This Is a Lot More Telling Than The Stuff Sunday Papers Truck Out!
Interesting commentary. Comparisons with Wellington scene now?
This reminds me of when the houses in Cromwell were being sold by the Ministry of Works at a rate of 60 a month, after the Clyde dam was finished. As soon as they sold them all prices went through the roof. Supply & demand.
Note the description of the banks sales process. Its described as if its something radical . It may be for the American market. Here in New Zealand most good salespeople would say they are following a sensible, normal approach !
And note comment on the "out of town investors" philosophy.
"The economic law of supply and demand says that when demand increases and supply falls, prices are sure to rise. Apparently that law has an asterisk that says “except for Las Vegas.”
For months now I’ve been hearing about how brisk sales have been, especially in the REO, or foreclosure, market. Looking at the numbers you will see that the available supply has been steadily trending down and sales have been setting all-time records. A bank puts an REO on the market and within days there are multiple offers on the property. So why are prices still falling?
On The Street
One realtor that I know specializes in these REO properties. What he sees are a lot of cash buyers from other areas stepping in. That would seem to mean that investors are seeing the value while local buyers are still gun-shy. Are they missing a golden opportunity?
He told me a story last week of an out of state investor who made an all-cash offer for 10% below the listed price on an REO. He warned him that he had virtually no shot at that deal. His buyer said, “but it’s all-cash.” The agent’s response was “so is everybody else’s offer.” Sure enough that REO was in a multiple offer situation and sold for about 10% more than the listed price on a 100% cash deal. He went on to say that the standard practice for the banks is to place a property on the market at a price that is lower than they expect to get. After a number of offers come in they counter by asking the buyers for their “highest and best” offer. The banks seem to have hit on a winning formula for liquidating properties.
The REO Myth
I have been asking a lot of veteran real estate agents and seasoned investors why prices are still falling. It would seem that a number of people think that there is going to be another wave of foreclosures that will be a tsunami that will cause prices to fall even further. Another opinion is that banks are sitting on a significant number of foreclosures and are releasing them piecemeal in order to keep prices from collapsing altogether.
Will there be another wave of foreclosures? Perhaps, more likely than not it will simply be a continuation of the wave we’ve been riding out for some time now. In the Las Vegas market demand has been outpacing supply for a while now, can that much more supply suddenly hit?
As for the theory that banks have all of these properties hidden under a tarp somewhere I say simply, where are they? These banks are public corporations and their assets are not invisible. If they were there someone would have found them by now.
The Smart Money
Are all of these cash investors wrong? I have a feeling that they’re not. Las Vegas prices have fallen so far below replacement cost that it would seem that they are significantly undervalued. For the longest time it had been virtually impossible to get a property to cash flow in the Las Vegas market, now it is a piece of cake. How much longer before everybody else notices?"
Heres the source of the article:
http://www.biggerpockets.com/renewsblog/2009/09/14/las-vegas-record-sales-dwindling-supply-why-are-prices-still-falling/
Monday, December 28, 2009
Sunday, December 27, 2009
No, This is Bad News
Sunday Paper Picks 2010 Good to Buy Holiday Home.
Why bad?
On Colins non scientific, 20 year observation of real estate trends, there is only one barometer to watch more closely than the Listener. ( That publication is always soooo wrong, investors should subscribe to see whats about to not happen)
And that market indicator? The Sunday paper banner headlines.
Why watch them for guidance? Because without fail, what they say is the opposite of what is going to unfold in the future. DOING THE OPPOSITE OF WHAT THEY SAY TO DO IS A GOOD IDEA! Yes, you cant go wrong.
So sorry, bad year for buying holiday homes.
Why bad?
On Colins non scientific, 20 year observation of real estate trends, there is only one barometer to watch more closely than the Listener. ( That publication is always soooo wrong, investors should subscribe to see whats about to not happen)
And that market indicator? The Sunday paper banner headlines.
Why watch them for guidance? Because without fail, what they say is the opposite of what is going to unfold in the future. DOING THE OPPOSITE OF WHAT THEY SAY TO DO IS A GOOD IDEA! Yes, you cant go wrong.
So sorry, bad year for buying holiday homes.
Monday, December 14, 2009
Why Real Estate in NZ is Like Lady Di
An influential Journalist blew me away with the revelation of where these unqualified, dodgy and sensational stories are coming from. Especially in the Sunday papers.
He said to me "in New Zealand, real estate has the "lady Di " factor to Newspaper editors...put it on the front page and the sales will spike up"
What more needs said?
He said to me "in New Zealand, real estate has the "lady Di " factor to Newspaper editors...put it on the front page and the sales will spike up"
What more needs said?
The Value Of Homestaging
I feel more and more strongly this is worth doing when you sell.
Its been a struggle to quantify what value it adds, in numbers. Because you cant sell the same house twice!
However I just saw some US figures, from StagedHomes.com. Their survey. Selling in 30 days vs average 60. Median 6.8% more. 6.8% .... wow! That would be like $35 000 more, on an average house in Wellington!
Certainly I feel apartments in Wellington that are not presented to "homestaged" standards will not only sell at discount, but they are virtually unable to be sold at any price, certainly those under $500 000.
This photo is of something I sold recently, homestaged. Dosnt it just look desirable?
Selling To "investors"
Heres a couple of "investor guidance" philosophies to give you the "flavor" of what they want from you!
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Well, if you have, or are going to sell to a true investor, you will have done one or several things wrong, probably.
They aim to buy below market value, on their terms, with great returns, either capital gain or yield.
Heres what has or will cause it:
You bought something only an investor would want to take off your hands.
You so overpriced it when it went to market you killed a fair sale, & were only left with the bottom feeders.
you failed to present it well. Didnt have the money, time or inclination to tidy it.
Your tenants were such pigs it took 5% off the value. Get them out, clean it & home stage. $2000 homestaging should add $10000 at least.
You didnt get out soon enough. Sell before you MUST!
You bought in a terrrible location.
You didnt market it well:
you sold it yourself .
You didnt get a good agent.
You didnt get a good company.
You didnt spend on advertizing.
Sorry, if they buy, you lost!
( Note: not all sales to 'investors" will be' lose/win' but in Wellington, the chances are high!)
Where To, Prices & Volumes, 2010 Wellington?
So heres my stab at it.
Firstly this is done without any knowledge on The Listeners current position on the market.
This is an important barometer for me, as I have found that publication to be very reliably & consistantly wrong on property for 15 years. And in a timely fashion too.
When The Listener says ( and they do about twice a year) "real estate is in a terrible state, and its ruining the country, and prices are about to go through the floor, and and and the collapse will take all the greedy people who own houses to hell"... then buy buy buy!
In their defense their editorial sentiment is generally negitive towards property, so the 7% average annual increase in value over the last 100 years works against them I guess. Can anyone summarize their current opinion, to take it into account in predicting the next 12 months?
Rest of the media, also a good indication of which way not to bet... but they are confused. "You need a house, but dont buy one, maybe" , seems the overall flavour.
Tony Alexander, BNZ...far sharper than media.. says nationally up 5 to 10 % next year.
Buyers...gone for christmas, no one to ask.
Listings...more, but selling. Except over $1 million...there are a swarm there, & not enough buyers.
Investment/first home...yields poor unless you compare them to running a small business or putting it in the bank. Or pretty well anything.
first homes
Prices fairly fierce for what you get...but there is nothing else...
Rumours..bloodletting by government to reduce spending blowout next year especially in Wellington.
Loss Atributing Qualifying Companies's to lose some benefits?
US property market still weak.
So... me, Ill say volumes next year 680 to 800 sales a month...ie steady. Prices? Wellington overall...up 6% year on year. First homes & over $ 1 million...not so strong... up 3%.
And living in a clean, clever, compact Capital, safe and secure from all the stress the rest of the "civilized" world put up with every day?.............. PRICELESS!
Have a wonderful Festive Season.
Cheers
Colin
Firstly this is done without any knowledge on The Listeners current position on the market.
This is an important barometer for me, as I have found that publication to be very reliably & consistantly wrong on property for 15 years. And in a timely fashion too.
