Monday, June 15, 2015

This does not bode well

How can you lose money selling houses in a property bubble? If you're Housing New Zealand, apparently:

Hundreds of state houses were sold substantially below Government Valuation, promoting warnings that local values could be dragged down.

Figures compiled by Labour showed that 443 state houses were sold in 2014, at an average of 13.3 per cent below the Government Valuation.

Labour claims Housing NZ has "lost" at least $13 million on the sales, with the total proceeds from sales where valuations were available raising $71.8m, compared to the $84.9m the houses were valued at.

In the regions, they're selling at 20 - 30 percent below GV. And then there's this:
Five state houses sold in 2014 raised more than $1m, including a $1.36m sale of a property in Devonport, about 5 per cent less than the property's GV.

That's right: they're selling a million-dollar property in a desirable Auckland suburb during a property bubble, when GVs are dust, and they still make less than GV. I do not understand how this is possible; rank incompetence doesn't even begin to describe it. But whatever the explanation, with the government planning to sell thousands of state houses worth billions of dollars, it does not bode well.