property owners in Australia have a mortgage. 

 

Sadly, that minority is being left to carry the inflation burden of the nation, which is crazy, because typically, a mortgagee has less money to spend, therefore, they are not the ones fueling inflation. 

Only 31% of properties in Australia are owned outright.  More than two thirds have mortgages.

[KhunHeineken]

38 minutes ago, Adumbration said:

Only 31% of properties in Australia are owned outright.  More than two thirds have mortgages.

Ok, perhaps I read it was owner occupiers.  Surely there's an amount of investment properties that are mortgaged for negative gearing purposes. 

[Paul Catton]

Updating the thread regarding our tracked valuation median.

Opal and I are currently at NZ$595,000 which is down from previously the previous posted figure of $630,000.

This now represents, from our peak at NZ$840,000 as historically posted, equates to an overall 41% shaving within two years.

[Adumbration]

4 hours ago, Paul Catton said:

Updating the thread regarding our tracked valuation median.

Opal and I are currently at NZ$595,000 which is down from previously the previous posted figure of $630,000.

This now represents, from our peak at NZ$840,000 as historically posted, equates to an overall 41% shaving within two years.

Thanks for posting your update.

 

It is sad to see that you have lost 245,000 dollars in just two years.

 

I see that one year term deposits with KiwiBank are currently paying 5.75% pa.  So if you had that 245K invested you would be yielding a (risk free) 14,000 dollar income.

 

With respect, your 41% loss calculation does not factor in inflation.  If we take a CPI index figure of 7% for the last two years into account, then your actual loss is circa 55%.

 

Perhaps one good thing is that the NZ government has decided to take its medicine up front, and so is far less likely to be caught off guard by stagflation.  Unlike the criminals at the RBA who have pivoted already with a pause this month.  They are entirely retarded if they think they can engineer a soft landing for Australian property.  And with their current idiotic strategy both the Australian dollar and Australian residential property is doomed.

[KhunHeineken]

On 4/26/2023 at 12:51 PM, Adumbration said:

Thanks for posting your update.

 

It is sad to see that you have lost 245,000 dollars in just two years.

 

I see that one year term deposits with KiwiBank are currently paying 5.75% pa.  So if you had that 245K invested you would be yielding a (risk free) 14,000 dollar income.

 

With respect, your 41% loss calculation does not factor in inflation.  If we take a CPI index figure of 7% for the last two years into account, then your actual loss is circa 55%.

 

Perhaps one good thing is that the NZ government has decided to take its medicine up front, and so is far less likely to be caught off guard by stagflation.  Unlike the criminals at the RBA who have pivoted already with a pause this month.  They are entirely retarded if they think they can engineer a soft landing for Australian property.  And with their current idiotic strategy both the Australian dollar and Australian residential property is doomed.

Yet the madness continues.

 

https://www.abc.net.au/news/2023-04-30/corelogic-house-prices-rebound-interest-rates-housing-market/102284450

[KhunHeineken]

On 4/26/2023 at 12:51 PM, Adumbration said:

Perhaps one good thing is that the NZ government has decided to take its medicine up front, and so is far less likely to be caught off guard by stagflation.  Unlike the criminals at the RBA who have pivoted already with a pause this month.  They are entirely retarded if they think they can engineer a soft landing for Australian property.  And with their current idiotic strategy both the Australian dollar and Australian residential property is doomed.

The RBA moved too slow, and raised too little, from the outset. 

 

11 months later and inflation is still around 7%.  More than double where it should be. 

 

Here's an interest clip.

 

https://9now.nine.com.au/60-minutes/what-is-sticky-inflation-and-why-is-it-pushing-more-interest-rate-rises/e9b010f4-6e46-4863-8eb1-8b394524afd0

 

Australia's housing market bubble may very well need to burst so it can be rebuilt again in a way that does not skew the market in favor of investors, but considering Bill Shorten was voted down on winding back negative gearing, it shows too many are now reliant on the property gravy train.  

 

What government will be brave enough to do what needs to be done in relation to Australia's the housing market?

 

Edited May 1, 2023 by KhunHeineken

[Adumbration]

2 hours ago, KhunHeineken said:

What government will be brave enough to do what needs to be done in relation to Australia's the housing market?

 

None. 

 

And the political naievity of most Australians is sickening. 

 

The property market will crash the moment conflict kicks off in the the South China Sea and Australia losses 70% of its export markets overnight.  And let us not forget to mention the bankrupt Australian educational facilities when they are forced to send all the SEA students back home.

Edited May 1, 2023 by Adumbration