When The Listener says ( and they do about twice a year) "real estate is in a terrible state, and its ruining the country, and prices are about to go through the floor, and and and the collapse will take all the greedy people who own houses to hell"... then buy buy buy!
In their defense their editorial sentiment is generally negitive towards property, so the 7% average annual increase in value over the last 100 years works against them I guess. Can anyone summarize their current opinion, to take it into account in predicting the next 12 months?
Rest of the media, also a good indication of which way not to bet... but they are confused. "You need a house, but dont buy one, maybe" , seems the overall flavour.
Tony Alexander, BNZ...far sharper than media.. says nationally up 5 to 10 % next year.
Buyers...gone for christmas, no one to ask.
Listings...more, but selling. Except over $1 million...there are a swarm there, & not enough buyers.
Investment/first home...yields poor unless you compare them to running a small business or putting it in the bank. Or pretty well anything.
first homes
Prices fairly fierce for what you get...but there is nothing else...
Rumours..bloodletting by government to reduce spending blowout next year especially in Wellington.
Loss Atributing Qualifying Companies's to lose some benefits?
US property market still weak.
So... me, Ill say volumes next year 680 to 800 sales a month...ie steady. Prices? Wellington overall...up 6% year on year. First homes & over $ 1 million...not so strong... up 3%.
And living in a clean, clever, compact Capital, safe and secure from all the stress the rest of the "civilized" world put up with every day?.............. PRICELESS!
Have a wonderful Festive Season.
Cheers
Colin
Sunday, November 22, 2009
What Stops Houses being Cheaper
Why are prices strong? A number of reasons:
A population that is growing & moving.
Dwellings are having, on average less ocupants. Do you know the average in 1900 was about 7 people per dwelling? Average!
Growth in migration.
Build costs, all up, are phenominal! Consents, land, decorating, landscaping, funding. In Wellington the build cost, true, seldom is under $3000 a square metre by the time you walk in the front door! Without land!
Now, add to that the nanny state. I tell people you need rocks in your head or be very very good to make money in NZ developing land & building residential homes en mass. The intrusive & arbitrary power of the state is a real uncertainty to costs & completion dates....ie to if you will make or lose money. Its a lottery.
Here is very good comment from Tony Alexander, BNZ economist. I recomend his weekly newsletter. Subscribe here
http://www.bnz.co.nz/Business_Solutions/1,1184,2-22-842,00.html
I Quote:
While we do not expect the pace of growth in sales earlier this year to reappear in the near future prospects
remain good – as we have long indicated – for average house prices to keep rising for the next 1-2 years.
There is the lowest level of addition to the existing housing stock in four decades and an upturn in
construction while underway will be constrained by a shortage first of funding for developers and then late
next year by a new shortage of contractors.
You may have noticed during the week that one of the other forecasting groups has adopted quite bullish
commentary on the housing market. So this now is where things start to get quite interesting. Regular
readers will know that over 18 months ago we were warning that although house prices would fall they would
decline maybe “only” 10% - 15% because of supporting factors such as rapidly falling construction, an
under-supply of housing, and the eventual impacts on debt-loving Kiwis of falling interest rates and
improving net migration flows. We suggested that if people wanted to make a “canny” purchase in the
housing market they should do so before the middle of this year.
Prices on average have now risen 9% since January and as we pointed out here last week the price gains
are occurring in the three main urban centres and not the regions this cycle. That aside, one of the other
things we pointed out last year is that probably in the second half of this year the debate about affordable
housing would reignite. That has not happened in public forums yet as far as we can see, but it won’t be far
away now that there appears to be general awareness of the property shortage moving out of just a dearth
of listings into a physical shortage of properties.
One might recall how when we were writing positively about the housing market in Winter the doom-sayers
were forecasting prices would decline anew because Spring would bring a flood of listings. That has not
happened, but one suspects the improving house price sentiment/discussion will bring forward a few more
sellers looking to alter their long term property exposure to something better aligned with their underlying
cash flows and risk tolerance.
But back on affordable housing. This is an extremely important issue with regard to social inclusion and
cohesiveness. One of the things we generally appear to value as New Zealanders is the ability to own our
own home and not to live in the tiny accommodation so prevalent overseas. When house prices were
skyrocketing 2-3 years ago and worries about this threat to our culture were high the Commerce Select
Committee held an investigation into the home affordability issue and produced a set of relatively lacklustre
recommendations which as far as we can tell have had no impact."
Yes folks, unless something big changes, houses in the places there are jobs will continue to be in demand.
And unlike other form of investments...you can live in them too!
A population that is growing & moving.
Dwellings are having, on average less ocupants. Do you know the average in 1900 was about 7 people per dwelling? Average!
Growth in migration.
Build costs, all up, are phenominal! Consents, land, decorating, landscaping, funding. In Wellington the build cost, true, seldom is under $3000 a square metre by the time you walk in the front door! Without land!
Now, add to that the nanny state. I tell people you need rocks in your head or be very very good to make money in NZ developing land & building residential homes en mass. The intrusive & arbitrary power of the state is a real uncertainty to costs & completion dates....ie to if you will make or lose money. Its a lottery.
Here is very good comment from Tony Alexander, BNZ economist. I recomend his weekly newsletter. Subscribe here
http://www.bnz.co.nz/Business_Solutions/1,1184,2-22-842,00.html
I Quote:
While we do not expect the pace of growth in sales earlier this year to reappear in the near future prospects
remain good – as we have long indicated – for average house prices to keep rising for the next 1-2 years.
There is the lowest level of addition to the existing housing stock in four decades and an upturn in
construction while underway will be constrained by a shortage first of funding for developers and then late
next year by a new shortage of contractors.
You may have noticed during the week that one of the other forecasting groups has adopted quite bullish
commentary on the housing market. So this now is where things start to get quite interesting. Regular
readers will know that over 18 months ago we were warning that although house prices would fall they would
decline maybe “only” 10% - 15% because of supporting factors such as rapidly falling construction, an
under-supply of housing, and the eventual impacts on debt-loving Kiwis of falling interest rates and
improving net migration flows. We suggested that if people wanted to make a “canny” purchase in the
housing market they should do so before the middle of this year.
Prices on average have now risen 9% since January and as we pointed out here last week the price gains
are occurring in the three main urban centres and not the regions this cycle. That aside, one of the other
things we pointed out last year is that probably in the second half of this year the debate about affordable
housing would reignite. That has not happened in public forums yet as far as we can see, but it won’t be far
away now that there appears to be general awareness of the property shortage moving out of just a dearth
of listings into a physical shortage of properties.
One might recall how when we were writing positively about the housing market in Winter the doom-sayers
were forecasting prices would decline anew because Spring would bring a flood of listings. That has not
happened, but one suspects the improving house price sentiment/discussion will bring forward a few more
sellers looking to alter their long term property exposure to something better aligned with their underlying
cash flows and risk tolerance.
But back on affordable housing. This is an extremely important issue with regard to social inclusion and
cohesiveness. One of the things we generally appear to value as New Zealanders is the ability to own our
own home and not to live in the tiny accommodation so prevalent overseas. When house prices were
skyrocketing 2-3 years ago and worries about this threat to our culture were high the Commerce Select
Committee held an investigation into the home affordability issue and produced a set of relatively lacklustre
recommendations which as far as we can tell have had no impact."
Yes folks, unless something big changes, houses in the places there are jobs will continue to be in demand.
And unlike other form of investments...you can live in them too!
Wednesday, November 18, 2009
Tenders effectiveness noticed by Quotable Value
We always like it when others agree with us!
Quotable Value, in their monthly press release, have reiterated what I said recently in this blog. That is, tenders are changinging the face of the market, while stock is short.
Here I quote them:
“The continued shortage of properties is leading to a continued
imbalance in the market with more buyers than available properties.
