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Playa
24-03-2020, 03:36 PM
We are about to sadly have mass redundancies and increased unemployment.At the same time record low interest rates.People don't want to leave there money in the bank as they get nothing,they are taking there money off the table in the share market.Will all that money find its way to the property market and send prices higher ? they need to find a home for the money somewhere. Or will it crash with people out of work unable to pay mortgages.I remember the time of the GFC was the start of big increases in the Auckland market

stoploss
24-03-2020, 04:01 PM
We are about to sadly have mass redundancies and increased unemployment.At the same time record low interest rates.People don't want to leave there money in the bank as they get nothing,they are taking there money off the table in the share market.Will all that money find its way to the property market and send prices higher ? they need to find a home for the money somewhere. Or will it crash with people out of work unable to pay mortgages.I remember the time of the GFC was the start of big increases in the Auckland market

Governments and banks joint mortgage package probably buy some people a bit of time .
That story in the paper today about all the Air BnB's being converted in Queenstown to long term rentals might be the answer to our housing shortage.
Lending currently a bit tighter with the volatility we are experiencing and certain job sectors would struggle to get a mortgage ..... Main bank rates are basically all time lows that's a big positive on servicing but until they drop the test rates it doesn't make it any easier to get into a house .

fungus pudding
24-03-2020, 04:12 PM
We are about to sadly have mass redundancies and increased unemployment.At the same time record low interest rates.People don't want to leave there money in the bank as they get nothing,they are taking there money off the table in the share market.Will all that money find its way to the property market and send prices higher ? they need to find a home for the money somewhere. Or will it crash with people out of work unable to pay mortgages.I remember the time of the GFC was the start of big increases in the Auckland market

Low interest rates = high real estate prices
High interest rates = low house prices.
That is why the best time to buy real estate, or assets in general, is when interest rates are high.
However with great uncertainty in world markets r.e. prices could bounce around a bit for the next year before finally settling a bit up from present prices. Having said that - the big bargains over the foreseeable future should certainly be in the share market, about which I know nothing, so I have no idea which ones.

JBmurc
24-03-2020, 04:29 PM
Low interest rates = high real estate prices
High interest rates = low house prices.
That is why the best time to buy real estate, or assets in general, is when interest rates are high.
However with great uncertainty in world markets r.e. prices could bounce around a bit for the next year before finally settling a bit up from present prices. Having said that - the big bargains over the foreseeable future should certainly be in the share market, about which I know nothing, so I have no idea which ones.

When do you think we will ever see high interest rates ?? I think we are all turning Japanese and Low rates will be around for decades just look at the last 12yrs so called Booming rockstar economy and rates when nowhere but down

fungus pudding
24-03-2020, 04:35 PM
When do you think we will ever see high interest rates ?? I think we are all turning Japanese and Low rates will be around for decades just look at the last 12yrs so called Booming rockstar economy and rates when nowhere but down

I agree with longish term, but wouldn't go as far as decades. Maybe one decade, say 10 to 12 years - but it's really no more than a guess.

Entrep
24-03-2020, 04:37 PM
It was BOOMING immediately before all this and I think anyone that had the cash/loan lined up will still keep looking/buying and see it as an opportunity over the next 6 months/however long it takes to get back to normal.

All this just cements for me how lucky we are to live in NZ and what an amazing country it is here. As more $hit happens in the world, more people will want to live here - and we have to be careful about that!

JBmurc
24-03-2020, 04:45 PM
I agree with longish term, but wouldn't go as far as decades. Maybe one decade, say 10 to 12 years - but it's really no more than a guess.

Yes depending on household income inflation as Kiwis incomes haven't at all grown with Homes values ... Personal I've watched locally homes increase by 50% since 2016
with floating and Fixed rates decreasing certainly helping keep afloat these insane values aka $700-$800k for average family home in areas where tourism makes up the backbone of the local economy (thats now collapsed)

SBQ
25-03-2020, 09:36 PM
When do you think we will ever see high interest rates ?? I think we are all turning Japanese and Low rates will be around for decades just look at the last 12yrs so called Booming rockstar economy and rates when nowhere but down

Japan's problem of high debt to GDP is due to inflation in the 70s and 80s. They Yen got too strong due to high productivity that it rendered their country uncompetitive. 20 years later and they still struggle with getting their debt down to be comparable around the world.



Low interest rates = high real estate prices
High interest rates = low house prices.

Not a strong believer in this statement. You need to look at inflation figures for which IMO, inflation in NZ has been way to high for the past 30 or 40 years (notably caused by excessive high housing prices). The Keynesian move to adjust interest rates won't apply anymore with record low central bank interest rates. Look for the unemployment indicators from this COVID crisis ; if we were to hit 30% unemployment, watch out! the NZ gov't can not borrow indefinitely to keep the banks holding long. Pretty much ALL banks in NZ (except Kiwi Bank) are foreign owned and they hold the mortgages. When mortgagee sales start flooding, it doesn't matter what level interest rates are.

JBmurc
25-03-2020, 11:33 PM
Japan's problem of high debt to GDP is due to inflation in the 70s and 80s. They Yen got too strong due to high productivity that it rendered their country uncompetitive. 20 years later and they still struggle with getting their debt down to be comparable around the world.



Not a strong believer in this statement. You need to look at inflation figures for which IMO, inflation in NZ has been way to high for the past 30 or 40 years (notably caused by excessive high housing prices). The Keynesian move to adjust interest rates won't apply anymore with record low central bank interest rates. Look for the unemployment indicators from this COVID crisis ; if we were to hit 30% unemployment, watch out! the NZ gov't can not borrow indefinitely to keep the banks holding long. Pretty much ALL banks in NZ (except Kiwi Bank) are foreign owned and they hold the mortgages. When mortgagee sales start flooding, it doesn't matter what level interest rates are.

Yes I agree >> bloody scarer >> well known NZ has a huge amount of AIRBNB +booknbach properties ..a high amount of NZ pop. employed in the property construction+sales business
that could slowdown on the back of Retail commercial property+Tourism property crash .. so many negatives .. going be really hard to keep NZ property at current values...

Then you have the Aussie banks with enough issues at home(with bubble property market also looking like falling) will NZ get the backlash

Bjauck
26-03-2020, 01:42 PM
It was BOOMING immediately before all this and I think anyone that had the cash/loan lined up will still keep looking/buying and see it as an opportunity over the next 6 months/however long it takes to get back to normal.

All this just cements for me how lucky we are to live in NZ and what an amazing country it is here. As more $hit happens in the world, more people will want to live here - and we have to be careful about that! LOL. No doubt for some NZ is still the lucky county. For boomers with real estate it had been a rollicking time.

For companies trying to raise capital, well they have often had to move over to Australia. For the increasing numbers who do cannot raise that first deposit for home ownership, accessing those capital gains is still out of reach.

fungus pudding
26-03-2020, 02:04 PM
Japan's problem of high debt to GDP is due to inflation in the 70s and 80s. They Yen got too strong due to high productivity that it rendered their country uncompetitive. 20 years later and they still struggle with getting their debt down to be comparable around the world.



Not a strong believer in this statement. You need to look at inflation figures for which IMO, inflation in NZ has been way to high for the past 30 or 40 years (notably caused by excessive high housing prices). The Keynesian move to adjust interest rates won't apply anymore with record low central bank interest rates. Look for the unemployment indicators from this COVID crisis ; if we were to hit 30% unemployment, watch out! the NZ gov't can not borrow indefinitely to keep the banks holding long. Pretty much ALL banks in NZ (except Kiwi Bank) are foreign owned and they hold the mortgages. When mortgagee sales start flooding, it doesn't matter what level interest rates are.

Using round figures, $500,000 at 8% costs the same as $1,000,000 at 4%. Second hand house prices will always settle around the median weekly affordable figure. Therefore doubling the interest rate will over-time, halve house prices. Halving rates will double prices.*
*Principle repayments will mean this is not strictly accurate - but it's a good rule of thumb.

SBQ
26-03-2020, 03:15 PM
Using round figures, $500,000 at 8% costs the same as $1,000,000 at 4%. Second hand house prices will always settle around the median weekly affordable figure. Therefore doubling the interest rate will over-time, halve house prices. Halving rates will double prices.*
*Principle repayments will mean this is not strictly accurate - but it's a good rule of thumb.

Not too long ago in 2008 & 2007 mortgage rates were double digits. How come houses have not come down in price? Have you not considered the basic principle of "Time Value of Money" ? When you factor cumulative inflation over the years, houses in NZ have still become unaffordable.

The key reason money is kept in the NZ housing market is the tax free capital gains investors enjoy.

fungus pudding
26-03-2020, 03:24 PM
Not too long ago in 2008 & 2007 mortgage rates were double digits. How come houses have not come down in price?



Because, interest rates have come down. As one falls, the other will rise. 'The opposite ends of a see-saw'. Read what I wrote in the example I gave.

Assuming the median affordability is 800 per week, then houses will be rise in price to that level. i.e 500,000 at 8% or at 4% - 1,000,000
Look with envy on those who moaned and groaned about having to pay 20 to 24% or more. They were the lucky ones.

whatsup
26-03-2020, 04:19 PM
IMHO no ones knows what is ahead in all markets, property included, so , "hope for the best but budget for the worst " !!

SBQ
26-03-2020, 04:24 PM
Because, interest rates have come down. As one falls, the other will rise. 'The opposite ends of a see-saw'. Read what I wrote in the example I gave.

