Property Listing & Mortgage Sale rise

Gerald Mullaney

28 March 2025

Property listing rise to near 40K and mortgage sales rising, could this be profit taking? The view is no, as why would one sell into a falling market? for example Auckland real estate prices adjusted for inflation are down 35% to 40%. The rise in listing may mean the debt holders can no longer afford the huge debt on the property or properties.

The drop in interest rates over the last six month has not eased the situation, its not that interest rates are high or low it a matter that the debt incurred on the property was never affordable in the first instance.

A lot of debt holders took on huge mortgages in some cases over 1.0 million dollars plus, hoping in a lot of cases that, they could hold the property for a short time and make a huge capital gain in a short time with doing very little.

The market down turned from late 2021/22 with the OCR being rased to 5.50% with retail interest rates reaching 7.50% that means on some of these million dollar plus mortgages the interest alone would be 75K or 1,442.00 per week what family could afford that amount wach week?

Therefore the view is the market was full of gamblers and speculators fueled by cheap credit. Throwing the market in a boom that boom is causing the destruction we are seeing in the market place going into 2025.

Therefore the view to all this bad news, most of it not reported. may cause the RSBNZ to stave off a property market crash going into 2025 by once again lowering the OCR to emergency levels to right the titanic property market, save the banks and save the economy.

Be on the look out for a great interest rate going forward from mid 2025 and there also maybe some good property buys for the smart cashed up buyers with great cash flow.

Make this crises your once in a life time opportunity.

Low debt, high equity and solid cash flow is a strategy to consider.

Is Residental Real Estate an Investment or Liability.

Gerald Mullaney

23 March 2024

Is your agent or advisor a snake?

The are many agents, advisors trying to sell real estate as a path way to wealth.

Yes its true, that since 1971, property have grown in value thru to 2021 with the ups and downs on the way to 2021. The overall trend was up until 2021

The reason why? to a large part, that real estate had so much growth, was the creation of credit, money printing and the creation of bank credit and thus lending.

This caused inflation and the inflation of property prices.

Plus there was the competition of buyers to " Get on the property Ladder" buying many properties some entities holding 500 properties this caused more buyers in the market which inturned caused in itself properties to inflate in value as they feared missing out on the capital gains.

The other point that was stressed was to invest for retirement which created fear to action.

Wages, Salaries and income increased and kept the prices to incomes in balance until slowly over the years it got out of balance. Rents went from 15% of income to up to 30/45% Mortgage interest on the mortgage went from 10 to 20% to in some cases 40 to 60% of income.

Govts allowed this to continue as people bought and sold properties or remortgaged properties and sent the funds into the economy therefore stimulating the economy creating Jobs, Tax, GST and profits,

As one finance minister stated rising house prices are good for the economy.

However the view is that its not all together good for the economy its all great while the gambling and speculation works until it does not work anymore and the gambling speculation stops as it has since 2021.

The situation now up to 2025 people expenditure into the economy is limited as most of the wages and salaries are used up in interest, rent and expenses no money left of a few pleasure activities thus now we are experiencing business down turn as people stop spending.

Yes one could say slavery is alive and going well sadly.

Agreed there is alway a deal if one waits long enought and buys under value or the property can show a return well above the interest rate and costs of holding the property being charged on the loan and you have a 20% deposit and can service the huge mortgage interest costs.

How do we know if we have bought and investment or a liability?

The following presents a basic overview.

1. An investment is something that puts cash into your bank account.

2. A liability is something that takes money out of the bank account.

3. The property is a liablity until the property can be sold for a profit less all holding costs this could take one to ten years. The the profit adjusted for inflation is the real todays profit.

   
   

   Is my agent or advisor a snake?

   Recently, a person attended a property seminar online and an example was given how a first time investor bought a 900,000.00 apartment in west auckland and that it would become cash flow positive in 12 to 14 years this it not an investment this is a long term liability, its most likely it will never show a profit, years of long term pain on cash flow.

   Let explore is the agent of advisor a snake

   The agent and or advisor will often say to the buyer " You get me for free" " I wont cost you any thing" this is not true as the agent most of the time is an agent of the developer, vendor or the bank.

   The bank may pay the financial advisor a considerable fee up to paying the financial fee of the first 6 to 12 months interest paid by the mortgage holder,

   The vendor will pay the agent up to 4 to 5% of the sale price.

   The developer will pay the so called investment advisor any where from 45,000.00 to 100,000.00 dollars for an unconditional sale.

   Therefore the so called advisors are not free far form it, the fees are hidden in the price one pays for the property.

4. Who do the advisors work for they work for themselves, the bank the developer these advisors are paid on day one whereas the first time investor may have to wait 10 to 14 years before the investor gets paid.

   a. Learn the difference between an Investment and a Liability.

   b. Don't get bitten by a snake.