One question, I heard the other day that some of the home builders were recording record profits or revenue, I can't remember which. How does this make sense with downward pressure on prices right now?
3.5% is a really good return for property. I find that Property in NZ yields approximately zero ROI, except for the capital gain when you sell it... Which makes it an interesting investment because people view property as an investment that's safe, from which you can get an income to retire on... Those people typically forget to capitalize costs such as the roof needing painted every 20 years (a $20k cost here, which capitalizes to $1k pa).
The other thing about property investment vs. other types of investment is that you can leverage it to make money on the bank's money and also borrow to buy more properties, meaning portfolio growth is massive.
The down side is people and regulation risk. Here in NZ, we have a very leftist government (and citizens) who hate landlords. The last bit of legislation put through was to change tax law so you can't deduct cost of mortgages from rental revenue, meaning that you're taxed on revenue, not profits for this type of business. I sold my rentals partly for this reason (increasing hate towards landlords).
So you honestly believe a 50% median home price drop is coming?
What SD move would that be v. historical records?
What was the peak to trough 2006-2009 drop anyway?
While I def. see the point you are making here. House prices attracting less capital bc of risk free Ts...I feel a 50% across the board housing drop is ...er....out there, ya know.
One question, I heard the other day that some of the home builders were recording record profits or revenue, I can't remember which. How does this make sense with downward pressure on prices right now?
3.5% is a really good return for property. I find that Property in NZ yields approximately zero ROI, except for the capital gain when you sell it... Which makes it an interesting investment because people view property as an investment that's safe, from which you can get an income to retire on... Those people typically forget to capitalize costs such as the roof needing painted every 20 years (a $20k cost here, which capitalizes to $1k pa).
The other thing about property investment vs. other types of investment is that you can leverage it to make money on the bank's money and also borrow to buy more properties, meaning portfolio growth is massive.
The down side is people and regulation risk. Here in NZ, we have a very leftist government (and citizens) who hate landlords. The last bit of legislation put through was to change tax law so you can't deduct cost of mortgages from rental revenue, meaning that you're taxed on revenue, not profits for this type of business. I sold my rentals partly for this reason (increasing hate towards landlords).
So you honestly believe a 50% median home price drop is coming?
What SD move would that be v. historical records?
What was the peak to trough 2006-2009 drop anyway?
While I def. see the point you are making here. House prices attracting less capital bc of risk free Ts...I feel a 50% across the board housing drop is ...er....out there, ya know.
I appreciate your well thought out articles. Sounds like REK will do quite well.
Agree… I intend to take full advantage..