Auckland Property Prices

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  1. Post
    #1
    How engorged is the Auckland property market? Reader Michael Bennett found a number of property options from around the world for less than the $850,000 price of this 2-bedroom place in Grey Lynn.

    1. A 30m canal barge built in 1893, moored in Paris. 3 bedrooms and 90sq m lounge room. $349,000.

    2. A 12th century monastery in France with church and 4-bedroom priory, on 1ha of land. $828,000.

    3. A three-storey Balinese house in Ubud among rice paddies, with swimming pool and water garden. $683,491.

    4. A castle in Romania. Some DIY needed, approved to be converted into 23 apartments. $531,767.

    5. An established 13ha hazelnut farm in Poland. $295,000.
    link

    I was thinking the same, that you could buy a do-up castle for these median Auckland house prices. Am I the only one who thinks this is crazy?

    Only the banks are making the real money from this craziness -
    The bank yesterday reported a record profit of $685 million for the year to June 30 - up 21 per cent on the prior year.

  2. Post
    #2
    I'm reading Garth Morgan's book at te moment and these ****en bankers are making exactly the same mistakes that led to the GFC. Too many buying property's that shouldn't be with ridiculous loans and tiny deposits.

  3. Post
    #3
    It doesn't seem sustainable. However, as long as immigrants (both national and international) continue to come to Auckland then it will probably remain fairly stable. If you looked at some Aussie cities (and I'm not saying I think the compassion is entirely appropriate) then you may think there is still quite a bit of room for prices to climb.

    Having said that, if I had Auckland property with low equity (~10% or thereabouts) I'd be a bit nervous.

    Outside of development, I don't think there is much potential for making money in Auckland property in the short - medium term, but who really knows.

  4. Post
    #4
    And while the banks are creaming it, this is the reality http://www.stuff.co.nz/business/mone...near-six-a-day

  5. Post
    #5
    Indigo1 wrote:
    I'm reading Garth Morgan's book at te moment and these ****en bankers are making exactly the same mistakes that led to the GFC. Too many buying property's that shouldn't be with ridiculous loans and tiny deposits.
    The GFC is abit more complicated than just house borrowing. Whats the name of the book? Garth Morgan is quite an extremist.

    Our banks are alot better.

  6. Post
    #6
    Indigo1 wrote:
    And while the banks are creaming it, this is the reality http://www.stuff.co.nz/business/mone...near-six-a-day
    Given that there are probably 1,000,000+ homes/households - 500 in 3 months is really nothing to worry about, in comparison to the foreclosures in the US.

  7. Post
    #7
    ne0 wrote:
    The GFC is abit more complicated than just house borrowing.
    My opinion is the foundation rests in a re-gearing of global economies (and by extraction lending) towards property investment rather than active economic pursuits.

    As for Auckland pricing, it does seem somewhat procarious, especially given the lack of health in the economy in contrast to the years leading up to 2008. Its like people have the shortest memories ever.

  8. Post
    #8
    bradc wrote:
    As for Auckland pricing, it does seem somewhat procarious, especially given the lack of health in the economy in contrast to the years leading up to 2008. Its like people have the shortest memories ever.
    Totally.

    I'm a bit of a overcautious pessimist when it comes to property investing, and it's probably cost me a few dollars over the last couple of years. I really didn't think the prices would ramp back up as much as they have for the exact reason you mention.

  9. Post
    #9
    KiwiTT wrote:
    I was thinking the same, that you could buy a do-up castle for these median Auckland house prices. Am I the only one who thinks this is crazy?
    Price up a castle in Grey Lynn Location is the key in this situation. I can only assume Grey Lynn is a nice area as I don't visit the NI often.

  10. Post
    #10
    WillAY wrote:
    Totally.

    I'm a bit of a overcautious pessimist when it comes to property investing, and it's probably cost me a few dollars over the last couple of years. I really didn't think the prices would ramp back up as much as they have for the exact reason you mention.
    Yeah its a weird situation, outside of murky economic times a rise in interest rates would be particularly dangerous for people with million dollar mortgages.

  11. Post
    #11
    bradc wrote:
    Yeah its a weird situation, outside of murky economic times a rise in interest rates would be particularly dangerous for people with million dollar mortgages.
    Yer. Doesn't look like they're going up any time soon though. However, you have to wonder what will happen when they inevitably do go up. I wouldn't think many people are going to be able to pay back enough of their principle loan to make too much of a difference between now and then tbh.

    Anyway, at the end of the day I'm not sure I care that much. I'm just going to keep doing things my way; insuring against the worst by keeping low levels of debt. I would rather be a little behind than have the worry.

  12. Post
    #12
    Absolutely, its all educated guessing so best to err on the side of caution.

  13. Post
    #13
    Why not compare the house prices to somewhere worth comparing? 2 bedroom in central Stockholm 600k to 1,2mil nzd. You could get serious and start comparing to London and then see how hard life is according to Mr bennett... I mean if he gets lucky he might find a one room apartment near the centre for under a couple of million, don't know if they'd sell it to him though, he's probably not of the right blood. News flash, you live in a popular and growing medium sized city, shit is not going to get cheaper.

