Residential - Boom or Bust

[BlackPeter]

I don't care how cheap it is, you will never see me buy an apartment.  You will literally be purchasing a money burning machine, with the added bonus of a lesson in the tragedy of the commons

Well, we wish you well. Many people got another handful of worthwhile years for doing just that (buying an apartment in a retirement village), but I suppose if you can be sure that your life runs out before your fitness does - or alternatively if you can afford to finance all care services privately, than all good;

[Shareguy]

To early to call but

(1) We have some experts saying inflation peaked.

(2) Ukrainian president saying the end of the war maybe near.

(3) National median price in the month of October 2022 was up 1.9% on September 2022.

(4) Today we hear more people coming than going

[mcdongle]

https://www.reinz.co.nz/Media/Default/Monthly%20Press%20Release%20Assets/Residential/10%20-%20October/REINZ%20Residential%20Press%20Release%20-%20October%202022.pdf

posting this if anyone wants to read it,

[mcdongle]

https://www.theguardian.com/world/2022/nov/17/new-zealand-house-seller-throws-in-free-tesla-as-market-tumbles

I dont read the Guardian i followed a link there........

[arekaywhy]

https://www.theguardian.com/world/2022/nov/17/new-zealand-house-seller-throws-in-free-tesla-as-market-tumbles

I dont read the Guardian i followed a link there........

haha, "here's a free headache"

[mcdongle]

New Zealand gets a mention in this.

https://12ft.io/proxy?q=https%3A%2F%2Fwww.ft.com%2Fcontent%2F76e8b499-2381-463d-ac6d-9d3507f150c3

[KW]

Williams Corp have now gated all their investors from redeeming their funds.  Apparently triggered once more than a third of investors ask for their money back.  Sadly, probably too late for most of them as I don't believe this company will still be around in 12 months time
https://www.nzherald.co.nz/business/williams-corporations-1524m-investor-funds-six-monthly-withdrawals-extended-to-annually/YPVZBD3KN5FC3OEGMMOFBERIDE/

[Basil]

Bets mates wife has a Trust fund and her father has that $1m invested and all the other kids $1m each too, through one of the big legal firms its best I don't name.  They run a contributory mortgage scheme and lend money to a number of developers.

I can't see how her Trust fund won't get a serious haircut in the next year or two.

Much more to this story, remind me to tell you the whole 9 yards at some stage.... interesting study in human psychology.

[KW]

Can't repay their investors, but continues to fly around the country on their private plane 

[winner (n)]

Can't repay their investors, but continues to fly around the country on their private plane 

And apparently the Rolls Royce when at home...and some on here lusts after the $4m 87-foot launch

But the affect are sophisticated professional investors so no worries

[KW]

But the affect are sophisticated professional investors so no worries

Yeah, about that.  Some merely claim to be sophisticated investors but are really just little old ladies who sold their house and moved into a rest home and put their life savings into Williams Corp because its the only place that was paying any interest....
https://www.fma.govt.nz/assets/Enforcement/Warnings/Warning-Williams-Corporation-Capital-Partnership-GP-Limited.pdf

[KW]

Williams Corp just put 25 tenanted townhouses up for sale on Friday, obviously trying to raise some cash by offloading their rental portfolio (of previously unsold townhouses) - Go make them an offer they cannot refuse lol

[Hectorplains]

Predictions: What about 2023?

Most pundits tipped prices to continue falling in 2023. But they expected the speed of the falls to slow.

Davidson said his team at CoreLogic had recorded about a 10 per cent drop in average Kiwi house values and believed another 10 per cent drop was possible in 2023.

That would be greater than the 10 per cent drop during the GFC, but would mean house prices were still higher than they were before Covid hit, he said.

Valocity's Wilson also expected continued falls but said they would likely become milder or even flatten out as 2023 progressed.

Economist Tony Alexander concurred, saying there would be more falls but also that there were increasing signs the market was turning and that it wouldn't collapse in 2023.

https://www.nzherald.co.nz/nz/2022-was-a-bumpy-year-in-the-housing-market-what-will-2023-bring/CVAJPL7VMZCGBCRJTKEXIF52MY/

Falling but more slowly they're saying...like snow.  Hopefully, not like NYC snow.

[Basil]

interestings times we are in........I hear in many areas there is a lot more rental supply now.......could we be entering into a period of higher rental loan servicing costs(higher interest rates) and lower rents......why not we have just been through a period with lower loan servicing cost and rising rents

https://www.oneroof.co.nz/news/42800
Interesting times indeed Snapper.  Mate of mine has been renting a large house in West Harbour for $800 pwk (extended family situation so his Mum pays some of it) for four years now.  Obviously with inflation at 7.2% this year and a couple / few percent in the other years $800 now is not the same as it was 4 years ago.  On top of that the landlord has higher rates, insurance and now interest rates.  Due to market pressure I see it as unlikely that his landlord can put that rent up but you never know, he could be forced to so I have told my friend to be ready for a $100 increase but I would think even if the landlord does this he will be significantly worse off than 4 years ago in terms of real net after tax income.

In addition, the landlord now faces the very real prospect of another year of severe capital value decline.  Who would want to be a landlord right now ?

[KW]

https://www.oneroof.co.nz/news/42800
Interesting times indeed Snapper.  Mate of mine has been renting a large house in West Harbour for $800 pwk (extended family situation so his Mum pays some of it) for four years now.  Obviously with inflation at 7.2% this year and a couple / few percent in the other years $800 now is not the same as it was 4 years ago.  On top of that the landlord has higher rates, insurance and now interest rates.  Due to market pressure I see it as unlikely that his landlord can put that rent up but you never know, he could be forced to so I have told my friend to be ready for a $100 increase but I would think even if the landlord does this he will be significantly worse off than 4 years ago in terms of real net after tax income.

In addition, the landlord now faces the very real prospect of another year of severe capital value decline.  Who would want to be a landlord right now ?

You forgot the extra income tax he has to pay as interest deductibility is phased out, down to just 50% from 1 April.  There is a very high chance that investors will choose to sell up as soon as their fixed rate mortgages expire.  I expect tenants will be told that unless they cough up a huge increase in rent, they will be given their marching orders as the landlord will be forced to sell up if they can't cover the cash shortfall.  With immigration back on, those tenants will be competing in a crowded market again, not the quiet over supply we've enjoyed for the last 3 years with closed borders.