To all my clients and to those of you who read this website, I wish you all the best for the coming year. Hopefully it will be better than the last few years. Also let us not forget those so badly affected in Christchurch (again) and all those who lost so much in the finance company debacle.
At least the signs are very good for the property market in the coming year, with continuing low interest rates and a build up of the housing shortage in the main centres.
To those of you who want to learn all about property investment or who have investments already and want to grow, down size or need general advice please note that I am available during the holiday period and can be contacted any time by phone or email. ( see the contact form on this site).
A word of caution. The heating up of the property market will bring back the con- artists and get-rich-quick merchants promising instant wealth and “all you need to know” in just one evening for $36 plus tea and biscuits. All of them are just fronts to sell you properties that they have an interest in one way or the other. You will never get bargains that way, but you will get a lot of headaches.
Also don’t be fooled by those who want to sell you “huge deals” in other countries, especially Queensland and the USA. If these deals were really so good why aren’t the locals buying them?
Ponzi schemes are alive and well and in a recent case in the USA
Read the story:
NORFOLK USA
A federal jury on Friday found Troy A. Titus guilty of 33 felony counts of mail and wire fraud, money laundering and conspiracy in what prosecutors said was a $7 million real estate Ponzi scam.
Titus, 43, of Virginia Beach, faces a maximum of 20 years in prison on each of the most serious mail and wire fraud charges. His total prison time could add up to hundreds of years. U.S. District Judge Raymond A. Jackson set sentencing for April 15.
After a one-month trial and four days of deliberations, the jury returned around 11:30 a.m. Friday, finding Titus guilty of 33 of the 49 counts he faced. The jury found him not guilty of eight related charges and could not reach a verdict on six counts. The government had earlier dropped two counts.
Read the rest here:
http://hamptonroads.com/2009/12/jury-finds-titus-guilty-33-counts-ponzi-scheme
And back home we had this article appear and
if this is true ( and I stress IF true) then it is a disgrace:
Fine Print Oversight Cost women Her Home
An Invercargill woman’s Christmas has been ruined: her home of 22 years is to be auctioned from under her today after a finance company lifted a $22,000 loan to $71,000 for missed payments.
Jeanette Brandon borrowed $22,000 in three instalments between August 2007 and March 2008 without realising the implications of a 29 per cent default, which would be imposed if she did not meet her payments on time.
However, the information was written in the contract she had signed it.
read the full article here:
http://www.stuff.co.nz/national/6182035/Fine-print-oversight-has-cost-woman-home
The finance company involved is Askufinance Ltd and the directors ( according to the company office website) are Justin & Vaughan Hyde of Stevens Ave Woolston Christchurch.
I you ever need a better loan company I can recommend a few.
Happy new year to you all and all the best in health and happiness for 2012.
Olly Newland
24.12.11
Another report on the chronc state of housing has been produced, no doubt at huge cost to the tax payer.
Full of good intentions, I doubt if a single idea it suggests will ever be implemented.
The chronic and worsening shortage of affordable houses will continue to lurch from one crisis to another until some real issues are addressed such I suggested in my interview with Interest.co. ( see below) .
One good thing the report said was that a capital gain tax would be of little use to which I would add that any such tax would be the final nail in the coffin of ever getting affordable houses.
It can also be noted that on “Trademe” at present there are over 800 houses for sale for under $300,000. Is there an affordability crisis or are buyers wanting to live beyond their means ? Goodness knows how many more are available in this price bracket throughout the country.
Urgent changes’ needed for housing
CATHERINE HARRIS AND DANYA LEVY
16/12/2011
The Productivity Commission has urged the Government to free up more land for affordable housing, especially in urban areas.
The commission, who has just released a draft report on housing affordability, noted that sections were now on average about 40 to 60 per cent of the cost of a house, particularly in Auckland.
“That means new homes tend to be at the top-end of the market. No one is going to put a $150,000 home on a $300,000 section,” said commission chair Murray Sherwin.
He said it was “abundantly clear” that there was a missing step on the property ladder for younger people and those on lower incomes.
“The chances of them ever purchasing their first home are decreasing.”
However, the Greens say the Commission lost an opportunity by not advocating for a capital gains tax on property which excludes the family home.
Read the rest here:
http://www.stuff.co.nz/business/money/6151210/Urgent-changes-needed-for-housing
14.12.11
Two Precinct apartments were sold under the hammer, 2 Viaduct & Princes Wharf leasehold units were passed in and a floor in Shangri-La attracted just one bid at Barfoot & Thompson auctions on Wednesday.
The Precinct units were taken to auction by the mortgagee but still attracted strong prices. Auction results:
Shangri-La, Herne Bay, 97 Jervois Rd, unit 14 on 280m² floor below the penthouse, 3-bedroom full-floor apartment, 2 bathrooms, 2 parking spaces, passed in at $1.5 million (Brian Parish & Carl Madsen)
Precinct, 6 Lorne St, unit 2301, 44m², one bedroom plus study, small balcony, sold for $255,000 (Tom Wang)
Precinct, 6 Lorne St, unit 2201, 44m², one bedroom plus study, small balcony, sold for $263,500 (Tom Wang)
Princes Wharf, 147 Quay St, shed 22, unit 24, leasehold, 2 bedrooms, 2 bathrooms, deck, no bids (Tom Wang)
Viaduct Point, 125 Customs St West, unit 203, leasehold, one bedroom, balcony, parking space, passed in (Tom Wang)
Bob Dey report
With mortgage interest rates stubbornly sticking to historic lows, is now the time to invest in property? Olly Newland says ‘yes — prudently’.