Assuming the median affordability is 800 per week, then houses will be rise in price to that level. i.e 500,000 at 8% or at 4% - 1,000,000
Look with envy on those who moaned and groaned about having to pay 20 to 24% or more. They were the lucky ones.

No, what's happened in real terms here in NZ is the standard of living in houses has eroded. New families are buying old houses that are 19th century performance whereas overseas, for the same amount of $ would get you in a modern McMansion size house.

I don't understand your interest rate example where housing prices are tied to swings in interest rates. Any common sense shows inflation causes prices to go higher. NZ has not experienced deflation so houses never did go down when mortgage rates went high.

fungus pudding
26-03-2020, 05:10 PM
No, what's happened in real terms here in NZ is the standard of living in houses has eroded. New families are buying old houses that are 19th century performance whereas overseas, for the same amount of $ would get you in a modern McMansion size house.

I don't understand your interest rate example where housing prices are tied to swings in interest rates. Any common sense shows inflation causes prices to go higher. NZ has not experienced deflation so houses never did go down when mortgage rates went high.

Look at the difference between real and nominal. If you can be bothered researching it you will find a couple of long periods where house prices remained quite flat, while all around other prices, groceries, petrol, daily living costs etc, were screaming up. that equates to falling prices in real terms. Look at those rocky industrial years with never ending strikes resulting in higher wages all round, yet real estate was flat.

I can assure you if interest rates jumped to, say, 12% tomorrow, you'd quickly see what I'm talking about,

Crypto Crude
04-04-2020, 03:20 PM
Low interest rates = high real estate prices
High interest rates = low house prices.
That is why the best time to buy real estate, or assets in general, is when interest rates are high..

That's a pretty loose theory...
When interest rates are high inflation is high which is prices going up....
Higher interest rates are higher loan costs which is less money loaned..people are more willing to take on loans when interest rates are low
:cool:cc

SBQ
06-04-2020, 07:40 AM
That's a pretty loose theory...
When interest rates are high inflation is high which is prices going up....
Higher interest rates are higher loan costs which is less money loaned..people are more willing to take on loans when interest rates are low
:cool:cc

and how come no one else is mentioning about unemployment figures? It does not matter where interest rates are, if people lose their jobs, so will mortgages going into default. You know the gov't can not keep forcing banks to extend mortgage payments. It's safe to say this crisis is nothing like the 2008 GFC. Rich or poor, everyone is affected and this goes to housing prices. While in 2008, quantity easing was the answer - unfortunately the virus does not discriminate between rich or poor.

JBmurc
06-04-2020, 10:03 AM
and how come no one else is mentioning about unemployment figures? It does not matter where interest rates are, if people lose their jobs, so will mortgages going into default. You know the gov't can not keep forcing banks to extend mortgage payments. It's safe to say this crisis is nothing like the 2008 GFC. Rich or poor, everyone is affected and this goes to housing prices. While in 2008, quantity easing was the answer - unfortunately the virus does not discriminate between rich or poor.

What many people aren't pricing in is the contagion affect

Commercial esp. tourism commercial is going to get hammered an those holding will just about always hold Res property ... guess whats going be able to be sold to give liquidly..

Total annual NZ tourism expenditure is $40.9 billion – $112 million per day....thats going to be crushed next 12-months

Down here in Central Otago =Tourism hotspot we have over 1000 Res. properties on the market for sale if you include all the apartments etc (For stupidly high values Vs local av. incomes) this will increase once we come out of lockdown >>last population I seen for the area came to 57,000-60,000p. Now compare that to Otago largest city that has a population more than double of Central Otago that has less than 300 properties on the market

properties include res sections advertised etc

artemis
06-04-2020, 01:10 PM
Makes sense that tourist destinations will have an excess of accommodation, short term and long term. For a few years anyway. But let's not forget #8 wire. There will be other opportunities such as retirement communities, families looking for lifestyle options. Tech firms working remotely. And maybe like Sleepyhead and its community setting up in Ohinewai.

ynot
06-04-2020, 01:59 PM
[QUOTE=artemis;805222]Makes sense that tourist destinations will have an excess of accommodation, short term and long term. For a few years anyway. But let's not forget #8 wire. There will be other opportunities such as retirement communities, families looking for lifestyle options. Tech firms working remotely. And maybe like Sleepyhead and its community setting up in Ohinewai.[/QUOTE

Expecting number 8 wire to sell 1,000 properties anytime soon may be a bit of a stretch.

Dean Letfus
06-04-2020, 04:20 PM
I think Auckland will roll on pretty well. If immigrations stops for an extended period the regions will suffer. Rents will drop but only nominally but values could really fall in rural areas where they have exploded unreasonably.

If you document house price inflation since we kept records, property has doubled on average every 7.8 years including through the 2 wars and the depression. NZ is not that expensive in real terms. It is hyped as expensive in relation to wages and that's true but our actual values aren't high compared to many similar markets. This is what makes real estate so low risk. Safe as houses!

ynot
06-04-2020, 04:52 PM
I think Auckland will roll on pretty well. If immigrations stops for an extended period the regions will suffer. Rents will drop but only nominally but values could really fall in rural areas where they have exploded unreasonably.

If you document house price inflation since we kept records, property has doubled on average every 7.8 years including through the 2 wars and the depression. NZ is not that expensive in real terms. It is hyped as expensive in relation to wages and that's true but our actual values aren't high compared to many similar markets. This is what makes real estate so low risk. Safe as houses!

I wouldn't be so sure on that one. A price drop will be driven by unemployment and we are looking at a 15% + unemployment increase.

"Former [New Zealand] Treasury Secretary Allan Bollard has pointed out
that this shock is huge by contrast to previous economic crises. The Treasury is estimating a 30‐40
percent reduction in output and 10‐17 percent downturn in the economy as a whole, and at a speed that is unprecedented"

kiora
07-04-2020, 01:19 AM
Is Auckland like London?
"for those who have built up mini (or in some cases not-so-mini) property portfolios that rely on a constant stream of guests churning through Airbnb apartments in Bath, Barcelona or Berlin, the prospect of weeks or months without guests spells financial disaster."
https://www.theguardian.com/technology/2020/apr/04/how-the-covid-19-crisis-locked-airbnb-out-of-its-own-homes

SBQ
08-04-2020, 05:52 PM
I wouldn't be so sure on that one. A price drop will be driven by unemployment and we are looking at a 15% + unemployment increase.

"Former [New Zealand] Treasury Secretary Allan Bollard has pointed out
that this shock is huge by contrast to previous economic crises. The Treasury is estimating a 30‐40
percent reduction in output and 10‐17 percent downturn in the economy as a whole, and at a speed that is unprecedented"

Certainly... i'm not seeing the fear on people's faces YET. When the lockdown is over, they will wonder why their boss has not called them back to work. Then the fear will really set in... 15% unemployment is unheard of in generations.

Joshuatree
08-04-2020, 06:06 PM
Ho w about commercial property? Alot of people working at home now will stay there after this crisis is over. Office space will have to diminish. Ive spoken to people who have already had directives from head office about this. Maybe a bonus is folks working from home will be able to get tax deductions for their home office.

ynot
08-04-2020, 06:42 PM
Anyone that thinks the Auckland property market is going to roll on like this Virus does not exist is kidding themselves. Nothing stays the same forever. Kiwi property will be no exception to what we are in for.

JBmurc
08-04-2020, 07:41 PM
I think Auckland will roll on pretty well. If immigrations stops for an extended period the regions will suffer. Rents will drop but only nominally but values could really fall in rural areas where they have exploded unreasonably.

If you document house price inflation since we kept records, property has doubled on average every 7.8 years including through the 2 wars and the depression. NZ is not that expensive in real terms. It is hyped as expensive in relation to wages and that's true but our actual values aren't high compared to many similar markets. This is what makes real estate so low risk. Safe as houses!

Not this time ...kiwis ticked up during these low rates was cheaper than renting ..but now with many losing jobs, less hours +lower incomes you can't just walk away and look for cheap location etc ..this will be brutal

SBQ
08-04-2020, 08:40 PM
Not this time ...kiwis ticked up during these low rates was cheaper than renting ..but now with many losing jobs, less hours +lower incomes you can't just walk away and look for cheap location etc ..this will be brutal

As I said before, i'm still talking to those in my circle that are clueless of the impact this virus would have on the economy. Too may enjoying Xbox at home... not a lot of productivity going on but they treat it as a 'holiday'. Well what if at the end of the holiday their job is not there? No one plans ahead, all going on 'hope' while watching the Ms Ardern speech of the day.

I can't say immigration would be that hot from now on. How will tourism come back to NZ if AirNZ says even after 5 years they will never get back their 'international routes' like they were few months ago?

There was a short moment back in February where I though to take my money and buy more NZ real estate. The inconvenience of owning more was what put me off and instead, exchanged the vast majority of my cash into USD and set it to my US broker. (I discussed this in another post); the process was not straight forward but hindsight.. WELL worth it - this week I hope to invest the remainder of the cash.

ynot
09-04-2020, 05:23 AM
I think Auckland will roll on pretty well. If immigrations stops for an extended period the regions will suffer. Rents will drop but only nominally but values could really fall in rural areas where they have exploded unreasonably.

If you document house price inflation since we kept records, property has doubled on average every 7.8 years including through the 2 wars and the depression. NZ is not that expensive in real terms. It is hyped as expensive in relation to wages and that's true but our actual values aren't high compared to many similar markets. This is what makes real estate so low risk. Safe as houses!

