New Zealand - The Good, The Bad and The Ugly.

[DawieO]

SOOO, who is coming to Rotorua this weekend for a bit of MTB’ing?

 

I am driving down Fri eve with another recently arrived MTB’er.

[patches]

Really getting insane now:

 

'Average' Auckland bungalow sells for $1.9 million, $500,000 above CV

 

Meanwhile, this is what slightly less will get you in Houghton

 

 

 

I know it's not comparing apples and apples, but makes one think!

[Wayne Potgieter]

SOOO, who is coming to Rotorua this weekend for a bit of MTB’ing?

 

I am driving down Fri eve with another recently arrived MTB’er.

I might be able to - just waiting on some information from a builder about a possible meeting with some designer dudes.

 

If that happens, then I am out. If it doesn't happen - then I am in!

[patches]

I was chatting to a colleague the other day regarding the house prices and the current surge. This was the train of thought.

 

Lets say I have save up $200,000. That's a fair amount of cash, but not impossible.

 

If I want to buy a house with that $200,000, the bank will lend me another $800,000 (providing lending criteria is met, and all that mumbo jumbo). Let's say at an interest rate of 3%.

 

If I buy a house for $1m, and over the space of a year it appreciates at 10%. Yes, that's high, but not impossible if one looks at the past year on Auckland's housing prices.

So not only has my $200,000 has made $20,000... sweet deal... BUT my borrowed $800k has gained $56,000 (10% increase minus 3% interest). So all in, I'm up about $76,000 (or $6333 pm) TAX FREE (equivalent of earning a salary of $102,000pa)

 

Yes, this is based on favourable interest and appreciation rates, and yes, rates, etc have not been taken into account.

But still... owning a home is almost a license to print money using mostly someone else's money.

 

Where else can you do that?!

 

No wonder there are cries for CGT and the like

 

*Disclaimer: I am by no means an economist, financial guru, or even a financially responsible adult    

Edited November 2, 2020 by patches

[patches]

SOOO, who is coming to Rotorua this weekend for a bit of MTB’ing?

 

I am driving down Fri eve with another recently arrived MTB’er.

 

Dammit, I wish!

 

I am conscripted to another weekend of installing gib. Plus I sold my soul to test a Pivot eBike at Woodhill on Saturday 

[intern]

SOOO, who is coming to Rotorua this weekend for a bit of MTB’ing?

 

I am driving down Fri eve with another recently arrived MTB’er.

 

 

I'll be there on Saturday; Sunday I am playing golf with one of my neighbours...

[Wayne Potgieter]

I was chatting to a colleague the other day regarding the house prices and the current surge. This was the train of thought.

 

Lets say I have save up $200,000. That's a fair amount of cash, but not impossible.

 

If I want to buy a house with that $200,000, the bank will lend me another $800,000 (providing lending criteria is met, and all that mumbo jumbo). Let's say at an interest rate of 3%.

 

If I buy a house for $1m, and over the space of a year it appreciates at 10%. Yes, that's high, but not impossible if one looks at the past year on Auckland's housing prices.

 

So not only has my $200,000 has made $20,000... sweet deal... BUT my borrowed $800k has gained $56,000 (10% increase minus 3% interest). So all in, I'm up about $76,000 (or $6333 pm) TAX FREE (equivalent of earning a salary of $102,000pa)

 

Yes, this is based on favourable interest and appreciation rates, and yes, rates, etc have not been taken into account.

 

But still... owning a home is almost a license to print money using mostly someone else's money.

 

Where else can you do that?!

 

No wonder there are cries for CGT and the like

 

*Disclaimer: I am by no means an economist, financial guru, or even a financially responsible adult    

There is an article floating around from January 2020 that says that the highest increasing neighbourhood from 2010 to 2020 was Silverdale with a 300% growth in median value over those ten years.

 

At this point, in 2020 it has softened a little and is currently on 7%, of which 2.7% growth has happened since Covid began.

 

Assuming a drop from the current trend of 14% per annum drops to 8% per annum, the median price increased from $275,000 in 2010, to $1,255 today (this reflects what I have seen myself over the weekend and are the properties I am looking to buy) then we decrease the rate of growth to a total thumbsuck of 8%, the same property increases to $2.8m in 2031.