Olly Newland returns to the interest.co.nz studio to share his views of the outlook for property — interview by Bernard Hickey.
Dear Mr. Newland,
I have read your latest column which has given me hope, however, I have also read Harry S. Dent’s latest book about The Crash Ahead. His information is based on demographics and spending patterns; and the strategies for inflation vs deflation are opposite. How do you think the slow down that he predicts will impact here in New Zealand? If globally, we are entering the start of a depression, what is your prognosis for New Zealand? Thank you for considering my question.
Sincerely, Bill
Dear Bill
I don’t there is the slightest chance of a depression. The most likely scenario is just muddling ahead going now no where for a few years. Just behind that is hyper-inflation which is big risk- because if economies do not improve governments will print their way out of the problem. I have seen this time and again. Inflation is always the lesser evil as compared to deflation or stagflation.
Regards
Olly
In response to his December column, Olly Newland was invited to give his market analysis on Radio New Zealand National’s news and current affairs flagship Morning Report today. Listen here:
Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.
Link to MP3 file for non-flash users.
Olly Newland’s column December 2011
Once again there are headlines that suggest the housing market is stirring and that prices are rising. Auckland is, as usual, the leader of the pack, but by a process of osmosis the rest of the country will catch up over the next year or two.
With all the modesty I can muster, let me point out I have been predicting this for a long time now.
Why is this happening?
What is driving the improving market when the headlines are still lurching from one crisis to another ?
Low interest rates are one key factor. Now borrowers can service up to twice as much debt as they could a few years earlier … but at the same cost.
Another key factor is that many savers are tired of getting measly returns (less tax) and are again finding the idea of investing in the property market a more attractive idea.
As for the Global Financial Crisis, people are thoroughly sick of that as well. There seems to be one crisis after another but the world keeps turning. It’s human nature to become immune to an endless, ongoing stream of ‘crisis’ talk – much like the desensitisation practice of tying a horse up to a fence by the road so they get used to traffic.
People cannot fail to notice that cars still fill the streets, that restaurants are full, exports are solid and that rents are slowly but surely rising.
Now that the “looney left” with their capital gains tax ideas have been well and truly routed at the polls, New Zealanders can get on with their plans — which including investing, buying and selling with the freedom they have always enjoyed.
All in all, these and other factors and we end up with an (un)holy mixture which could result in an even bigger boom that the last one.
Is property a gilt-edged investment? Like this? (click to enlarge)
However I believe there is a risk of some considerable danger so I give this warning:
If we do have another boom, – and the chances of that are increasing daily- encouraged by continuing low interest rates, plus earthquake rebuilding, leaky home renovation etc then the risk of the bubble bursting followed by a nasty crash seems far more likely than ever before.
So my advice is to tread carefully.
By all means enjoy any such boom. Do all the profitable deals you can find. Make money with both hands but be ready to press the ‘dump button’ at any time. In other words do not get involved in long term speculative projects.
In my view the next boom (when it happens) will be shorter, sharper and could have a very nasty bite at the end.
Coincidently, this report surfaced in the last few days: (more…)
“First home buyers return
1:20PM Wednesday December 07, 2011 Source: Fairfax
First home buyers appear to be the driving force behind the residential real estate market in New Zealand, according to new research released this morning by BNZ.
The survey, conducted by BNZ Banking Group with the Real Estate Institute of New Zealand, canvassed more than 10,000 licensed real estate agents.
Some 29% of real estate agents reporting first home buyers are prevalent in the market.
BNZ chief economist Tony Alexander said first home buyers nationwide were probably responding to the lower level of interest rates at the moment.
“Since we went into recession in 2008, a lot of young people who may have left home and gone out on their own otherwise have not done so. Maybe they have been living at home, have now built up a deposit and are certainly sick of living with their parents,” Alexander said”.
http://tvnz.co.nz/business-news/first-home-buyers-return-4610397
Building activity returns to 10-year low
05/12/2011
Building activity is at another 10-year low, with a drop in commercial building work in the September quarter while housing work was steady at an 18-year low.
Building activity fell 2.3 per cent in the September quarter after adjusting for price and seasonal effects, Statistics New Zealand said.
The latest quarter’s fall again brings building activity to the lowest level in 10 years.
A drop in non-residential building activity led to the latest quarterly fall, while residential building activity was unchanged.
Non-residential building activity has fallen over the latest three quarters, and in the September quarter was at a similar low level as in the December 2009 quarter.
Link
http://www.stuff.co.nz/business/industries/6086620/Building-activity-returns-to-10-year-low
I have warned repeatedly of the coming shortage of rental property and rising rents – provided the properties are in decent areas.
Here we have more evidence of the coming rental famine, caused by a shortage of new houses, the leaky homes disaster and the Christchurch tragedy-not to mention loopy new tax disincentives .
Renters face frantic contest
By Russell Blackstock
Sunday Dec 4, 2011Frantic families and couples are struggling to find rental homes in Auckland’s crowded market during what should be a quiet time of year.
Letting agents expect activity to get even more furious in the run-up to Christmas and are already complaining they cannot fill demand.
“You feel for people when they are competing with sometimes dozens of others at viewings,” said Susan Wendell, owner of Wendell Property Management in Sandringham.
Read the rest here:
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=10770682
