Forum Archive Index - March 2004

["Rockbottom" <rockbottom@ihug.co.nz>]

Hello Macdunk

 

Many of your comments regarding the advantages of property are valid and it would be true to say that Rockbottom has done very well out of property over the years.

Nevertheless like any market there are times of over-demand or over-supply. The laws of supply and demand and psycology (cant get my spelling chekker to work) then take over. Some areas become the flavour of the month or not and prices can change rapidly.

Rockbottom has a crib in a township where land values have increased 500% in the past 30 months. Three years ago it took on average over two years to sell a property. About 25% of the houses were on the market. Now it is almost impossible to buy a house as they are snapped up as soon as they go on the market at very high prices.

 

One property investment Rockbottom made required what some would say was near over-committment. Friends offered food parcels to get over the first few months!

A complication was caused by a serious drop in the market which put the mortgage lender (and Rockbottom) at significant risk. However in time (quite a few years) and a period of austerity the market bounced back and all came right.

 

At present property prices in certain areas have gone mad or as others would say approaching the true value. What is certain is that at some time (and it is likely to be in the next 18 months) the market will peak and then prices will start to decline. Prices will not drop like a stone. Its just that property will not sell at first. Then over the next few years more and more property will be for sale and the vendors that need to sell will meet the market.  In time demand will resurface and another boom will happen. But this could happen a further 5 years down the track.

 

So what am I saying.

1.    Property can be a very good investment

2.    But there is significant risk involved

3.    Know the market you are in

4.    Do your homework

5.    Keep control

6.    Have fun

 

 

Rockbottom