Comments on: Latest REINZ sales statistics show no clear direction on price

By: Dane

Dane — Mon, 28 Apr 2008 13:01:10 +0000

Ian, are you sure it is the agent setting the price, you might want to consider the vendor may have set the price “because the one down the road sold last year at the same price so mine must be the same”

By: ian

ian — Sat, 26 Apr 2008 03:44:25 +0000

To follow on,has anyone noticed,some of our more shady agents in Tauranga are now setting prices for vendors 10-20% higher,to offset the current downturn in prices?This,of course,does not help the vendor as it will take even longer to sell the property,maybe finally resulting in a dramatic price loss!

By: Kate

Kate — Tue, 22 Apr 2008 07:42:59 +0000

Martin, I agree – if by “today’s prices” you mean roughly a 10% drop on last year’s prices – I don’t think that’s where the bottom will end either. The method or ‘rule’ I’m following with respect to prospective purchases presently is to check out the last time the property sold. If it is 2004 or earlier great – anything later than that and the seller is unlikely to let go of it for a 2003/04 price. But that’s where I think prices will come back to, 2003/04 – as that’s when houses were affordable relative to wages. Of course, if borrowing gets really cheap again (4-5%) prices might not slide that much – and if lending tightens further – they could well slide even further.

By: Martin

Martin — Sun, 20 Apr 2008 22:14:49 +0000

Alistair

Sadly I am not convinced that todays prices are the best bargains as I don’t believe we have seen the full fall out of the bubble bursting. Despite what has been said, all evidence points to a global liquidity bubble that is unravelling, almost like watching a train wreck in slow motion.

Property prices have been propelled upwards by excessive money creation by all of the central banks. RBNZ has doubled the money supply in this country since 2000 (source RBNZ reported M3 money supply growth).

It is true that NZ has not had the same loose lending as overseas, but we still have had too many people exposing themselves to too much leverage by way of LAQC investing.

When leverage starts to unwind, it does so at an explosive pace. As yet all we have seen is a slight slow down and a lttle nervousness, not fear or hardship. For those interested, this article makes some interesting points on bubble formation, and how they typically end. It’s a little in depth, but very insightful.

I continue to keep my cash on the sidelines watching, and looking out for some profitable investments. I want positive cashflow from my investments!

By: Alistair Helm

Alistair Helm — Sun, 20 Apr 2008 11:16:51 +0000

Martin

Most profound!

There are certainly always opportunities for astute buyers in any market – as is often said of real estate, you only really make money in buying well. Today’s market is already opening up some opportunities for well funded buyers.

By: Martin

Martin — Sun, 20 Apr 2008 10:32:51 +0000

Have to agree with Kate. I liken the markets to the seasons. There are times to sow investments and time to harvest returns. You can get in a real pickle if you plant seeds when you should be harvesting…

By: Kate

Kate — Mon, 14 Apr 2008 05:06:31 +0000

Really fascinating graph – I do so enjoy this kind of analysis. It is interesting to note the intersection of the two trends in 2003, whereafter value growth exceeded (and way exceeded) volume trends. Sales values increased, whilst volumes dipped – opening a statistically remarkable gap. Just a totally anecdotal guess but I’d say this is around the period when banks relaxed their minimum deposit requirements – a whole bunch of greenhorns ‘graduated’ from the Richmastery and other mania investment courses – armed with foolish ambition and scant consideration for the real implications of debt.

By: Alistair Helm

Alistair Helm — Mon, 14 Apr 2008 00:04:45 +0000

Ross

A good question – it does speak to the very different data sources of REINZ and QV as I detailed in the post from December “House prices up or down – who to believe QV or REINZ?“

By: Ross

Ross — Sun, 13 Apr 2008 23:39:23 +0000

It’s no wonder buyers and sellers are confused – REINZ say there has been low activity in the lower price range yet two days later QV say more activity at the low end of the market! Who should they believe?