Come on Dean, tell me I'm wrong. Sing me that old property can never go down tune again.

iceman
09-04-2020, 07:00 AM
As I said before, i'm still talking to those in my circle that are clueless of the impact this virus would have on the economy. Too may enjoying Xbox at home... not a lot of productivity going on but they treat it as a 'holiday'. Well what if at the end of the holiday their job is not there? No one plans ahead, all going on 'hope' while watching the Ms Ardern speech of the day.

I can't say immigration would be that hot from now on. How will tourism come back to NZ if AirNZ says even after 5 years they will never get back their 'international routes' like they were few months ago?

There was a short moment back in February where I though to take my money and buy more NZ real estate. The inconvenience of owning more was what put me off and instead, exchanged the vast majority of my cash into USD and set it to my US broker. (I discussed this in another post); the process was not straight forward but hindsight.. WELL worth it - this week I hope to invest the remainder of the cash.

Slightly off topic but yesterday I spoke to two people working in tourism overseas. One has a whale watching business in the North Atlantic. Last year they (him and others) took our 108,000 customers. They are forecasting 7,000 this year, most of them already done.
The other one is a pilot in a port in the sub-antarctic where cruise vessels dock for Antarctic trips. They have been getting 110-140 cruise ships between Oct-Apr in recent years. Next season they expect "less than 10".
Both of the above examples are venture/outdoor type tourists, like majority that visits NZ is. This is the scale we are talking about. A complete collapse for potentially a long time to come.

Southern_Belle
09-04-2020, 08:00 AM
Not this time ...kiwis ticked up during these low rates was cheaper than renting ..but now with many losing jobs, less hours +lower incomes you can't just walk away and look for cheap location etc ..this will be brutalalso we are a nation of small business owners, many of whom are already signalling they will never re-open, particularly cafes, bars etc ...... I wonder how many of these businesses mortgaged the family home to get into and operate these businesses ... domino effect???

artemis
09-04-2020, 11:30 AM
..... Maybe a bonus is folks working from home will be able to get tax deductions for their home office.

Not under current rules if they are employees. Hard to see that changing.

artemis
09-04-2020, 11:33 AM
Anyone that thinks the Auckland property market is going to roll on like this Virus does not exist is kidding themselves. Nothing stays the same forever. Kiwi property will be no exception to what we are in for.

It depends. The housing market is a complex thing with many levers.

nztx
10-04-2020, 10:58 PM
Slightly off topic but yesterday I spoke to two people working in tourism overseas. One has a whale watching business in the North Atlantic. Last year they (him and others) took our 108,000 customers. They are forecasting 7,000 this year, most of them already done.
The other one is a pilot in a port in the sub-antarctic where cruise vessels dock for Antarctic trips. They have been getting 110-140 cruise ships between Oct-Apr in recent years. Next season they expect "less than 10".
Both of the above examples are venture/outdoor type tourists, like majority that visits NZ is. This is the scale we are talking about. A complete collapse for potentially a long time to come.

Agree with Iceman

Aside from those direct affects on businesses, tourist dollars tend to go round many times in the local communities as well - contributing to other direct & indirect local businesses & services, also paying the taxman clipping the ticket each step of the way..

Potential losses go considerably wider than just patronage of Travel, Tourism & Hospitality businesses - exponentally

How many businesses in Kaikoura will be relatively unscathed with what we have currently - look further to the service/supply chains to the affected businesses and the ones supplying those further back along the supply chain.

kiora
12-04-2020, 04:26 PM
"Lockdown 'final straw' for worried property investors"
https://www.stuff.co.nz/life-style/homed/residential/120863299/lockdown-final-straw-for-worried-property-investors

macduffy
12-04-2020, 07:49 PM
"Lockdown 'final straw' for worried property investors"
https://www.stuff.co.nz/life-style/homed/residential/120863299/lockdown-final-straw-for-worried-property-investors

Right. So one of two things might happen. The landlords who are desperate to quit their rentals will either sell to another investor or, if they can't attract a buyer, will have to meet the market of prospective owner-occupiers who can't afford today's prices. Either way, the properties don't disappear. Is there a third possibility?

JBmurc
12-04-2020, 07:57 PM
Looking over TM listings from chch south there is no way we don't haven't enough properties I wonder if this is the same for the rest of NZ ... the idea we don't have enough properties in NZ is looking more likely to be a lie pumped by RE agents fuelled by MSN.... and its only going to increase after the lockdown as thousands of AirBNB hit the market >>

the true fact of the matter is we don't have many affordable homes to buy or rent .... but we sure have thousands of expensive ones empty ... think the most likely outcome is for a major price reduction or they will just sit empty..

artemis
13-04-2020, 05:00 AM
Right. So one of two things might happen. The landlords who are desperate to quit their rentals will either sell to another investor or, if they can't attract a buyer, will have to meet the market of prospective owner-occupiers who can't afford today's prices. Either way, the properties don't disappear. Is there a third possibility?

Not all property investors will want to exit the sector. Even for those that do they may choose to wait and see how supply and demand works out. Tourism will be a problem area for a good while, tertiary education will bounce back early. Net migration - anyone's guess.

A third possibility is leave the rental vacant or lower the rent for the time being, carrying forward rental losses until the market changes.

And property investors who were looking to build new or buy existing for rentals now won't if the numbers don't stack up. That will impact apartment developments and reduce private rental supply, though the government might buy them for social housing, as demand will continue to rocket up.

ynot
13-04-2020, 06:47 AM
"Lockdown 'final straw' for worried property investors"
https://www.stuff.co.nz/life-style/homed/residential/120863299/lockdown-final-straw-for-worried-property-investors

As we already know only too well, State intervention in a business environment never ends well.

Crypto Crude
21-05-2020, 01:53 PM
Housing market in nz definately cooling off and a dip in prices for sure...
:cool:cc

nztx
16-10-2020, 05:53 PM
An interesting article on Stuff:

'We'll be buying up big': Sir Bob Jones sits on a stash of cash, waiting

https://www.stuff.co.nz/business/property/123101150/well-be-buying-up-big-sir-bob-jones-sits-on-a-stash-of-cash-waiting

Aaron
25-03-2021, 10:22 AM
I was surprised there was no thread on the changes to residential property investment but realised this would be much better on a political thread to debate what Grant or Jacinda did or didn't say about raising taxes.

As for the proposals I think just targeting property investors and denying them the ability to claim interest like every other investment is unfair.

Although someone mentioned the interest deduction might be available for new builds so assuming no government will address the heart of the problem which is central banks and monetary policy then leveraged investors might need to sell up and actually build some rental housing to get back on track from a tax perspective. Which sounds like a good idea as everyone seems to agree supply of new housing is part of the problem.

Probably won't change housing affordability while capital is virtually free and available thanks to monetary policy and central planners controlling interest rates. More tinkering but still no sign that the heart of the issue will be addressed any time soon. What form would that take? Restricting money printing to GDP or population growth, letting willing buyers and sellers determine the price of capital? sounds radical but it might help alleviate inflated asset prices, particularly housing in NZ.

Am I correct in thinking a lot of the detail is still being written up such as deductibility for new builds, definition of new builds, definition of residential property (i.e. is a GST registered airbnb residential or more like a hotel?)

As long as a landlord can claim interest after building a brand new house I can live with the changes even if they are unfairly targeting landlords when all they are doing is capitalising on a central bank gaurantee of rising prices through targeted inflation. It is only because how unfair targeted inflation and the calculation of the CPI is to future generations and how obvious it is becoming do we get this annoying and unfair tinkering IMHO.

PS to keep to the thread, I don't think it will change property prices much, but that said even overseas commentators have discussed NZ house prices to income. If it is a bubble then any prick might burst it but I don't think this will be enough. Time will tell.

Aaron
25-03-2021, 03:28 PM
A lot of talk about the tax changes being added to rents, much like the need to insulate etc etc ultimately all being added to the rent payable. I wonder if any landlord has shared some of their annual capital gains by decreasing rents??? or have I missed something with that train of thought.

t.rexjr
25-03-2021, 03:45 PM
A lot of talk about the tax changes being added to rents, much like the need to insulate etc etc ultimately all being added to the rent payable. I wonder if any landlord has shared some of their annual capital gains by decreasing rents??? or have I missed something with that train of thought.

I endeavor not to increase rent during a tenancy. I also set rent at what I deem to be lower end of fair market from the beginning of the tenancy. As a result I get great tenants that are more often than not long term. They are the enablers, without them I could not own investment properties. The Capital increase over the long term far outstrips any gains made from rental income.

artemis
25-03-2021, 03:49 PM
A lot of talk about the tax changes being added to rents, much like the need to insulate etc etc ultimately all being added to the rent payable. I wonder if any landlord has shared some of their annual capital gains by decreasing rents??? or have I missed something with that train of thought.

What you may have missed is that paper capital gains don't pay the bills. And if they are crystallised, buying in the same market isn't going to pay the bills either.

Aaron
25-03-2021, 04:06 PM
What you may have missed is that paper capital gains don't pay the bills. And if they are crystallised, buying in the same market isn't going to pay the bills either.

Assuming you never sell or if you do you only roll over your investment.
Much like commercial property I suppose the rise in capital value is used to justify an increase in rent without any additional benefit being provided. Don't get me wrong I am not anti landlord. I had tenants who every christmas stopped paying their rent probably due to overspending and holidays. I assume they thought we were wealthy landlords rather than a young couple trying to get ahead and pay the mortgage. Very stressful as they would catch up only to get behind again.