As a result our Valuers are seeing many properties sell for well above
their expected values. These demand-based price increases are likely
to continue until the balance in the market changes. This will happen
either when more properties come onto the market, or when buyers
consider prices to be beyond their affordability and as a result consider
other parts of the market, or resolve to continue their current living
arrangements” said QV Valuation Manager Glenda Whitehead. “The
lack of strong spring activity could be due to several factors. Many
owners will have locked in to lower long term interest rates at the
beginning of the year and will be concerned about losing those rates if
they sell. Having made the decision some months ago to stay put, they
may now be extending or renovating and no longer be considering
selling” said Whitehead.
Tenders effective in current market
Pieter Geill of QV Valuations said: “The shortage of listings in Wellington
continues. The traditional spring resurgence which we would normally
see at this time of year is still holding off and is putting upward pressure
on prices. Good homes are attracting competition amongst buyers,
especially at tender which seems to be an effective sales method in this market"
Quotable Value, in their monthly press release, have reiterated what I said recently in this blog. That is, tenders are changinging the face of the market, while stock is short.
Here I quote them:
“The continued shortage of properties is leading to a continued
imbalance in the market with more buyers than available properties.
As a result our Valuers are seeing many properties sell for well above
their expected values. These demand-based price increases are likely
to continue until the balance in the market changes. This will happen
either when more properties come onto the market, or when buyers
consider prices to be beyond their affordability and as a result consider
other parts of the market, or resolve to continue their current living
arrangements” said QV Valuation Manager Glenda Whitehead. “The
lack of strong spring activity could be due to several factors. Many
owners will have locked in to lower long term interest rates at the
beginning of the year and will be concerned about losing those rates if
they sell. Having made the decision some months ago to stay put, they
may now be extending or renovating and no longer be considering
selling” said Whitehead.
Tenders effective in current market
Pieter Geill of QV Valuations said: “The shortage of listings in Wellington
continues. The traditional spring resurgence which we would normally
see at this time of year is still holding off and is putting upward pressure
on prices. Good homes are attracting competition amongst buyers,
especially at tender which seems to be an effective sales method in this market"
Thursday, November 12, 2009
NZ Real Estate...10 Year High
Predictions of up 10% in next 10 months..
Average price in Wellington $400 000....10% is $40k, 10 months, $4k a month, up $1000 a week.
What prat keeps saying property is not a gopod place to put money?
Thanks here to "Scoop"
Nov. 13 (BusinessWire) – New Zealand house prices hit a 10-year high for the month of October amid a decline in the volume of sales as fewer properties are put on the market.
The national median house price rose to $355,000 last month, from $350,000 in September, according to the Real Estate Institute, with the median value increasing in seven of the 12 districts surveyed. The volume of sales declined 5.8% to 6,091 from a month earlier as the shortage of properties continued to keep Spring listings low and helped bump up prices.
Related Stories on Scoop
Auckland houses prices reach 22-month high 04/11/2009
NZ home building permits climb for third month 30/10/2009
NZ house prices extend gains in September: REINZ 14/10/2009
NZ apartment permits fall, total consents climb 29/09/2009
NZ house prices edge higher in August: REINZ 14/09/2009
Results powered by search.scoop.co.nz More Related Stories >>>
“The rises aren’t, in most cases, dramatic, but slow and steady over the past few months as confidence returns to the market,” said president Peter McDonald, in a statement. “I believe the market will firm even further with the better economic news we’re hearing more and more frequently.”
Average price in Wellington $400 000....10% is $40k, 10 months, $4k a month, up $1000 a week.
What prat keeps saying property is not a gopod place to put money?
Thanks here to "Scoop"
Nov. 13 (BusinessWire) – New Zealand house prices hit a 10-year high for the month of October amid a decline in the volume of sales as fewer properties are put on the market.
The national median house price rose to $355,000 last month, from $350,000 in September, according to the Real Estate Institute, with the median value increasing in seven of the 12 districts surveyed. The volume of sales declined 5.8% to 6,091 from a month earlier as the shortage of properties continued to keep Spring listings low and helped bump up prices.
Related Stories on Scoop
Auckland houses prices reach 22-month high 04/11/2009
NZ home building permits climb for third month 30/10/2009
NZ house prices extend gains in September: REINZ 14/10/2009
NZ apartment permits fall, total consents climb 29/09/2009
NZ house prices edge higher in August: REINZ 14/09/2009
Results powered by search.scoop.co.nz More Related Stories >>>
“The rises aren’t, in most cases, dramatic, but slow and steady over the past few months as confidence returns to the market,” said president Peter McDonald, in a statement. “I believe the market will firm even further with the better economic news we’re hearing more and more frequently.”
Monday, November 9, 2009
The New Act : Real Estate Agents Authority
Yes folks...another bunch of people to look after you.
I am just checking that , as everything I do must comply with a few simple things ( to save you from me, I believe) that my blogs now carry a legal requirment. Lets see if I have added it correctly after my name. You are now warned!
I am just checking that , as everything I do must comply with a few simple things ( to save you from me, I believe) that my blogs now carry a legal requirment. Lets see if I have added it correctly after my name. You are now warned!
Wednesday, November 4, 2009
Agents "Buying a Listing"
Really annoying to all except the company that bank the fee.
Now, every salesperson occasionally get over enthused. And they need to be optomistic. But sometimes its clear a high price...very improbable...is suggested ( always when several companies are involved!)
Highest gets it. ...The listing has been "bought!"
Dosnt sell at first, evidence of real value feedback is given.... (wheeling in the hearse is the term) Vendors expectation reduced & motivation is higher....sold for what the other companies said.
Just heard one yesterday..."winners" minimum $100 000 higher than others "market value"...be interesting, but dont think they will get it!
Now, every salesperson occasionally get over enthused. And they need to be optomistic. But sometimes its clear a high price...very improbable...is suggested ( always when several companies are involved!)
Highest gets it. ...The listing has been "bought!"
Dosnt sell at first, evidence of real value feedback is given.... (wheeling in the hearse is the term) Vendors expectation reduced & motivation is higher....sold for what the other companies said.
Just heard one yesterday..."winners" minimum $100 000 higher than others "market value"...be interesting, but dont think they will get it!
Residential Investment in Wellington
Ill do a more detailed blog on this subject soon.
For now...lots of investors appeared early in year but didnt buy. Now there is more competition.So they missed out ( See examples of good buys in my march Blogs, with photos.)
Real estate companies seldom leave "bargains" around like all the out of date investment books talk about. Not enough silly , distressed private sales to satisfy their demand. Everybody factors in adding bedrooms, putting on sleepouts, so few chances there. & several potential buyers for each etc. Ill talk about successful strategies for 2009 soon.
Meantime interesting Aussie web, found through twitter....http://positivegearingproperty.com/
Just dont expect this stuff to work on a well marketed property with a good real estate salesperson!
All may change with changes to LAQCs & deductions...we dont know yet.
Im also going to discuss "Buyers agents" ...in Wellington.
For now...lots of investors appeared early in year but didnt buy. Now there is more competition.So they missed out ( See examples of good buys in my march Blogs, with photos.)
Real estate companies seldom leave "bargains" around like all the out of date investment books talk about. Not enough silly , distressed private sales to satisfy their demand. Everybody factors in adding bedrooms, putting on sleepouts, so few chances there. & several potential buyers for each etc. Ill talk about successful strategies for 2009 soon.
Meantime interesting Aussie web, found through twitter....http://positivegearingproperty.com/
Just dont expect this stuff to work on a well marketed property with a good real estate salesperson!
All may change with changes to LAQCs & deductions...we dont know yet.
Im also going to discuss "Buyers agents" ...in Wellington.
Tuesday, November 3, 2009
Wow Is for Worries! Real estate agents Act 2008
Wow!
How would you like to be working under a new Act of Parliament where part of the act says:
" A charge of misconduct or unsatisfactory conduct may be brought and dealt with despite the charge not being based on a breach of any specific rule"
Buyers, sellers, agents' competitors, and their own colleagues are not just encouraged to file a complaint, but LEGALLY OBLIGED to do so ...if they have "reasonable grounds" for believing unsatisfactory conduct has occurred. Life could be busy for the tribunal....hmmmm...... reasonable grounds....
I suspect Ill be saying more on this Act, which comes into effect in 2 weeks.
Lots of excitement and heartache to come from this ill thought piece of law.... you heard it first here!