  14. Post
    #14
    massive wrote:
    Why not compare the house prices to somewhere worth comparing? 2 bedroom in central Stockholm 600k to 1,2mil nzd.
    I'm not sure that is a very good compassion to be honest (I'm not sure there are any great comparisons at all really). But yes, there are other cities in other countries in which the cost of property is significantly higher, but I do not think this means the same thing inevitably happening in Auckland.

    massive wrote:
    shit is not going to get cheaper.
    Over the (very?) long run, or, are you saying that there is never going to be a price correction in Auckland housing ever again?

    If it's the former, then yer, you're most likely (barring near cataclysmic event) right. If it's the latter then I hope you're leveraged into property up to the hilt.

  15. Post
    #15
    The big difference between us and many other expensive cities are our relatively lower wages.

    One thing I wonder too is how much the nature of the size of the market activity creates a false economy - for example it would seem that if you get an out of character rogue price in an area that all of a sudden sets a benchmark that gets followed "just because". Smaller real estate sales volumes retain that high pricing, but if the volume on the market increases I imagine you get stagnation.

  16. Post
    #16
    I don't see prices crashing, unless the buying starts picking up like crazy due to speculators and a big bubble forms.

    But currently I think the price rise has been caused by a demographic shift in favour of the demand side.

    Still, home prices are ****ing expensive relative to incomes and no way would I be settling any time soon (unless I saw a bargain)

    flatting for $150 vs $500 weekly mortgage payments

  17. Post
    #17
    I completely agree that it's very hard to do some fair comparisons, but comparing to similar sized cities gives a better picture of one can expect than pandering to the masses with bullocks about castles in Romania for ****s sake. Why not take it a step further, you can go to Zambia and explain nicely to the local council what it is you'd like to do with some land and they'll actually gift you the land., completely free, that's like an infinite percent better than 800k.

    This is a bit of an emotive rant but why the **** do people think they should expect to have houses in the centre of a medium sized city for anything other than a small fortune?

  18. Post
    #18
    I guess because up till recently that wasn't the case. 30 years ago Grey Lynn for instance was a cheaper working class area.

  19. Post
    #19
    And it's not just Grey Lynn either. It's quite easy to spend 650-800k in Glen Innes of all places on places that aren't all that flash.... because of the future redevelopment there, people think that they can ask premium prices for a suburb that's not going to be "premium" for the next decade or more. Silly thing is, there's so much credit and cash floating around that peoples' definitions of "affordable" have drastically shifted upwards, while their actual income has remained stagnant or gone back in real terms.

    This can't last, we've got a two-year MAXIMUM before interest rates are back at the longer term averages of 7-8% and possibly higher. The GFC has only really just begun since every economy seems to think they can just sweep everything under the rug. Things are going to get VERY messy for the highly leveraged before too long.... I just hope that the government doesn't take pity on these people and bail them out with welfare, because I hate it when the government pays for the consequences of peoples' own speculative decisions.

  20. Post
    #20
    massive wrote:
    but comparing to similar sized cities gives a better picture of one can expect than pandering to the masses with bullocks about castles in Romania for ****s sake.
    Fair point.

    Esprit wrote:
    This can't last, we've got a two-year MAXIMUM before interest rates are back at the longer term averages of 7-8% and possibly higher. The GFC has only really just begun since every economy seems to think they can just sweep everything under the rug. Things are going to get VERY messy for the highly leveraged before too long.... I just hope that the government doesn't take pity on these people and bail them out with welfare, because I hate it when the government pays for the consequences of peoples' own speculative decisions.
    I don't know anything for certain, but my default mindset is closer to this than the whole "we have entered a new era in property investment in which prices will ceaselessly spiral upwards".

    Esprit wrote:
    And it's not just Grey Lynn either. It's quite easy to spend 650-800k in Glen Innes of all places on places that aren't all that flash...
    Yer, out my way; Blockhouse Bay, Hillsborough, Lynfield, things are going the same way. I mentioned in the other thread about a ~500sqm section on Hillsborough road going for $457k, it's absurd. The prices around this area are actually quite a bit higher than the "2007 peak" from what I can see.

  21. Post
    #21
    It will be interesting to see what happens when interest prices go back up. Currently about 80% of home loans are floating on rediculously low interest rates, shits gunna turn ugly when those interest rates rise and repayments with it....

  22. Post
    #22
    Esprit wrote:
    This can't last, we've got a two-year MAXIMUM before interest rates are back at the longer term averages of 7-8% and possibly higher. The GFC has only really just begun since every economy seems to think they can just sweep everything under the rug. Things are going to get VERY messy for the highly leveraged before too long.... I just hope that the government doesn't take pity on these people and bail them out with welfare, because I hate it when the government pays for the consequences of peoples' own speculative decisions.
    +1 great post, couldnt agree more

  23. Post
    #23
    Shits always going to turn ugly for people that live beyond their means

    I'm sure most people will just lock the good rates in when they start to rise. I'm locked for another 6 months, but rates haven't changed since I locked really. The problem comes when people come off the next round of fixed terms when rates are higher. I imagine i'll lock again for around 6% for a couple / few years. Times will be different when that term expires!

  24. Post
    #24
    It might sound terrible, but I'm keen to buy when the interest rates go up and cause some sort of fall in the market (due to defaults, I guess). The banks aren't helping at all - they are willing to lend me far more money than makes any conceivable sense given my income. I don't intend to be paying off my property for all eternity.

  25. Post
    #25
    For your plan to work house prices would have to fall considerably. Such a climate would also be a period of economic chaos, meaning interest rates would probably drop again, and your own financial position would be rather tenuous.