But due to what seems to be ever expanding credit availability and constantly lower interest rates over the last 30 years asset owners have been big winners, yet to hear the bleating when legislation to provide insulated housing came in (I thought heat pumps were a step too far) you would think their throats were being cut yet no mention is ever made of the wealth generated through central bank policy for the past 30 years. It seems a little one way sometimes. Pass on the costs keep the capital gains. Mind you at the yields rental properties are currently selling at I can see how cashflow could be tight.

Cyclical
25-03-2021, 04:06 PM
I endeavor not to increase rent during a tenancy. I also set rent at what I deem to be lower end of fair market from the beginning of the tenancy. As a result I get great tenants that are more often than not long term. They are the enablers, without them I could not own investment properties. The Capital increase over the long term far outstrips any gains made from rental income.


What you may have missed is that paper capital gains don't pay the bills. And if they are crystallised, buying in the same market isn't going to pay the bills either.

t.rexjr maybe one of those fortunate enough to actually own his IP's, rather than being highly leveraged... Those in that boat stand to gain most from this I think, and presumably future FHB's (will be hard for those that have literally just bought, if things track down). Leveraged investors and tenants stand to lose. Oh, the government is a big winner, by means of a huge tax grab. The most interesting thing for me will be to see if this pops the bubble and breaks the ponzi scheme they've put so much effort into with the post covid recovery, and what that will mean for the broader economy. I don't think OCR is going to be headed north for quite some time!

Aaron
25-03-2021, 04:17 PM
t.rexjr maybe one of those fortunate enough to actually own his IP's, rather than being highly leveraged... Those in that boat stand to gain most from this I think, and presumably future FHB's (will be hard for those that have literally just bought, if things track down). Leveraged investors and tenants stand to lose. Oh, the government is a big winner, by means of a huge tax grab. The most interesting thing for me will be to see if this pops the bubble and breaks the ponzi scheme they've put so much effort into with the post covid recovery, and what that will mean for the broader economy. I don't think OCR is going to be headed north for quite some time!

Interesting to read the opinions on the drop in the $NZdollar after the announcement. One view was crazy socialist govt is scaring away international investors with crazy policy. Another was speculators realized if it slows house price rises the reserve bank can sit on its hands for a lot longer. I'm going with speculators as they make up a large % of foreign currency transactions with a much smaller amount of foreign currency transactions due to actual trade and investment. OCR not going to move anytime soon. Orrs got no cajones anyway even if he gave a s*it about wealth inequality and moral hazard.

t.rexjr
25-03-2021, 04:32 PM
t.rexjr maybe one of those fortunate enough to actually own his IP's, rather than being highly leveraged... Those in that boat stand to gain most from this I think

Actually it'll mean around 6k extra tax due (about $115 pw that I'm now out of pocket)

interestingly I'm currently renting the house I live in. For the amount I pay I could 100% leverage the loan to buy the house, pay all related expenses, and be better off...

SBQ
25-03-2021, 05:40 PM
As for the proposals I think just targeting property investors and denying them the ability to claim interest like every other investment is unfair.

Although someone mentioned the interest deduction might be available for new builds so assuming no government will address the heart of the problem which is central banks and monetary policy then leveraged investors might need to sell up and actually build some rental housing to get back on track from a tax perspective. Which sounds like a good idea as everyone seems to agree supply of new housing is part of the problem.

Probably won't change housing affordability while capital is virtually free and available thanks to monetary policy and central planners controlling interest rates. More tinkering but still no sign that the heart of the issue will be addressed any time soon. What form would that take? Restricting money printing to GDP or population growth, letting willing buyers and sellers determine the price of capital? sounds radical but it might help alleviate inflated asset prices, particularly housing in NZ.

Am I correct in thinking a lot of the detail is still being written up such as deductibility for new builds, definition of new builds, definition of residential property (i.e. is a GST registered airbnb residential or more like a hotel?)

As long as a landlord can claim interest after building a brand new house I can live with the changes even if they are unfairly targeting landlords when all they are doing is capitalising on a central bank gaurantee of rising prices through targeted inflation. It is only because how unfair targeted inflation and the calculation of the CPI is to future generations and how obvious it is becoming do we get this annoying and unfair tinkering IMHO.

PS to keep to the thread, I don't think it will change property prices much, but that said even overseas commentators have discussed NZ house prices to income. If it is a bubble then any prick might burst it but I don't think this will be enough. Time will tell.

If I make an investment in starting a small business, and it has long term assets and equipment that depreciate to a salvage value. When I plan to close up the business, these assets are taxed. Accounts receivables & cost adjusted inventory is also taxed at winding up the business. Then tell me why is it a rental property house after 5 or 15 years is sold without paying tax on the capital gain?


What is radical is the difference in capital required to buy a home. The individual or couple looking to buy their 1st home only has so much capital (earning ability). But to the landlord that has a much larger asset backing + cash flow, can easily pay MORE for the house in question. Capital is not free, it's strongly discriminated where the banks prefer to lend to less risky investors with high incomes and strong collateral backing. Basically the NZ housing market has turned into a meme stock investment portfolio and the losers are those that can get in and, if they do, they will pay dearly on long term 30+ year mortgages. Something that the Labour Party can do is implement what Canada has done for 1st time home buyers. Since the NZ banks have changed to a 40% LVR deposit - make an exemption for 1st home buyers of only requiring 5% deposit. For as long as I can remember since late 80s, Cdn gov'ts has forced banks to comply with this 5% deposit regardless of times during the economy.

Building new houses? Sounds like a business venture if the intent is to sell for a profit. But don't make it sound so bad, the Brightline test on new builds is still only 5 years. So one can invest into building new and hold them for 5+ years and sell for the tax free capital gain ; a move where most OECD countries won't allow regardless how long you hold them.

fungus pudding
25-03-2021, 06:34 PM
[COLOR=#b22222]If I make an investment in starting a small business, and it has long term assets and equipment that depreciate to a salvage value. When I plan to close up the business, these assets are taxed. Accounts receivables & cost adjusted inventory is also taxed at winding up the business. Then tell me why is it a rental property house after 5 or 15 years is sold without paying tax on the capital gain?


I presume you are talking about depreciation recovered, which must be accounted for when selling business assets. Fair enough, that's as it should be, but that is not a capital gain. Any capital gained (over and above the depreciated value) is not taxed. You cannot recover depreciation on sale of an investment property for the plain and simple reason that it was not depreciated iin the annual accounts.

allfromacell
25-03-2021, 10:09 PM
I get the anger around these changes but I think something had to be done to help curb the demand side of the equation. For whatever reason people in this country are property obsessed and for a lot of them buying houses is the only way they know how to grow their wealth, the fomo these last 12 months has quite frankly been terrifying.

The housing crisis is exactly that, a very real crisis and imo needs bold and creative policy, it needs to be taken as seriously as covid has been, after all it's shelter and the impact on our society is enormous.

Supply side obviously needs more work, but fortunately consents and completions are all approaching record highs and are at levels not seen for many years. RMA reform's are hopefully positive and can further boost the supply side of the equation.

All in all I get why people consider this an attack on them but I do support the government taking bold unique action on this very serious issue, I imagine very few posters on this website will agree.

Aaron
26-03-2021, 08:11 AM
If I make an investment in starting a small business, and it has long term assets and equipment that depreciate to a salvage value. When I plan to close up the business, these assets are taxed. Accounts receivables & cost adjusted inventory is also taxed at winding up the business. Then tell me why is it a rental property house after 5 or 15 years is sold without paying tax on the capital gain?


What is radical is the difference in capital required to buy a home. The individual or couple looking to buy their 1st home only has so much capital (earning ability). But to the landlord that has a much larger asset backing + cash flow, can easily pay MORE for the house in question. Capital is not free, it's strongly discriminated where the banks prefer to lend to less risky investors with high incomes and strong collateral backing. Basically the NZ housing market has turned into a meme stock investment portfolio and the losers are those that can get in and, if they do, they will pay dearly on long term 30+ year mortgages. Something that the Labour Party can do is implement what Canada has done for 1st time home buyers. Since the NZ banks have changed to a 40% LVR deposit - make an exemption for 1st home buyers of only requiring 5% deposit. For as long as I can remember since late 80s, Cdn gov'ts has forced banks to comply with this 5% deposit regardless of times during the economy.

Building new houses? Sounds like a business venture if the intent is to sell for a profit. But don't make it sound so bad, the Brightline test on new builds is still only 5 years. So one can invest into building new and hold them for 5+ years and sell for the tax free capital gain ; a move where most OECD countries won't allow regardless how long you hold them.

As FP pointed out I think you misunderstand what a capital gain is. Accounts Receivable and inventory are part of the normal business process. Accounts receivable is just sales of whatever product or rent you charge. When a business is sold such as Kiwi Ninja in the herald this morning for I think $203million any gain over and above what has been invested in this business will be tax free much like rental houses used to be before the bright line test.

Probably a good idea to make it harder for investors over first home buyers with differing LVRs although I was of the impression that Canada's housing market wasn't that much better than ours.

If true an interesting statistic in a herald article this morning from Chloe Swarbrick is that 30% of residential housing is own by investors with 4 or more houses. I would take that with a grain of salt but it is hard to see why the NZRB needs to support those investors with easy money and low interest rates for the last 30 years, obviously if true it is working really well for some people and getting better every year.