How would you like to be working under a new Act of Parliament where part of the act says:
" A charge of misconduct or unsatisfactory conduct may be brought and dealt with despite the charge not being based on a breach of any specific rule"
Buyers, sellers, agents' competitors, and their own colleagues are not just encouraged to file a complaint, but LEGALLY OBLIGED to do so ...if they have "reasonable grounds" for believing unsatisfactory conduct has occurred. Life could be busy for the tribunal....hmmmm...... reasonable grounds....
I suspect Ill be saying more on this Act, which comes into effect in 2 weeks.
Lots of excitement and heartache to come from this ill thought piece of law.... you heard it first here!
Apartment, Or Mansion?Whats Your Fancy?
Viva la Difference!
If we all wanted the same property...well, It would be crowded.
When looking through a 260m2 penthouse recently (lovely, 3 carparks, big harbour views, $3 million) I commented that $3 mill would buy the best house in Mount Victoria!
And here it is! 25 Brougham st. About 440 restored glorious square metres, FOUR car parks. No harbour view, but no body corporate meetings with the other 91 owners in the apartment building either.
Price? be quick...low to mid $2 millions. Be quick! To me...that is a bargain .I want it.
Monday, November 2, 2009
Leasehold Apartment Land Comes To Wellington.
Well it has been here a while.
"Piermont" was the first "modern" developer lease to go through that I know of.
"The Wellingtonian" tried, but it faltered & freehold was offered as an option.
The idea is the apartments are "cheaper" because you don't own a share in the land underneath. But you pay a lease, in modern cases here & Auckland (where all clever ideas come from) to a company set up by the developer.
The reduction in purchase price seems small or non existent, compared to those sold with freehold. This suggests purchasers either don't value, or know the value of the lands freehold.
In the cost of Piermont I understand the first several years lease were pre paid. There is interest in what the first review will bring.
The cost of the leases is related to the value of the land. Since building values tend to go down in real terms ( it is a depreciating asset) and land values go up, this takes away a capital gain advantage from the purchaser.
But a much worse feature is that in boom times, when everyone else is benefiting from rising values, what is happening to these unfortunate leasehold apartment owners?....The value of the land goes up, increasing the cost of their lease. DECREASING the value of their apartment.
There were cases in Auckland I believe where apartments costing $600 000 soon had leases of over $100 000.
There are grumbles already from owners, and murmurings from valuers about the the Piermont lease. I have however never seen one, & would be interested to hear any comments on it.
Another leasehold development is being sold I have been told, as we speak. I will find out if this is the case.
"Piermont" was the first "modern" developer lease to go through that I know of.
"The Wellingtonian" tried, but it faltered & freehold was offered as an option.
The idea is the apartments are "cheaper" because you don't own a share in the land underneath. But you pay a lease, in modern cases here & Auckland (where all clever ideas come from) to a company set up by the developer.
The reduction in purchase price seems small or non existent, compared to those sold with freehold. This suggests purchasers either don't value, or know the value of the lands freehold.
In the cost of Piermont I understand the first several years lease were pre paid. There is interest in what the first review will bring.
The cost of the leases is related to the value of the land. Since building values tend to go down in real terms ( it is a depreciating asset) and land values go up, this takes away a capital gain advantage from the purchaser.
But a much worse feature is that in boom times, when everyone else is benefiting from rising values, what is happening to these unfortunate leasehold apartment owners?....The value of the land goes up, increasing the cost of their lease. DECREASING the value of their apartment.
There were cases in Auckland I believe where apartments costing $600 000 soon had leases of over $100 000.
There are grumbles already from owners, and murmurings from valuers about the the Piermont lease. I have however never seen one, & would be interested to hear any comments on it.
Another leasehold development is being sold I have been told, as we speak. I will find out if this is the case.
Saturday, October 24, 2009
the Statistics On Selling a House Privately in NZ
This is based on thoughts coming from some surveying I did, a while ago.
In Wellington, about 7% of ads were private sale. At that time only 4% of sales were private, & that included non market transactions. (That is, selling to the friend that had always wanted it, selling within families etc.) So probably more than 50% of all private sales attempts ended up concluded by a realtor. I don't know if web sales have increased. Anecdotal indications are it doesn't seem to be very widespread
Why do they try? To save a fee, I think. And/or because no agent will take it on at "Their Price".
I think a lot believe their house has only one value to all purchasers, like a car of a certain year and mileage. They think that all that has to happen is put the property in front of the market, and pocket the fee an agent would charge.
They think it is a rational transaction, and that selling is not a skill. Selling is actually the most highly paid skill in the world. Look at Donald Trump and Richard Branston.
So what seems to happen?
There are several flaws to sellers pocketing $10 to $20 000.
Firstly the buyer usually deducts the real estate fee before they offer...and 50% of sellers do the same, in their minds too! So the buyer saves the fee, and the seller does the work for nothing!
Security issues, or being unable or willing to show the house at requested times cause some to falter.
Personalities kill the deal. remember this is 15 rounds of the sellers greed vs the buyers fear...a potent battle!
A real estate adage, often true is "to kill a deal, put the seller and buyer in the same room". One reason real estate salespeople are accused of bad conduct, or outcomes, is because one party or the other has been a total pillock, and demanded a totally unreasonable thing be conveyed to the other party! So shoot the messenger! A big part of sales success is keeping the two parties reasonable to each other!
Clever buyers con weak sellers. Self explanatory. I hear these buyers boasts all the time. Of course they try it through agents too!
Private sellers pay very high rates to advertise in newspapers, and cant get into the Real Estate magazines. Trade Me offers more than it delivers, for real estate, in my opinion. The owner doesn't have a pool of existing buyers, or a team of salespeople. So private sales usually get only a small number of inspections. Less inspections, less offers.
Very occasionally sellers underprice. I heard someone recently who claimed to buy a property they said was worth$1.4 million in Oriental Bay privately.They bought it off the first ad, paying the full asking of $1.1m.
Joho Lomu's house in Mirimar was sold privately ( I saw through it at the time) and resold for huge profit soon after. I was told how his manager allegedly handled the sale, by the private buyers. I wont comment on the story!
So my Stats...total guess:
10% of private sales attempts do as well as the best agents could. Often these sellers have sales skills
10% sell for a "normal" price, & save the fee.
20% sell for "normal" less commission..IE do it for nothing.
5% sell for a poor price.
55% attempt, then give it to a professional.
Thats the way I see it.
In Wellington, about 7% of ads were private sale. At that time only 4% of sales were private, & that included non market transactions. (That is, selling to the friend that had always wanted it, selling within families etc.) So probably more than 50% of all private sales attempts ended up concluded by a realtor. I don't know if web sales have increased. Anecdotal indications are it doesn't seem to be very widespread
Why do they try? To save a fee, I think. And/or because no agent will take it on at "Their Price".
I think a lot believe their house has only one value to all purchasers, like a car of a certain year and mileage. They think that all that has to happen is put the property in front of the market, and pocket the fee an agent would charge.
They think it is a rational transaction, and that selling is not a skill. Selling is actually the most highly paid skill in the world. Look at Donald Trump and Richard Branston.
So what seems to happen?
There are several flaws to sellers pocketing $10 to $20 000.
Firstly the buyer usually deducts the real estate fee before they offer...and 50% of sellers do the same, in their minds too! So the buyer saves the fee, and the seller does the work for nothing!
Security issues, or being unable or willing to show the house at requested times cause some to falter.
Personalities kill the deal. remember this is 15 rounds of the sellers greed vs the buyers fear...a potent battle!
A real estate adage, often true is "to kill a deal, put the seller and buyer in the same room". One reason real estate salespeople are accused of bad conduct, or outcomes, is because one party or the other has been a total pillock, and demanded a totally unreasonable thing be conveyed to the other party! So shoot the messenger! A big part of sales success is keeping the two parties reasonable to each other!
Clever buyers con weak sellers. Self explanatory. I hear these buyers boasts all the time. Of course they try it through agents too!