 

Now if these forward focussed figures are even remotely accurate, thats quite scary.

 

Sure, a lot can happen between now and then, we could even see significant downturn, but the last ten years worth of growth is pretty scary for my risk averse south african brain.

[patches]

There is an article floating around from January 2020 that says that the highest increasing neighbourhood from 2010 to 2020 was Silverdale with a 300% growth in median value over those ten years.

 

At this point, in 2020 it has softened a little and is currently on 7%, of which 2.7% growth has happened since Covid began.

 

Assuming a drop from the current trend of 14% per annum drops to 8% per annum, the median price increased from $275,000 in 2010, to $1,255 today (this reflects what I have seen myself over the weekend and are the properties I am looking to buy) then we decrease the rate of growth to a total thumbsuck of 8%, the same property increases to $2.8m in 2031.

 

Now if these forward focussed figures are even remotely accurate, thats quite scary.

 

Sure, a lot can happen between now and then, we could even see significant downturn, but the last ten years worth of growth is pretty scary for my risk averse south african brain.

 

I did some basic sums (the financial types on here will cringe), but here's a basic outline for getting a sweet batch on the South Island   

 

 

Referring to the above, lets say one buys an Auckland property for $1,000,000 with a 20% deposit.

They then pay down the principle at 3.5% pa (achievable, at about a 20 yr rate).

Then taking into account an appreciation in value of 5% (not unrealistic).

 

After 5 years (not that long) they would be in a position to leverage about $416,000 of equity to purchase a second property, which if a 40% deposit (conservative) is required, that gives them approx. $1,040,000 of buying power.

 

So yeah, that's my basic plan. 1.5yrs down, 3.5 to go 

[NotSoBigBen]

Dammit, I wish!

 

I am conscripted to another weekend of installing gib. Plus I sold my soul to test a Pivot eBike at Woodhill on Saturday

*scratches Patch's name off the Xmas card list*

[hayleyearth]

Any recommendations about solicitors?

[davetapson]

Any recommendations about solicitors?

 

We used Lucy Wright at Bay Law, recommended by the broker we were using.  She was pretty responsive and answered all my dumb questions happily.

 

lucy@baylawoffice.co.nz

 

We didn't get the property so don't know what the total cost would have been, but the review of the all the sale docs (including answering my questions) was $200, which is what she said it would be initially.

 

Have no idea if that is good value or not.

Edited November 2, 2020 by davetapson

[Saag]

Any recommendations about solicitors?

We are using Nicolene du Toit (she has been here for 20 years) at North Harbor Law in Orewa. Very happy so far. She gave the sellers all their days when we had to sign and go unconditional.

 

Two of my friends used her and both were very happy.

 

Fees are $2800 all in, which is about par for a house buy.

[patches]

Any recommendations about solicitors?

 

I used Stephanie Tait from Conveyancing Centre (based in Mt Eden).

 

She was very thorough, and is one of those people that takes their time to properly discuss during a consultation, in stead of trying to push numbers through the door. Extremely knowledgeable. 

 

I think her fee was about $1750, which including the review of 2 property files. I don't the she charges just for checking LIM reports, (provided it's like 3 or so), she only charges on settlement.

[patches]

*scratches Patch's name off the Xmas card list*

 hahaha!

 

I could say I was testing an ebike to completely confirm that I think they are ridiculous and I never in 100 years would purchase one 

 

In reality I looked at the demo bikes on offer and asked myself, what is the most different from the bike I have. Try something completely new, not just same-same-but-different.

 

Plus NotSoBigBen, the hills here are real... years of riding the Spruit didn't prepare me for them

[arabsandals]

Decided this post was actually a bit gloaty and unkind to intern so I've deleted it.

Edited November 3, 2020 by arabsandals

[davetapson]

He took a punt, sometimes you win, sometimes you lose.

 

There weren't many who wouldn't have agreed with him at the time.

 

That said, the fat lady is only getting warmed up at this stage.

 

I did see a graph though, that mapped deaths vs economic downturn and they were pretty directly related - indicating NZ might get away lightly. Given tourism, hard to see why.