Building houses requires more equity as it is a business venture and carries much more risk, but it does provide the much talked about increase in supply of new houses. Using tax policy to encourage a change in behaviour may work. More likely some unintended consequences will arise. My understanding is that if an investor builds the house they can then rent it out and claim the interest deduction as normal and the bright line test is brought down to 5 years. But this is speculation as I am unsure if this is actually the case.

Still doesn't get to the heart of the issue which is monetary policy and centrally controlled interest rates. Although that said under a totally capitalist system I suppose home ownership rates would be a lot lower by now. At least Labours doing something for better or worse.

Aaron
29-03-2021, 09:11 AM
Herald article probably behind the pay wall but here is the bit that interested me.

https://www.nzherald.co.nz/business/how-far-do-prices-need-to-fall-to-make-housing-affordable/KQIIR7STLO5QKYSJ7FVZ4Q4SRU/

To get a sense of how affordable we think house prices should be, it helps to look back at the long term trend, says Olsen.

House prices basically bumped around at about two or three times household income from the 1970s on, he says.

"We had a multiple of below four up until 2001," says Olsen. "After that it starts to go up quite rapidly."

In the year to June 2008 it peaked at 5.7.

"It took a bit of a pause after the GFC but then it's only gone up from there," he says.

2001 this started, although the federal reserve is not the NZRB this was around the time Alan "Bubbles" Greenspan provide the Fed put after the dotcom crash. 2008 recognised that things had gone too far and that there was too much debt but this was solved with more debt and lower interest rates.

Maybe there is a direct connection between monetary policy and insanely high house prices although no one was suggesting this in the article the rises may have been coincidental.

But if monetary policy is the issue why can't it be changed? I would suggest.

One there is a global currency war and any rise in interest rates will push up the value of the dollar hurting our exporters.

Two possibly debt levels are so high they can't be repaid in any ordinary sense of the word "repayment" but they can be deflated away by debasing the currency they are valued in.

Who gets hurt if interest rates go up and credit gets tightened, probably everyone if there is a collapse and we will no doubt hear how it will hurt the poor worse, although if monetary policy is increasing inequality and reducing social mobility and equality of opportunity surely a change in monetary policy will hurt those that have benefitted the most from the current policies.

So I guess this means we ignore the heart of the problem around inflated house prices and hope it doesn't lead to something worse in the future.

fungus pudding
29-03-2021, 09:49 AM
I get the anger around these changes but I think something had to be done to help curb the demand side of the equation. For whatever reason people in this country are property obsessed and for a lot of them buying houses is the only way they know how to grow their wealth, the fomo these last 12 months has quite frankly been terrifying.

The housing crisis is exactly that, a very real crisis and imo needs bold and creative policy, it needs to be taken as seriously as covid has been, after all it's shelter and the impact on our society is enormous.

Supply side obviously needs more work, but fortunately consents and completions are all approaching record highs and are at levels not seen for many years. RMA reform's are hopefully positive and can further boost the supply side of the equation.

All in all I get why people consider this an attack on them but I do support the government taking bold unique action on this very serious issue, I imagine very few posters on this website will agree.

I don't. I imagine most posters will agree the govt. needs to take some action. What most will disagree with, I think, will be the particular actions they have chosen to take.

macduffy
29-03-2021, 11:11 AM
House prices basically bumped around at about two or three times household income from the 1970s on, he says.


I would suggest that the components of "household income" have changed a lot since the 1970's. Many more single parent households on low incomes, more beneficiaries, resulting in lower average household incomes. Doesn't change the fact though that NZ is short of housing, particularly in fast growing regions.

Aaron
29-03-2021, 11:15 AM
Interest rates in the 1970s would require a much lower income to price ratio or houses would have been unaffordable if you needed to borrow money.

fungus pudding
29-03-2021, 12:03 PM
I would suggest that the components of "household income" have changed a lot since the 1970's. Many more single parent households on low incomes, more beneficiaries, resulting in lower average household incomes. Doesn't change the fact though that NZ is short of housing, particularly in fast growing regions.

Stay at home mums were the norm until mid 70s. So while there were fewer single parent homes, I'm not so sure that many households had two working adults. But yes - the housing problem is plain and simple - not enough houses.

iceman
29-03-2021, 02:08 PM
I don't. I imagine most posters will agree the govt. needs to take some action. What most will disagree with, I think, will be the particular actions they have chosen to take.

Absolutely my view as well FP

Jay
29-03-2021, 02:42 PM
My view as well.
Changing the deductibility is plain dumb IMO - it is a business in the simple meaning of the word. Generating an income and therefore expenses incurred in generating that income should be a deductible expense. Get their tax if sold within 10 years.
Yes I know does not produce anything, but still income generating and providing a service, must be other businesses out there that do not produce anything - e.g. widgets but provide a service of some description, they would still claim interest if applicable...

stoploss
29-03-2021, 03:04 PM
If I make an investment in starting a small business, and it has long term assets and equipment that depreciate to a salvage value. When I plan to close up the business, these assets are taxed. Accounts receivables & cost adjusted inventory is also taxed at winding up the business. Then tell me why is it a rental property house after 5 or 15 years is sold without paying tax on the capital gain?


What is radical is the difference in capital required to buy a home. The individual or couple looking to buy their 1st home only has so much capital (earning ability). But to the landlord that has a much larger asset backing + cash flow, can easily pay MORE for the house in question. Capital is not free, it's strongly discriminated where the banks prefer to lend to less risky investors with high incomes and strong collateral backing. Basically the NZ housing market has turned into a meme stock investment portfolio and the losers are those that can get in and, if they do, they will pay dearly on long term 30+ year mortgages. Something that the Labour Party can do is implement what Canada has done for 1st time home buyers. Since the NZ banks have changed to a 40% LVR deposit - make an exemption for 1st home buyers of only requiring 5% deposit. For as long as I can remember since late 80s, Cdn gov'ts has forced banks to comply with this 5% deposit regardless of times during the economy.

Building new houses? Sounds like a business venture if the intent is to sell for a profit. But don't make it sound so bad, the Brightline test on new builds is still only 5 years. So one can invest into building new and hold them for 5+ years and sell for the tax free capital gain ; a move where most OECD countries won't allow regardless how long you hold them.

SBQ ,5 % deposits are available .
https://kaingaora.govt.nz/home-ownership/

Furthermore the banks are allowed to lend with less deposit than the RBNZ mandated LVR for a % of their lending. They generally allocate this to first home buyers.....
See the announcement here https://www.rbnz.govt.nz/news/2021/02/financial-stability-strengthened-by-firmer-lvr-restrictions

The biggest problem the banks face with their customers wanting to borrow 95 or 90 % of the purchase price is them servicing the 95 or 90 % lending ....
Doesn't matter if you have a heap of assets- if you can't show you can service the debt (also at much higher test rates) from your income under "The Responsible lending code " they will decline.
https://www.mbie.govt.nz/dmsdocument/12349-responsible-lending-code-revised-december-2020

Bjauck
29-03-2021, 04:55 PM
I would suggest that the components of "household income" have changed a lot since the 1970's. Many more single parent households on low incomes, more beneficiaries, resulting in lower average household incomes. Doesn't change the fact though that NZ is short of housing, particularly in fast growing regions. I would think there are several social trends at play. I think there would be more older people living alone (although back in the 1970's there sadly would still have been a lot of WW1 widows/ maiden aunts?) while poorer areas may have larger households. Some recent immigrant families may be more likely to have multi-generation households. I would also wager there are fewer single working twentysomethings able to afford their own or rent flats/houses alone.

Norwest
29-03-2021, 08:34 PM
Herald article probably behind the pay wall but here is the bit that interested me.

https://www.nzherald.co.nz/business/how-far-do-prices-need-to-fall-to-make-housing-affordable/KQIIR7STLO5QKYSJ7FVZ4Q4SRU/

To get a sense of how affordable we think house prices should be, it helps to look back at the long term trend, says Olsen.

House prices basically bumped around at about two or three times household income from the 1970s on, he says.

"We had a multiple of below four up until 2001," says Olsen. "After that it starts to go up quite rapidly."

In the year to June 2008 it peaked at 5.7.

"It took a bit of a pause after the GFC but then it's only gone up from there," he says.

2001 this started, although the federal reserve is not the NZRB this was around the time Alan "Bubbles" Greenspan provide the Fed put after the dotcom crash.

Net Migration 18 years up until to 2001 (inclusive) was 44,400 or approx 2,467 increase per year.

Net Migration 18 years after 2001 was 477,900 or approx 26,550 increase per year.

It's simple supply and demand, mass immigration has been the number one increase of house prices.

If you want to come up with a number of "house price to household income", it gets even worse... immigration has the added issue of keeping wages suppressed which skews this statistic even further in the wrong direction.

Aaron
30-03-2021, 08:27 AM
Net Migration 18 years up until to 2001 (inclusive) was 44,400 or approx 2,467 increase per year.

Net Migration 18 years after 2001 was 477,900 or approx 26,550 increase per year.

It's simple supply and demand, mass immigration has been the number one increase of house prices.

If you want to come up with a number of "house price to household income", it gets even worse... immigration has the added issue of keeping wages suppressed which skews this statistic even further in the wrong direction.