Private sellers pay very high rates to advertise in newspapers, and cant get into the Real Estate magazines. Trade Me offers more than it delivers, for real estate, in my opinion. The owner doesn't have a pool of existing buyers, or a team of salespeople. So private sales usually get only a small number of inspections. Less inspections, less offers.
Very occasionally sellers underprice. I heard someone recently who claimed to buy a property they said was worth$1.4 million in Oriental Bay privately.They bought it off the first ad, paying the full asking of $1.1m.
Joho Lomu's house in Mirimar was sold privately ( I saw through it at the time) and resold for huge profit soon after. I was told how his manager allegedly handled the sale, by the private buyers. I wont comment on the story!
So my Stats...total guess:
10% of private sales attempts do as well as the best agents could. Often these sellers have sales skills
10% sell for a "normal" price, & save the fee.
20% sell for "normal" less commission..IE do it for nothing.
5% sell for a poor price.
55% attempt, then give it to a professional.
Thats the way I see it.
Friday, October 23, 2009
Whats The Impact of Tenders, in a Sellers Market?
Tenders May Be Changing The Wellington Sales Landscape.
The old idea was once a salesperson got an offer of about what a residential property was "worth", the vendor got worked over to be reasonable & take it. Especially with a general agency...where heaven forbid, another company might come along with a higher offer. And it still happens in some companies.
Leaders started tendering , and it has become widespread.
Looking today, on the Leaders website, and searching for 4 plus bedroom houses over $500k, and under$750k found the following for all of Wellington city: 4 under offer or for sale by price. 13 for sale by fixed tender.
Some buyers complain they "keep missing out" or that they "want the chance to negotiate"
Investors say everything is "too dear". What do they mean, & what is happening to sales outcomes?
Wellington continues to be a sellers market. Houses are not an easily duplicated or substituted comodity. There is too much variety & not a big enough pool of stock.
A normal sale is where "a buyer, knowledgeable in the market, motivated, but not under duress to buy, purchases from a vendor, motivated, knowledgebale but not under duress to sell."
But the tender enables the vendor to sell, in every case, to the most highly motivated buyer. So often a half dozen, or dozen, or as in Weka st or Rongatai road this year, two dozen "normally motivated" buyers miss out.
So what does it say that these buyers rely on purchasinig "non tender" listings? Probably that they get them for less than the vendor could have got. Why would owners choose to sell this way, other than ignorance or convenience? I often suggest to these buyers they go troll through private sales for bargains, poor negotiators and the uninformed vendor.
There is a concequence of selling for top prices. all the neighbours of course immediatly expect the same. This sets a line in the sand.
So is the Wellington market, particularly, being underpinned by a strong sellers market combined with a selling system evolved to favour the sellers ( as it should in my opinion?)
Note...the buyers, who most complain about tenders, & the impartial realocation of houses to they who want them most, seem to change their story dramatically when after buying, that they themselves decide to sell!
The old idea was once a salesperson got an offer of about what a residential property was "worth", the vendor got worked over to be reasonable & take it. Especially with a general agency...where heaven forbid, another company might come along with a higher offer. And it still happens in some companies.
Leaders started tendering , and it has become widespread.
Looking today, on the Leaders website, and searching for 4 plus bedroom houses over $500k, and under$750k found the following for all of Wellington city: 4 under offer or for sale by price. 13 for sale by fixed tender.
Some buyers complain they "keep missing out" or that they "want the chance to negotiate"
Investors say everything is "too dear". What do they mean, & what is happening to sales outcomes?
Wellington continues to be a sellers market. Houses are not an easily duplicated or substituted comodity. There is too much variety & not a big enough pool of stock.
A normal sale is where "a buyer, knowledgeable in the market, motivated, but not under duress to buy, purchases from a vendor, motivated, knowledgebale but not under duress to sell."
But the tender enables the vendor to sell, in every case, to the most highly motivated buyer. So often a half dozen, or dozen, or as in Weka st or Rongatai road this year, two dozen "normally motivated" buyers miss out.
So what does it say that these buyers rely on purchasinig "non tender" listings? Probably that they get them for less than the vendor could have got. Why would owners choose to sell this way, other than ignorance or convenience? I often suggest to these buyers they go troll through private sales for bargains, poor negotiators and the uninformed vendor.
There is a concequence of selling for top prices. all the neighbours of course immediatly expect the same. This sets a line in the sand.
So is the Wellington market, particularly, being underpinned by a strong sellers market combined with a selling system evolved to favour the sellers ( as it should in my opinion?)
Note...the buyers, who most complain about tenders, & the impartial realocation of houses to they who want them most, seem to change their story dramatically when after buying, that they themselves decide to sell!
Saturday, October 10, 2009
Too Cool! Two Great Thorndon Townhouses For Sale.
Im selling these 2 New York Loft style townhouses.
20 years in the business...I can tell you there are not many like this in Wellington.
excuse the copy...Im very busy.
Most townhouses are boxes. High beamed ceilings and a huge lounge set these two apart from the crowd. 130m2 each. Ratable values $415 000 and $435 000. In a complex of only 5, set quietly off noisy roads, yet an easy stroll to the CBD, Thorndon pool or the town belt. And handy to the motorway. Great courtyard common area with seating and Petanque court to relax & entertain. Recently refurbished to stringent new council code. Carpark too. I’m often asked for this type of property…but they are virtually never available. Tender closes Oct 22. View Sunday 1 to 2 pm
12 Little George st Thorndon Wellington New Zealand
Thursday, October 8, 2009
Here are Tattoo Apartments
Yes, I love these!
32 Apartments. 5 metre high stud.
32 Apartments. 5 metre high stud.
18 of 32 sold with no advertizing.
Ive got agency to sell the last 14, starting from $308 000.
Abel Smith st opposite the Southern Cross. And boy has that got a great restaurant now.
Its Archaus design. Ive worked with these guys for 15 years...like the detail & flair....link to follow, with purchasing details. this will win awards AND be great to live in ( The two dont always go togeather)
Its Archaus design. Ive worked with these guys for 15 years...like the detail & flair....link to follow, with purchasing details. this will win awards AND be great to live in ( The two dont always go togeather)
Tuesday, September 29, 2009
Proof Recession is Over for Wellington Real Estate
Upmarket, 50 m2 Apartments snapped up off plans
First succesful selldown since times got tough! Yes folks, its over!
My definition of a recession in real estate: You cant sell new developments off the plans.
16 of 32 lovely, well designed & located apartments have been bought in the last month. Sold by developers to mates, contacts, & past clients, with no marketing.
they are very cool. look like good value & ( sigh) groovy design. Very yummy. Some of the best fun I have had is selling cool apartments!
watch this spot for more details once I am allowed.
First succesful selldown since times got tough! Yes folks, its over!
My definition of a recession in real estate: You cant sell new developments off the plans.
16 of 32 lovely, well designed & located apartments have been bought in the last month. Sold by developers to mates, contacts, & past clients, with no marketing.
they are very cool. look like good value & ( sigh) groovy design. Very yummy. Some of the best fun I have had is selling cool apartments!
watch this spot for more details once I am allowed.
Saturday, September 26, 2009
Predicting Future Price Movements in The Residential Market
OK, I dont know why I never thought of this obvious relationship!
Here is the graph that got me excited.
thanks again to tony Alexander at BNZ...a good thing to subscribe to ( see below for link)
Note, Ive annotated graph, its not the easiest correlation to spot quickly.
Wednesday, September 23, 2009
BNZ predictions...Graph Shows Future House Price Movement!
Heres an excerpt fron the latest great BNZ report, produced by the charming Tony Alexander. Tony is a fun & generous speaker I have heard on occasion over the years. Worth subscribing at http://www.bnz.co.nz
It includes a really useful graph I have never seen before. It looks really useful, once you extrapolate it!
“ Housing Market Rising As Expected
The highlight of the week as far as housing activity goes was the monthly REINZ report released on Monday. It showed that in rough seasonally adjusted terms sales of dwellings fell by about 5% in August butat 5,878 were ahead a still strong 39% from a year ago. One can easily put the small easing in sales activitydown to the frequently reported shortages of listings – and because listings are in short supply it is no surprise that the average number of days taken to sell a dwelling fell even further in August.
