RobClubley

Just thought I'd share this as it's sort of amusing.

Our 5 year fixed rate mortgage ended so I called into the bank to see whether it was worth changing anything, and also to cheekily ask for a little more to sort out our blue 1950s bathroom suite.

According to their online valuation we have precisely $200 of equity in our house.

Hahahahaha

So after 5 years and $70k spent on improvements to the house, not to mention $130k or so in interest basically we own nothing.

You've got to laugh.

We have no intention of moving so the value's not that relevant but it would be nice to think we actually own a portion of it.
I guess we own the letterbox, maybe a bit of the front fence.

scrubbedexpat094

Wow! You own your own letterbox, lucky you

mickey_d

Better than OH's friend in Auckland, they have -200,000!!!!!!!
I reckon ours will be about -20,000, we'll find out next year when our 5 year fixed is up as well.

luvwelly

Their online valuation will of course be crude - could it be based on rateable value even? Improvements don't necessarily add value (program probably doesn't take them into account at all) but they should make it easier to sell.

At least the interest rates are lower now than 5 years ago.

Genesis

Join the club if you will pardon the pun. We have spent up very large on our house. I doubt it's current valuation mirrors in any way what we have spent on it which is around $150k (add on the soon to be new improved roof and that makes it around $200k). And we have added all value adding stuff like better gardens, c/heating, double glazing (53 windows!!), new kitchen, big double glazed conservatory and one new bathroom. Still it was a labour of love and je ne regret rien!

Just worked out if we sold up tomorrow (presuming we could) we would be about $60k out of pocket..after all that work and seven years!!!

Justcol

Heard a piece on the radio yesterday that said NZ homes are aproximately
20% over valued and that we are now on the brink of a US style colapse / readjustment
so your $500,000 home is potentially gonna drop to around $400,000....not good

DC10

Even if that happens those who bought in NZ with Sterling more than 3 years ago would still be ahead

$500,000 in 2007/8 = £180,000

$400,000 in 2011/12 = £200,000

Of course, this theory doesn't work if you do end up with negative equity

Justcol

only works if you plan to return to the uk

RobClubley

Very true. :-)

BEVS

You're doing that bathroom on a budget then Rob.

florabundi

Genesis ~ I really hope you guys have a window cleaner

lardyl

I suppose the nature of Kiwi homes is such that you might need some equity in order to pay for maintenance but otherwise this is not an issue for individuals unless they are downsizing or selling up without buying in this market is it? (as others have said)

As a nation we need lower property values to be productive and keep the lid on inflation without using interest rates as a tool, a raher blunt instrument that ruins our exports and makes property ownership even more expensive.

Once the government gets the idea that we need to tax assets fairly then we'll all be happy that our homes are lower in value than they were.

Genesis

Yes, me. That was not counting the 30 or so in the conservatory!!!!

Genesis

Its bad for those who will be in negative equity, but only if they want to sell up OR raise more money on the property. But we all need a roof over our heads and the only time you lose any money is when you sell up. So effectively its a loss on paper until that point. Generally I think a fall in house prices is a good thing overall. I cannot say I would be overly worried if my house fell by $100k (as I am used to losing large sums of money ha, ha,) so long as everything else goes down accordingly we are all in the same boat. The only people to lose out would be those cashing in the equity in their houses. Houses are waaaaaaaaaaaaay to expensive IMO and a drop in prices is good for the next generation don't you think?

lardyl

exactly - but to be honest most trades profit from the feel good factor of house price inflation as does the home improvement industry.
however the real winners are the Aussie banks who give us mortgages and take that interest overseas, which also has recently conspired to give us another credit downgrade and increase the costs of NZ govt and industry borrowing, another loss to all of us.
So high house prices are a lose-lose, unless you want to make money from the property ladder as we know some do.