Agreed immigration has been a driver of housing demand. Hopefully Labour keep their latest promise and actually restrict it this time. Also agreed the supply side has been lagging but also the gauranteed capital gain from the RBNZ means landlords can buy at ridiculously low rental yields squeezing first home buyers out. They then need to bump up rents as quickly as possible to justify the purchase price (whether that is actually happening or not I don't know but I know they are buying at what would be silly yields if the debt wasn't going to be inflated away while house prices rise due to monetary policy)

fungus pudding
30-03-2021, 08:43 AM
Agreed immigration has been a driver of housing demand. Hopefully Labour keep their latest promise and actually restrict it this time. Also agreed the supply side has been lagging but also the gauranteed capital gain from the RBNZ means landlords can buy at ridiculously low rental yields squeezing first home buyers out. They then need to bump up rents as quickly as possible to justify the purchase price (whether that is actually happening or not I don't know but I know they are buying at what would be silly yields if the debt wasn't going to be inflated away while house prices rise due to monetary policy)

Labour will shortly announce their latest promise - i.e. not to keep any promises.

SBQ
30-03-2021, 09:03 AM
SBQ ,5 % deposits are available .
https://kaingaora.govt.nz/home-ownership/

Furthermore the banks are allowed to lend with less deposit than the RBNZ mandated LVR for a % of their lending. They generally allocate this to first home buyers.....
See the announcement here https://www.rbnz.govt.nz/news/2021/02/financial-stability-strengthened-by-firmer-lvr-restrictions

The biggest problem the banks face with their customers wanting to borrow 95 or 90 % of the purchase price is them servicing the 95 or 90 % lending ....
Doesn't matter if you have a heap of assets- if you can't show you can service the debt (also at much higher test rates) from your income under "The Responsible lending code " they will decline.
https://www.mbie.govt.nz/dmsdocument/12349-responsible-lending-code-revised-december-2020




That's great to know NZ has 5% mortgages for 1st Time home owners but I do read from their link there's quite a huge criteria and, " First Home Loans are issued by selected banks, building societies, and credit unions, and underwritten by us, Kāinga Ora – Homes and Communities." In Canada it's gov't mandated and banks there can not discriminate by not accepting the 5% deposit rule. In recent times, their gov't insurer entity CHMC has taken on more a direct approach by 'backstopping' and 'buying' off these mortgages directly with the retail banks (so it frees up retail bank's balance sheet removing some of the risk). The maximum amount to mortgage under their scheme is $1M and a mortgage period of no more than 25 years.

I can understand the seriousness when Jacinda made her speech last week. NZ can not afford a housing collapse because our economy is too tied and undiversified to handle such an event. It's a lot different to in the US when the GFC hit, their economy was large enough to handle through the recessions (because their wealth of the country, unlike NZ, it not only based on houses at the top of the food chain).

Unregulated banks will prey on anything that moves so the Responsible Lending Code are only guild lines. I say this as Jacinda pointed out last week that the banks in NZ didn't play ball and allowed housing prices to escalate long term. Moral Suasion only goes so far and as i've seen in NZ, it seems the Reserve Bank doesn't keep a good eye on retail banking behaviour.

There's many aspects that the banks look at when lending, however I agree that 'how to service the loan' is the top priority. It is not a surprise banks are far more willing to lend on houses than to lend on a business venture. If not owner occupied home, the banks know the house can be rented out which produces an income ; something that a business plan can not guarantee when you go for a business loan. Nevertheless, the banks in NZ aren't at fault. It's more rather socially systemic that in NZ, most people get rich at retirement through ownership of multiple houses (which has limited productivity). When you mention shares ownership of reputable companies around the world, they are clueless and say it's a scam, despite that's how the majority of the rich I see in N. America earn their wealth.

dibble
31-03-2021, 08:29 AM
My view as well.
Changing the deductibility is plain dumb IMO .

Disagree. There's a cogent argument for their action.

Every NZer knows the real money in Res Prop is capital gains, to think otherwise is disingenuous. I believe some "investors" even run at a loss or just dont bother renting their house out, such is the situation. Ergo, if you are making a "business" and want to claim all the deductions you should pay tax on all the outcomes. Alternatively dont call yourself a business and dont pay tax on gains but also dont claim deductions. In the past ResPropinvestors have had the best of both sides.
You could use the same argument on shares that pay no dividends but, as ever, its never quite that simple.

My beef isn't with the ethos, its the daft piecemeal quagmire we now have. This asset is, that one isnt, this investor is that one isnt, depreciation this, bright line that etc etc. What a mess.

Blame democracy.

fungus pudding
31-03-2021, 08:50 AM
Disagree. There's a cogent argument for their action.



No there isn't. Income tax should be reserved for income from profit. There may be an argument for the bright line test, and I happen to think there is as our tax policy to tax gains based on intention has proven completley unworkable - to the point the IRD seems to have abandoned trying to collect tax from all but the most blatant habitual traders, but there is no such reason to apply income tax to an outgoing. It will throw the rental market way out of balance, ultimately resulting in rising rents. Labour should study their moves in the housing market right through the party's history to learn every move they have ever made to control rents has ended in disaster.

dibble
31-03-2021, 10:15 AM
No there isn't. Income tax should be reserved for income from profit.

Yes, and profit for ResProp is predominantly the capital gain. To believe otherwise requires inserting one's head in the sand. Therefore if you arent taxed on all the profit you shouldnt be entitled to all the deductions. The execution is very debatable though e.g. rates is deductible and interest now isnt, some gains are taxed others arent (bright line) etc.

Your other point is merely speculation. The key determinant that throws rent out is the powers of supply and demand. Landlords cant just raise rent 'cos they are in a bad mood about tax, but they can if a shortage means the market is willing (however reluctantly) to pay more.

Aaron
31-03-2021, 10:24 AM
No there isn't. Income tax should be reserved for income from profit. There may be an argument for the bright line test, and I happen to think there is as our tax policy to tax gains based on intention has proven completley unworkable - to the point the IRD seems to have abandoned trying to collect tax from all but the most blatant habitual traders, but there is no such reason to apply income tax to an outgoing. It will throw the rental market way out of balance, ultimately resulting in rising rents. Labour should study their moves in the housing market right through the party's history to learn every move they have ever made to control rents has ended in disaster.

I have already agreed denying interest deductibility on a specific investment is inconsistent and unfair, but if you are allowed to claim interest on a new build and the bright line test gets cut back to 5years instead of 10yrs for a new build, this is using policy to address the main issue in your view which is a lack of supply.

Is that a good idea or is it just a matter of govt staying out of it and giving Mr market and the invisible hand, time to work it all out to everyones benefit.

fungus pudding
31-03-2021, 10:32 AM
Yes, and profit for ResProp is predominantly the capital gain. To believe otherwise requires inserting one's head in the sand. Therefore if you arent taxed on all the profit you shouldnt be entitled to all the deductions. The execution is very debatable though e.g. rates is deductible and interest now isnt, some gains are taxed others arent (bright line) etc.

Your other point is merely speculation. The key determinant that throws rent out is the powers of supply and demand. Landlords cant just raise rent 'cos they are in a bad mood about tax, but they can if a shortage means the market is willing (however reluctantly) to pay more.

Of course they can't buck the market - but the supply side of rental will obviously be affected with this crazy policy - that's what will increase rents. Your point about capital gain being the major profit from property is irrelevant - unless we also apply it to every assett; jewellery, shares etc and especially other real estate including the family home, batch etc. After all if property prices were stable - why bother owning? I'm sure the main reason people want to 'get on the ladder' to use that dopey cliche is simply the fear of missing out. I know in my own circle of relatives and contacts most of the younger ones buy something less than they aspire to to get themselves started; 'a foot on the ladder' so to speak. So obviously tax should apply to them as well when they sell the starter home if we are to be consistent. They were equally motivated by the potential profit.

SBQ
31-03-2021, 11:05 AM
Of course they can't buck the market - but the supply side of rental will obviously be affected with this crazy policy - that's what will increase rents. Your point about capital gain being the major profit from property is irrelevant - unless we also apply it to every assett; jewellery, shares etc and especially other real estate including the family home, batch etc. After all if property prices were stable - why bother owning? I'm sure the main reason people want to 'get on the ladder' to use that dopey cliche is simply the fear of missing out. I know in my own circle of relatives and contacts most of the younger ones buy something less than they aspire to to get themselves started; 'a foot on the ladder' so to speak. So obviously tax should apply to them as well when they sell the starter home if we are to be consistent. They were equally motivated by the potential profit.

I keep bringing this up in the past. So to put it in layman terms, why is it in other OECD countries (and I use Canada as that's where i'm most famliar), have some form of taxation on the capital gain on houses? Why are they wrong and NZ is right that the game plan dibble has described for every residential investor in NZ is to get that tax free capital gain? Therefore, disallowing the mortgage interest as an expense deduction seems fair to me.

The treatment in new house construction where 5 year brightline test still applies? You guys don't know how good you have it. In Canada, the person that builds new houses thinking of only paying capital gains tax is still under risk of paying more taxes. Like Australia, Canada's CGT is only HALF of the gain is taxable income. But the CRA in Canada can easily go after any person and deem the full capital gain as taxable income - IF you go and claim interest mortgage expense off the building of the new house. Yep - just like any venture when there's intention to profit by capital gain in Canada, there's always the risk that you will lose that status and be deemed all 100% of the gain as taxable income. Anotherwords, CGT in Canada is only mean for non-intentional means of making a profit. Such as buying stocks in a retirement portfolio - when you try to claim expenses on the gains of the share market gains... then those gains would be risked at paying full income tax rates and not at CGT rates.