50000
This measure now sits at 34 days from 37 in July and 55 a year earlier. This puts the speed of sales back
practically at the 33 of August 2007 and the August result is 3.7 days faster than average for the month. In July the days to sell measure was 2.8 days below average while June was above average by 0.9 days.
And so, with sales constrained by a vendor shortage, it is no surprise that prices continue to go up. The stratified measure put together by the Reserve Bank shows that on average prices in August were up 1.2% after rising 1.0% in July. Prices have now on average recovered 5.9% from their low point back in January
and sit 2.6% up from levels a year ago and only 6.2% down from the peak reached in November 2007.
Page 7
So where are prices going from here? Simply look at the graph below and the answer is as obvious now as it has been for all but the most biased for some time.”
Tony has here the most cool graph! You have GOT to go look!(Colin)
It shows whats going to happen to house prices!
If you are like me it will take thought to figure what that plunging "price movement" line means...but when you do! Golly Gosh!..... Buy now…in fact you should have bought in January! Go to http://www.bnz.co.nz/binaries/w170909.pdf , page 7, to see!
It includes a really useful graph I have never seen before. It looks really useful, once you extrapolate it!
“ Housing Market Rising As Expected
The highlight of the week as far as housing activity goes was the monthly REINZ report released on Monday. It showed that in rough seasonally adjusted terms sales of dwellings fell by about 5% in August butat 5,878 were ahead a still strong 39% from a year ago. One can easily put the small easing in sales activitydown to the frequently reported shortages of listings – and because listings are in short supply it is no surprise that the average number of days taken to sell a dwelling fell even further in August.
50000
This measure now sits at 34 days from 37 in July and 55 a year earlier. This puts the speed of sales back
practically at the 33 of August 2007 and the August result is 3.7 days faster than average for the month. In July the days to sell measure was 2.8 days below average while June was above average by 0.9 days.
And so, with sales constrained by a vendor shortage, it is no surprise that prices continue to go up. The stratified measure put together by the Reserve Bank shows that on average prices in August were up 1.2% after rising 1.0% in July. Prices have now on average recovered 5.9% from their low point back in January
and sit 2.6% up from levels a year ago and only 6.2% down from the peak reached in November 2007.
Page 7
So where are prices going from here? Simply look at the graph below and the answer is as obvious now as it has been for all but the most biased for some time.”
Tony has here the most cool graph! You have GOT to go look!(Colin)
It shows whats going to happen to house prices!
If you are like me it will take thought to figure what that plunging "price movement" line means...but when you do! Golly Gosh!..... Buy now…in fact you should have bought in January! Go to http://www.bnz.co.nz/binaries/w170909.pdf , page 7, to see!
Sunday, September 20, 2009
Wise Prime Minister Kills Capital gains Talk
John Key Says This Issue Is Not Going Anywhere.
Did he mutter something about "until hell freezes over?...."
Good job. He agrees with my comments below, from when this was hot 10 days ago.
Now get on with making the rest of the economy more vibrant please.
Did he mutter something about "until hell freezes over?...."
Good job. He agrees with my comments below, from when this was hot 10 days ago.
Now get on with making the rest of the economy more vibrant please.
Monday, September 14, 2009
Capital gain effects...revisited
Capital gains, at Least On Rental Property. Effects?
Now my minds going! Its not simple!
If the tax was on "realized gains"The market would freeze up a lot. In Italy houses have lain idle for literally hundreds of years because the owners cant afford to pay taxes due on sale.
If it is on "unrealized gains". Whew!
I assume it cant be retrospective. But having endured Muldoons retrospective tax change in the Kiwifruit industry, its possible.
So year one, "Unrealized Gains"scenario: Prices fall 20% (see my earlier blog) wiping $36b. Investors lose $24b, & claim $12b in tax losses! Hmmm.
In future after that, when the market rises, (which is always good times) Govt coffers will overflow at a time it dosnt need it, so will spend it like Labour just did for 9 years. When times are bad, investors will get refunds, putting pressure on already empty Govt coffers.
BUT THEN... there will be an equalizing private effect. Investors will have Mr or Ms Taxpersons hand in their pocket during booms, but handing some back in bad times. Countercyclical for investors.
Of course that is a bit like saying they take 3 pints of blood, but give one back.
Now my minds going! Its not simple!
If the tax was on "realized gains"The market would freeze up a lot. In Italy houses have lain idle for literally hundreds of years because the owners cant afford to pay taxes due on sale.
If it is on "unrealized gains". Whew!
I assume it cant be retrospective. But having endured Muldoons retrospective tax change in the Kiwifruit industry, its possible.
So year one, "Unrealized Gains"scenario: Prices fall 20% (see my earlier blog) wiping $36b. Investors lose $24b, & claim $12b in tax losses! Hmmm.
In future after that, when the market rises, (which is always good times) Govt coffers will overflow at a time it dosnt need it, so will spend it like Labour just did for 9 years. When times are bad, investors will get refunds, putting pressure on already empty Govt coffers.
BUT THEN... there will be an equalizing private effect. Investors will have Mr or Ms Taxpersons hand in their pocket during booms, but handing some back in bad times. Countercyclical for investors.
Of course that is a bit like saying they take 3 pints of blood, but give one back.
Houses On the Move! (Prices, not The Houses!)
4th Straight Month of National Median House Prices Up
Median national of $346 750 in Aug just 2% under all time high.
Sales volumes 39% up on Aug 08
17 offers on 38 Rintoul St Newtown. A tired, 4 Br Rental/first home. great location. About #30 % above Ratable Value of $445. Looks like those great positive cashflow properties I featured a couple of months ago are yesterdays great buys!
Median national of $346 750 in Aug just 2% under all time high.
Sales volumes 39% up on Aug 08
17 offers on 38 Rintoul St Newtown. A tired, 4 Br Rental/first home. great location. About #30 % above Ratable Value of $445. Looks like those great positive cashflow properties I featured a couple of months ago are yesterdays great buys!
Capital Gains Tax In NZ
So Its On Again...The old Capital Gains issue
Heres the issues I think:
Some see property as an obsessive addiction of NZ Investors, damaging "Productive" investment.
I suggest NZers have been right to put spare money ,& debt, into Property.
Property has tax , leverage & utility values ( You cant live in share certificates, but I guess you could burn them to keep warm!).
But its just that everywhere else in the Economy has done so poorly! Put it in the bank? 3%? And taxed? Finace companies/ Shares? Why do you think banks dont lend much on them? Business, in a country with 90% of the businesses employing less than 5 people? Exporting? When both govenments have let the NZ dollar be the kicking boy/moneymaker for global traders for 20 years? They say making money on the NZ dollar ( and damaging our brave exporters) is as easy as shooting fish in a barrel. No, cant see many other places to invest in NZ. Maybe get the money offshore? Works for our richest!
No, property is the place to be.
Now Capital gain: There is already the ability to tax capital gains ( in shares too). But only as a trading activity. The worry is if you tax capital gains at acrual, where do people get the money to pay it yearly, without selling the asset!
Exempt the family home, & you get everyone investing in "The monster Family Home" like Oz
Only tax rental? Holy cow!
35% Nz houses are rentals. Say 7% State houses. total stock, $600 billion. So private rentals worth say $180 billion.
Now, are tax costs to be passed on to tenants?
Of course not! Tenants rent is dictated by supply & demand, not a landlords desires or costs. Is the tax to be offset by a decrease in tax somewhere else? I say...bloody unlikely, certainly for landlords!
So would a capital tax decrease atractiveness to the owner? Probably. So what do they do? Sell? If so to who? Someone who would accept a lower return? Are they crazy? of course not! They will need a BETTER yield! IE pay less! So value goes down.
How much? SAy 20%?
Now that is $36 BILLION, on a current value of $180 billion. Ye Gods...Imagine destroying $36 billion of NZers equity! $4 Billion lost in Finance companies looks like Chicken Feed! What would it do to the economy?
Hmmm be interesting to see where it goes.
My prediction... NOWHERE!
Heres the issues I think:
Some see property as an obsessive addiction of NZ Investors, damaging "Productive" investment.
I suggest NZers have been right to put spare money ,& debt, into Property.
Property has tax , leverage & utility values ( You cant live in share certificates, but I guess you could burn them to keep warm!).
But its just that everywhere else in the Economy has done so poorly! Put it in the bank? 3%? And taxed? Finace companies/ Shares? Why do you think banks dont lend much on them? Business, in a country with 90% of the businesses employing less than 5 people? Exporting? When both govenments have let the NZ dollar be the kicking boy/moneymaker for global traders for 20 years? They say making money on the NZ dollar ( and damaging our brave exporters) is as easy as shooting fish in a barrel. No, cant see many other places to invest in NZ. Maybe get the money offshore? Works for our richest!
No, property is the place to be.
Now Capital gain: There is already the ability to tax capital gains ( in shares too). But only as a trading activity. The worry is if you tax capital gains at acrual, where do people get the money to pay it yearly, without selling the asset!
Exempt the family home, & you get everyone investing in "The monster Family Home" like Oz
Only tax rental? Holy cow!
35% Nz houses are rentals. Say 7% State houses. total stock, $600 billion. So private rentals worth say $180 billion.
Now, are tax costs to be passed on to tenants?
Of course not! Tenants rent is dictated by supply & demand, not a landlords desires or costs. Is the tax to be offset by a decrease in tax somewhere else? I say...bloody unlikely, certainly for landlords!
So would a capital tax decrease atractiveness to the owner? Probably. So what do they do? Sell? If so to who? Someone who would accept a lower return? Are they crazy? of course not! They will need a BETTER yield! IE pay less! So value goes down.
How much? SAy 20%?
Now that is $36 BILLION, on a current value of $180 billion. Ye Gods...Imagine destroying $36 billion of NZers equity! $4 Billion lost in Finance companies looks like Chicken Feed! What would it do to the economy?
Hmmm be interesting to see where it goes.
My prediction... NOWHERE!
Sunday, September 6, 2009
Awesome Section For Sale, Wellington Coast, $320 000
Heres a real Gem:I went Saw it Today
Great section on Coast . On cliffs looking to the South Island, Mana Island...I think I saw Australia!
Yet only 30 minuits from Wellington Central! $320 000 nz. A place to build a dream home.
Contact my friend Lizzy Quinn Leaders MREINZ 0274 444 667 or lizzyquinn@paradise.net.nz
It includes the concept plan. reserve to north. Up and coming seaside suburb of Titahi Bay
Saturday, September 5, 2009
Friday, September 4, 2009
Saturday, August 29, 2009
280 Mortgagee sales from 7000...Hardly a flood!
If you treble a very small number, it is still small
I cant get excited about this. Its about 4 % of all sales
I know around Wellington of numerous investors waiting for good buys. They complain about the virtual absense of stock. On the other hand I know of very few Morgagee sales.
Anyway, heres the report.
More and more New Zealanders are being forced out of their homes as mortgagee sales hit an historic high, according to new statistics released today.
Terralink International said June's figures showed registered mortgagee sales, had tripled compared to the same period last year, up to 289 from 98.
The company's managing director Mike Donald said the figures showed property owners in provincial towns were now beginning to be hit harder by mortgagee sales.
"In the North Island, Hawke's Bay, Taranaki and Manawatu all experienced big increases in mortgagee sales.
"In the South Island mortgagee sales in Otago continue to grow, where Queenstown hit particularly hard."
Mr Donald said Auckland had the highest number of mortgagee sales in June, 112, up from 109 in May.
But Auckland's contribution to the country's total was down from 44 percent of the national total in May, to 38 percent of the total in June.
The number of mortgagee sales in Hawke's Bay was up 800 percent year-on-year.
Mr Donald said while business commentators were beginning to speculate that the worst of the economic recession was over, the downturn of the past 12 months was still catching up with those who had overstretched themselves with mortgages.
"Many New Zealanders aren't out of the woods yet and it will be a long time before they will be.
"The job losses keep coming and the culmination of months of financial strain mean many Kiwis have exhausted their options for meeting mortgage payments.
"In the United States the recession had seen around 1 million foreclosures and commentators expect there will be another 2 million to follow.
"We expect that we will experience the same type of lag in New Zealand and there will be more mortgagee sales in the coming year."
Why would we expect the same, when our banks are sound, and did not get involved in Sub Prime lending? Surely its just a sign of a tough job and business market?
Photographing Houses to Sell
Heres advice for photographing houses for sale...From The Wall Street Journal http://bit.ly/15CMUf
Thursday, August 27, 2009
US House Starts Shock & Awe
Agent Ken (Agentopolis) on Twitter: "home sales blast past expectations ... http://tinyurl.com/njc939
about 5 hours ago from API"
about 5 hours ago from API"
Wednesday, August 26, 2009
Not A bad Gift To Your Daughter!
Caragafoyle On The Terrace
just found these... the lobby of my old office . Worth sharing. This Historic catagory 2 home of 500 m2 was built by the Hon Martin ( of Martinborough!) for his daughters "Wellington home"!
Apartment Market Picking Up
Shortages of Stock...Even with several large developments just settling.
Good signs. rents firm. Few defaults, if any, on latest round of settlements. Profits made on many " off the plans" purchases. 5%, 10%, 20%. even.
Ie up to 120% return on deposit over 2 years...in "Tough" times!
Sunday, August 23, 2009
National House Prices up 3 Months in a Row
o.7 % Increase Nationally in June
Well, price movement back in a better area! My comments from several months ago confirmed!
Tuesday, July 21, 2009
National rents Weaker...Wellington fairly normal!
Heres an article via NZPA
Wellington is not mentioned. Usual difficulty letting ghastly dumps , & rents are not up, but not falling.
"Average rents are easing as an oversupply of residential properties put pressure on the market.
First National Group, which manages around 6500 rental properties in this country, said rents were down by an average 3.5 percent in the past three months.
Its quarterly property managers survey last week showed typical winter rental market conditions were exacerbated this year by the economic downturn.
First National general manager John Stewart said apart from a few pockets, supply continued to outstrip demand providing plenty of choice for tenants.
Some areas had double the usual rental supply, although a general shortage of quality rental property was noted, he said.
Property managers were reporting more tenants downsizing, reducing work travel distances or moving into shared accommodation due to tight economic conditions.
Demand for lower end properties was helping stabilise rents but First National was seeing new tenancy reductions of up to $50 a week for higher end properties in some areas including Auckland, Coromandel, the Bay of Plenty and Christchurch, Mr Stewart said.
Places most difficult to get tenants in the past three months were Waiheke Island, which had a vacancy rate of 21 percent, followed by Ashburton at 18 percent and Whangamata at 14 percent.
Rent reductions for new tenancies in those places were up to 7.5 percent to 10 percent a week.
Tenant demand was strongest on the West Coast, which had a vacancy rate of 0.5 percent, Taupo with 3 percent, and Taranaki with 3.6 percent.
As usual in winter, colder and older homes were difficult to fill, with warmer, drier properties being let quickly, Mr Stewart said.
Economic conditions meant unless people were downsizing or relocating for a job, they were choosing to sit tight rather than incur additional costs associated with moving.
Some metropolitan offices reported increasing numbers of tenants calling in to announce they had lost their jobs and could not pay rent for a week or two.
Of anecdotal interest were university and polytech-tenanted properties falling vacant at the end of the first semester recently and not being picked up for the new term.
"Perhaps more students are either ceasing their studies or moving home to mum and dad," Mr Stewart said.
With a shortage of listings of houses for sale and a supply of buyers, landlords might do well to consider selling as first home purchasers continued to dominate real estate activity.
First National said residential vacancy rates were static or increasing in Auckland, which had vacancy rates in the past three months of over 9 percent on average, while rents were down an average of 5 percent.
Wellington is not mentioned. Usual difficulty letting ghastly dumps , & rents are not up, but not falling.
"Average rents are easing as an oversupply of residential properties put pressure on the market.
First National Group, which manages around 6500 rental properties in this country, said rents were down by an average 3.5 percent in the past three months.