The limited supply of houses in NZ with high immigration is not the sole problem. Plenty of NEW houses are being built at record levels. In the past i'm seeing far too much $ that has gone into residential properties and into nothing else. Hence, the rich in NZ get rich off the rising house prices.... a horse of a different colour to the rich I see in N. America earning their wealth through share investments in their retirement portfolios.

artemis
31-03-2021, 12:34 PM
We should not ignore the influence of the property management industry on market rents. Owners expect to get the best return and least hassle possible for their investment in exchange for the fairly big bucks they pay for the PMs.

If owners think they are not getting what they pay for they will walk. So the professionals will do their best to engage good tenants at the best rent they can achieve.

Property management fees are around the 10% of rent mark taking into account GST and margins and extras. So there's a big influence on market rents for starters, add in rent increases due to costs and demand and its a vicious or virtuous cycle, depending on POV.

2017 - MBIE reported to Ministers that 53% of rentals were managed by the professionals. Probably more now due to increasing rules, compliance, fines, complexities and risks. They are a very significant and usually overlooked influence on rent levels.

fungus pudding
31-03-2021, 01:21 PM
I keep bringing this up in the past. So to put it in layman terms, why is it in other OECD countries (and I use Canada as that's where i'm most famliar), have some form of taxation on the capital gain on houses?

NZ almost had the right idea with the intention rules - designed to tax speculators, traders, flip-over merchants, but allow genuine investors to eventually sell up, or die, tax free. After a lengthy holding period tax really becomes no more than a tax on inflation (which is never the investors fault) Unfortunately this has proven impossible to enforce. Any half-baked excuse was accepted by the IRD, and as far as I can see they have given up even chasing tax on small or occasional traders. Hence the bright line test seems fair and reasonable; i.e. to tax speculators while genuine investors - those who are acting for rental profit can dispose of their assets and retain the full value. Habitual traders, developers, builders and associated trades etc, were not exempt.
None of this justifies imposing income tax on outgoings as has now been introduced. That is so illogical it's laughable. The real downside will be interference in rental supply. Like it or not, we are short of residential landlords, relying almost entirely on individual 'mum and dad' investors with just the occasional charity or small commercial organistion to meet the demand. This nonsense of taxing more than their annual profit will certainly not help that.

Aaron
31-03-2021, 02:51 PM
Hey FP you never answered my question. Always interested to hear your view.

I have already agreed denying interest deductibility on a specific investment is inconsistent and unfair, but if you are allowed to claim interest on a new build and the bright line test gets cut back to 5years instead of 10yrs for a new build, this is using policy to address the main issue which in your view is a lack of supply. Isn't this a good idea to encourage building new houses?

Bjauck
31-03-2021, 04:03 PM
I keep bringing this up in the past. So to put it in layman terms, why is it in other OECD countries (and I use Canada as that's where i'm most famliar), have some form of taxation on the capital gain on houses? Why are they wrong and NZ is right that the game plan dibble has described for every residential investor in NZ is to get that tax free capital gain? Therefore, disallowing the mortgage interest as an expense deduction seems fair to me. .... Yep NZ's warped investment environment favouring residential housing has been generations in the making. The investment environment was warped long before Covid. The absence of stamp duties and CGT on leveraged real estate investment, coupled with lack of a tax-efficient pension scheme meant those with high enough incomes leveraged themselves to the max to invest in real estate! Investment real estate was the best tax-efficient vehicle for amassing a pension fund. Our share market is consequently very small for our economy.

However, Labour have imposed what amounts to a tax on revenue - so a new tax which they had explicitly ruled out before the recent election. They had ruled out a general capital gains tax. The extension of the bright line (which had been ruled out too) ls now becoming a de facto CGT applied to investment property. In a healthy democracy, They should have presented to the electorate a general CGT and stamp duty regime with relief for pension schemes. Why didn't they?

fungus pudding
31-03-2021, 04:23 PM
Yep NZ's warped investment environment favouring residential housing has been generations in the making. The investment environment was warped long before Covid. The absence of stamp duties and CGT on leveraged real estate investment, coupled with lack of a tax-efficient pension scheme meant those with high enough incomes leveraged themselves to the max to invest in real estate! Investment real estate was the best tax-efficient vehicle for amassing a pension fund. Our share market is consequently very small for our economy.

However, Labour have imposed what amounts to a tax on revenue - so a new tax which they had explicitly ruled out before the recent election. They had ruled out a general capital gains tax. The extension of the bright line (which had been ruled out too) ls now becoming a de facto CGT applied to investment property. In a healthy democracy, They should have presented to the electorate a general CGT and stamp duty regime with relief for pension schemes. Why didn't they?

Are you suggesting the return of free title searches, which used to be funded by the stamp duties? Things are far better now with user pay searches - no more standing in queues for ages to get a dam title search.

Bjauck
31-03-2021, 05:16 PM
Are you suggesting the return of free title searches, which used to be funded by the stamp duties? Things are far better now with user pay searches - no more standing in queues for ages to get a damn title search. In Australia and UK I think stamp duty is set at about 5% of value. Australian title search is an additional charge.

fungus pudding
31-03-2021, 06:12 PM
In Australia and UK I think stamp duty is set at about 5% of value. Australian title search is an additional charge.

What is the stamp duty for then? It's expensive enough for people buying a home without a 'just because they can' tax?

Bjauck
31-03-2021, 06:42 PM
What is the stamp duty for then? It's expensive enough for people buying a home without a 'just because they can' tax?
It is expensive enough to buy food, clothing etc. even without paying GST.

fungus pudding
31-03-2021, 06:54 PM
It is expensive enough to buy food, clothing etc. even without paying GST.

And depleting your spending money by taxing income doesn't help either. But GST and income tax are the systems that fund govt. expenditure. An extra 5% stamp duty on a house purchase simply sounds opportunist. What is it for if they do not fund their weird titles system?

Bjauck
01-04-2021, 06:31 AM
And depleting your spending money by taxing income doesn't help either. But GST and income tax are the systems that fund govt. expenditure. An extra 5% stamp duty on a house purchase simply sounds opportunist. What is it for if they do not fund their weird titles system? It is arbitrary to rely on those types of taxes. It warps the economy and investment decisions. It is logical to extend the tax base to include realised capital gains and those who buy land as well as those who buy goods and services. Maybe stamp duties and GST should be levied at the same rate?

it seems illogical not to tax those activities whilst taxing income from personal effort. How much does it warp decision making?

For those who push for a flat tax rate, would it be fair if all net capital gains and income were taxed at the same rate? In addition would it be fair if all land, goods and services purchases were taxed at the same flat rate?

If I were creating a tax system, I would contemplate having a receipts tax system. In other words, if a taxpayer receives an inheritance, income or capital gains, then they should be treated the same, accumulated and taxed at a flat rate (with a tax-free threshold.) That would mean taxpayer outgoings would not be taxed - so no GST or stamp duties.

Aaron
01-04-2021, 08:54 AM
Hey FP you never answered my question. Always interested to hear your view.

I have already agreed denying interest deductibility on a specific investment is inconsistent and unfair, but if you are allowed to claim interest on a new build and the bright line test gets cut back to 5years instead of 10yrs for a new build, this is using policy to address the main issue which in your view is a lack of supply. Good idea? Bad idea? Discuss....

fungus pudding
01-04-2021, 09:31 AM
Hey FP you never answered my question. Always interested to hear your view.

I have already agreed denying interest deductibility on a specific investment is inconsistent and unfair, but if you are allowed to claim interest on a new build and the bright line test gets cut back to 5years instead of 10yrs for a new build, this is using policy to address the main issue which in your view is a lack of supply. Isn't this a good idea to encourage building new houses?

The supply problem is largely a result of the RMA and planning regulations. Sort that out, and a free market will provide the necessary accomodation.

Aaron
01-04-2021, 10:14 AM
The supply problem is largely a result of the RMA and planning regulations. Sort that out, and a free market will provide the necessary accomodation.

Labour is going to look at rejigging the RMA, I won't pretend to understand the RMA but along with encouraging landlords to actually build new houses Labour seems to be taking some positive steps to address the issue around house price rises don't you agree?

Although personally I think monetary policy is at the heart of the matter just trying to see if I can coax a positive response from you towards any Labour initiatives. I don't think it is possible but thought I would try.

fungus pudding
01-04-2021, 11:14 AM
Labour is going to look at rejigging the RMA, I won't pretend to understand the RMA but along with encouraging landlords to actually build new houses Labour seems to be taking some positive steps to address the issue around house price rises don't you agree?

Duplicated reply.

fungus pudding
01-04-2021, 11:29 AM
Labour is going to look at rejigging the RMA, I won't pretend to understand the RMA but along with encouraging landlords to actually build new houses Labour seems to be taking some positive steps to address the issue around house price rises don't you agree?

Although personally I think monetary policy is at the heart of the matter just trying to see if I can coax a positive response from you towards any Labour initiatives. I don't think it is possible but thought I would try.

No. I do not agree. The bright line test increase to ten years is fair enough, because as I have said, IRD have never been able to sucessfuly apply the intention policy, leaving the impossible situation of having to ask vendors if they sold for the monetary gain, or did they have another reason. You may recall the standard form with the little squares to tick that were sent out to every vendor of a property that had been rented out. But this will have little or no effect on prices. Taxing landlords' outgoings will make no difference to real estate prices either, except for an increase in rents as the rental pool dries up, but of course the offset is some tenants will become owners, even if that is not their preference. I'm not sure that investors will be encouraged to build new rental units. Too marginal at the best of times. I expect many will come to their senses and get into the far better investment - commercial or industrial. Along with the new 39% top tax rate I expect a to see a rise in the listed property trusts so investors can benefit from the 28% PIE tax rate. So overall the world will tick on - but Labour cerainly have not found the answer to rising house prices.
I gather from your last comment you think I am anti labour. I am not. I am anti-stupidity and stupid policies. I have voted for Labour at times, but at present I would not vote for either major party.