Its quarterly property managers survey last week showed typical winter rental market conditions were exacerbated this year by the economic downturn.
First National general manager John Stewart said apart from a few pockets, supply continued to outstrip demand providing plenty of choice for tenants.
Some areas had double the usual rental supply, although a general shortage of quality rental property was noted, he said.
Property managers were reporting more tenants downsizing, reducing work travel distances or moving into shared accommodation due to tight economic conditions.
Demand for lower end properties was helping stabilise rents but First National was seeing new tenancy reductions of up to $50 a week for higher end properties in some areas including Auckland, Coromandel, the Bay of Plenty and Christchurch, Mr Stewart said.
Places most difficult to get tenants in the past three months were Waiheke Island, which had a vacancy rate of 21 percent, followed by Ashburton at 18 percent and Whangamata at 14 percent.
Rent reductions for new tenancies in those places were up to 7.5 percent to 10 percent a week.
Tenant demand was strongest on the West Coast, which had a vacancy rate of 0.5 percent, Taupo with 3 percent, and Taranaki with 3.6 percent.
As usual in winter, colder and older homes were difficult to fill, with warmer, drier properties being let quickly, Mr Stewart said.
Economic conditions meant unless people were downsizing or relocating for a job, they were choosing to sit tight rather than incur additional costs associated with moving.
Some metropolitan offices reported increasing numbers of tenants calling in to announce they had lost their jobs and could not pay rent for a week or two.
Of anecdotal interest were university and polytech-tenanted properties falling vacant at the end of the first semester recently and not being picked up for the new term.
"Perhaps more students are either ceasing their studies or moving home to mum and dad," Mr Stewart said.
With a shortage of listings of houses for sale and a supply of buyers, landlords might do well to consider selling as first home purchasers continued to dominate real estate activity.
First National said residential vacancy rates were static or increasing in Auckland, which had vacancy rates in the past three months of over 9 percent on average, while rents were down an average of 5 percent.
Monday, July 13, 2009
Wellington Rental Property Views
Heres the views from the Kilbirnie 2 flat property refered to earlier...not bad?
Friday, July 10, 2009
Yields In Wellington. Two Recent Sales of Good Buys
6 Br plus 1br house Kilbernie heights, Good panoramic sea views,( A bit like on my twitter site) there was potential to sell a bit of land (possibly) . Big, 200m2 dwelling. Sold recently on potential 8% yield.
Great 5 br house plus sleepout in Newtown, sold recently on 7.9% gross.Pretty, (although it dosnt look great in this shot) big rooms, good location.You should be able get money between 6 & 7%rate, if you can get some!. Not too easy for investment, but possible.
Saturday, June 27, 2009
Where the Aliens came from.
Well, Im just kidding about the Aliens, but it looked way weird being there. A very privileged moment being there.
It is near the Lord Of The Rings filming site for Rivendell, and...still only 35 minuits from New Zealands Parliment.
It is near the Lord Of The Rings filming site for Rivendell, and...still only 35 minuits from New Zealands Parliment.
Enjoying showing Wellington!
Now this is actually 80 km from the CBD. Hope you like the image....it was far more amazing actually there!
And more on Wellingtons wonderfulness
Took this tonight when I took the dogs for a walk.
Threw a line in off the wharf. Nothing.
But enjoyed talking to the other fisherman there.
He didnt catch anything either.
And 20 minuits to the CBD.
Why Live in Wellington New Zealand?
So I can live up the hill behind here.
I catch fish off the wharf to your left.
And yet I can be outside Parliment in 15 minuits. Like Iceland without the ice, & no banks gone bust!
Friday, June 26, 2009
Crazy number of offers on first homes & investment potential houses
So what the heck IS happening in Wellington, & New Zealand real estate?
Heres your author, with a plain house that just had 23 buyers put offers in to be the new owners!
So I'm trying to work out what the chicken entrails are telling us:
NZ banks are, & have been, actively lending again at 6.95 to 8%. Even to 95% loans. Kiwi banks , & their Aussie parents, havent been involved the international financial stupidity, & seem to be doing fine.
First home buyers keen.
Investment buyers standing , salavating at the sidelines. NZ rents are still strong. Many have portfolios bought at half current values & are, after depreciation, seriously cashflow positive. AND, thats BEFORE they refinance fron currently ending 9.5% loans to maybe 7.5%!
So: tidy 2 flat home in Berhampore: $900 week rent, very tidy. 7.1% gross, two offers at that level, so not a random yield.
Kilbirnie: $630, 000 sale, with tidy up: potential 8.8% gross yield.
Yet the media tell us the end is still....maybe...nigh!
23 offers on a do up ( ie tired house) on a lovely flat section near Peter Jacksons Mirimar Wellngton Film studios. For those of you not Wellingtonians....flat sections are RARE! Im serious. We pay more for them!
The picture is if it , with a flattering shot of your author.
32 offers (truly, 32 buyers putting legal offers in, for consideration) on a tidy house nearby.(!)
So....there is a shortage of stock.
Are we at the bottom?
High immigration inwards helps prices up.
Building costs are still astronomical ( double Queenslands per square metre rate)
Hmmmm....whats going on? I will tell you what I think is happening....soon.
With apologies to friends who are new age ( see http://www.starlightrising.com/ )
"Astrology was invented to make economic forecasting look good"
Keynes
Thursday, May 21, 2009
Buyers diving back in
Shortages of house stock is heating up competition up to about the $700 000 mark in Wellington. Good volumes of sales, but little comming on to replace those sales.
News out of the US sas the same, first home buyers & investors wading in. See http://bit.ly/16cPR3 . Arizona & Florida, bellweather states, getting recovering rates of sales, as people believe a bottom near. Back here, 6% interest rates mean many investors ( who were warned by the gloom mercants they were foolish, 2 yeas ago) have no need to sell. Rents firm.
Saturday, May 16, 2009
Why so few properties for sale?
In 20 years Ive seldom seen so little for sale! Far from a flood of pressured sellers, predicted 6 months ago by the gloom merchants ( ie most of the media) buyers are frustrated at how little choic they have, & there is a reasonable degree of competition for what there is. We have had 5 to 10 tenders on some properties recently sold.
I guess low interest rates help keep owners from distress. That with the fact that in Wellington rents are firm. Winter is slightly weaker as usual, but there is no sign of falling rents to match lower economic times.
Build costs are still stratospheric, underpinning values.
Immigration looks to be stonger, also firming the market.
Banks are keener to loan than 6 months ago, encouraging buyers.
And there is now a thought this is as bad as it will get, so why sell now?
Note: my analysis of the time to buy & sell has not changed: Do the opposite of whatever is the advice of the Listener & Sunday papers & you will be on the right track! The issue is at the moment...do they think its a good or bad time to sell or buy? I cant tell.
I guess low interest rates help keep owners from distress. That with the fact that in Wellington rents are firm. Winter is slightly weaker as usual, but there is no sign of falling rents to match lower economic times.
Build costs are still stratospheric, underpinning values.
Immigration looks to be stonger, also firming the market.
Banks are keener to loan than 6 months ago, encouraging buyers.
And there is now a thought this is as bad as it will get, so why sell now?
Note: my analysis of the time to buy & sell has not changed: Do the opposite of whatever is the advice of the Listener & Sunday papers & you will be on the right track! The issue is at the moment...do they think its a good or bad time to sell or buy? I cant tell.
Monday, May 4, 2009
Great Seminar on Wednesday!
I went & saw the well regarded Graham Barr speak last week at the BNZ on Willis st, about selling houses or apartments in Wellington in the current market. ( It has changed fast this year. 5.6% mortgages have brought back buyers, especially since rents have not dropped one cent through these turbulant times).
Call me for free tickets to future events. Normally $25 each. These have been getting great feedback from attendees, & I learnt a number of good points myself!
Colin Kelly
021 439 727 or colinj.kelly@xtra.co.nz
Call me for free tickets to future events. Normally $25 each. These have been getting great feedback from attendees, & I learnt a number of good points myself!
Colin Kelly
021 439 727 or colinj.kelly@xtra.co.nz
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