Aaron
01-04-2021, 12:09 PM
I gather from your last comment you think I am anti labour. I am not. I am anti-stupidity and stupid policies. I have voted for Labour at times, but at present I would not vote for either major party.

Correct I was just being an ahole because I assumed it would cause you pain to ever admit anything Labour does was a good idea.

Time will tell if they are good ideas or not but it is a step further than just making noises such as asking the NZRB to consider house prices. They will probably have already lost the National swing voters with the latest policies so they might as well get rid of targeted inflation while they are about it. Personally I think that would be politically much easier and over the long term have a greater effect.

SBQ
01-04-2021, 12:38 PM
Labour is going to look at rejigging the RMA, I won't pretend to understand the RMA but along with encouraging landlords to actually build new houses Labour seems to be taking some positive steps to address the issue around house price rises don't you agree?

Although personally I think monetary policy is at the heart of the matter just trying to see if I can coax a positive response from you towards any Labour initiatives. I don't think it is possible but thought I would try.

I sure hope the RMA gets a major makeover and will trend towards how the supply is made overseas. Today I was reading what Vancouver is doing ; converting corner lot petro stations into high density urban living:

https://dailyhive.com/vancouver/3668-west-10th-avenue-vancouver-raphael

and if you have not noticed, the streets are grided and residential houses don't place high fencing around the front of their homes - this makes driving easier as it reduces the risk of accidents from cars backing out, children cycling too quick out of the driveways, etc.

I have the only empty lot where I live in a sub-division built 10 years ago. All plans to build 2 new houses fell through as some of the neighbours would not grant me a resource consent. Everyone asks me, "What are you going to do with that prime empty piece of land?" - I said hopefully one day, the NZ RMA may change and allow more effective / efficient building for me. It was not expected that we ended up buying the neighbouring house (and thus didn't need to build new).

Monetary policy isn't the key issue of the housing crisis as the NZ Reserve Bank follows similar criteria that overseas central banks follow (and where their housing prices have not seen no where near the rise NZ has experienced in the past 40 years). Kind of like which came 1st, the chicken or the egg example. Why are we blaming banks because they lend to wealthy landlords and property investment consortiums? - when the banks also need to service the 1st home buyers? Are you implying that if the banks didn't have the $ ; that these landlords wouldn't have the ability to leverage their investments? IMO, it's the behaviour of these wealthy people buying too many residential houses is the root problem just as Jacinda has outlined.

Like high powered sports cars - do we blame deaths caused because the cars are too powerful and fast or do we blame the drivers?

Aaron
01-04-2021, 01:58 PM
Monetary policy isn't the key issue of the housing crisis as the NZ Reserve Bank follows similar criteria that overseas central banks follow (and where their housing prices have not seen no where near the rise NZ has experienced in the past 40 years). Kind of like which came 1st, the chicken or the egg example. Why are we blaming banks because they lend to wealthy landlords and property investment consortiums? - when the banks also need to service the 1st home buyers? Are you implying that if the banks didn't have the $ ; that these landlords wouldn't have the ability to leverage their investments?

Are you arguing that lower interest rates and the availability of credit do not have a major effect on the price of assets? I would suggest they do and I don't think I am alone in that view.

Doesn't a NZRB gaurantee of a 2% minimum price rise every year not provide the basis for negative gearing. Would losing money on an investment property make sense without the central bank gauranteed tax free capital gain and inflation effectively reducing the debt by 2% or more a year.

What about if interest rates on term deposits were at a level that was above inflation and provided a real return to the investor. Would people be so keen to invest in houses if they could get a real return on capital invested at the bank.

Do banks even need depositors anymore?

SBQ
01-04-2021, 05:41 PM
Are you arguing that lower interest rates and the availability of credit do not have a major effect on the price of assets? I would suggest they do and I don't think I am alone in that view.

Doesn't a NZRB gaurantee of a 2% minimum price rise every year not provide the basis for negative gearing. Would losing money on an investment property make sense without the central bank gauranteed tax free capital gain and inflation effectively reducing the debt by 2% or more a year.

What about if interest rates on term deposits were at a level that was above inflation and provided a real return to the investor. Would people be so keen to invest in houses if they could get a real return on capital invested at the bank.

Do banks even need depositors anymore?

No. Without a doubt varying interest rates affect all assets, but that's not my argument.

The key problem is the RBNZ does not factor house prices in their CPI figures for inflation (and this a common issue abroad). So the 2% target is of moot interest because it does not capture the rise in house prices (as it's treated as a capital asset and not a consumption). Will say i'm not a fan of the CPI metric and it's the same kind of BS that academics have cooked up such as EBITDA when comparing profitability of businesses. For decades, both Warren Buffet & Charlie Munger have said universities have forgot how to teach business studies and Mr Munger has recently said, they've cooked up all sorts of ideas (and the damn gov'ts are following it because they're "academic experts") that investors are clueless to what investing is all about. A good example recently he ranted is the issue of 'diversification', paraphrasing that why do managed funds have to own 50 or 100+ different companies in different sectors just so they can say they're diversified when, "I have a tough enough time trying to evaluate a dozen GOOD companies"?

The CPI inflation figure follows along the same lines - they're only a basket of 'consumption' goods and services. It does not factor the LOSS income by the individual through higher taxation - through massive increases in residential properties. Of course their argument is when $ is slim because of high unemployment, they assume the demand will drop and prices will go down (thus inflation goes down). When Jacinda last year go the news by so called 'expert economists' in NZ, their forecast was housing prices would drop. But when you get a +20% rise, then how are these economists are still credible today? One thing I will appraise Jacinda is she asks why the NZRB doesn't factor house prices into the CPI figure? and so they've been lame about it ; Jacinda is directly making action to do something about it. Pull the levers to discourage more rapid high price speculation.

Nevertheless, if you pull up CPI figures in NZ for the past 40 years and compared them to Canada or the US, I would be quite certain NZ's inflation is considerably more despite the same 2% target has been met. Just look at the pricing of food, new cars, education, you name it. If inflation was not that significant here then we wouldn't be seeing x 3 times the price of building material in NZ when compared to the retail shelf price at Home Depot in America.

In Canada, all the chartered banks lending ability are governed by the ratio of cash deposits. They just can't willy nilly borrow infinite amounts from the central bank. In NZ, I don't believe that's how it would work or how it could be enforced as the majority of banks here are foreign owned and operate on overseas funding too. A foreign bank in Canada are still bound by the gov't regulations and without it, Canada's housing market would of collapsed during the GFC. So to answer your question, "no' banks in NZ don't give a rats ass about cash term deposits.

As for term deposits, the ONLY advantage fixed interest bearing deposits have is to take advantage of "opportunity". Hence the term cash is king when you can seize the moment ie last year's share market crash. But to bank on it or assume it's a wise way of investing (ie Kiwi Saver funds that use fixed interest bearing investments as a % proxy of the risk level of the funds) is nothing but BS hot air. A 'Conservative' fund = higher level of fixed deposits earning measly 1% ? while the more 'Aggressive' funds have a far lower % of fixed deposits. This is how the NZ FMA educates people about finance? The same stupid thing as "you got to diversify your risk away".... which also diversifies the gains away.

Aaron
06-04-2021, 07:26 AM
Someones view on what is causing high house prices and where they might be headed.

https://www.theguardian.com/money/2021/apr/05/bubble-or-boom-why-ultra-low-interest-rates-mean-house-prices-may-never-bust

Lower for longer(forever?) I might be kicking myself for not borrowing more in a few years. Money nearly free and all the talk is about inflation in things other than asset prices. Monetary policy rewarding what used to be considered reckless behaviour is the name of the game. I haven't been playing.

House hunting is going slow.

Bjauck
06-04-2021, 01:26 PM
Someones view on what is causing high house prices and where they might be headed.

https://www.theguardian.com/money/2021/apr/05/bubble-or-boom-why-ultra-low-interest-rates-mean-house-prices-may-never-bust

Lower for longer(forever?) I might be kicking myself for not borrowing more in a few years. Money nearly free and all the talk is about inflation in things other than asset prices. Monetary policy rewarding what used to be considered reckless behaviour is the name of the game. I haven't been playing.

House hunting is going slow.
There is more room for house prices in other countries to keep on inflating. On the other hand, NZ has only just introduced tax reforms and tenancy reforms which other countries already had. In NZ now Tenants are getting more rights and landlords will not be able to - to the same extent - reduce taxable incoming to boost non-taxed leverage capital gains.

In NZ there still remains plenty of scope to increase the tax burden on both investor and owner-occupier house owners.

Louisphan
07-04-2021, 12:36 PM
Ten Year Bright-light test is fair enough in my opinion. However the rest of the new rules will only damage the Property Investors but wont help the first home buyer.

Firstly, If they think interest deduction is not fair for the home owner, just let them can claim interest expenses in their income. It is more reasonable than make the property industry cant claim the interest while the other industry still can. In the end of the day, people do not invest in housing market because the returns is low, the property investor take the risk to get low annual returns so they get higher capital gain is reasonable.

Secondly, the price cap is so stupid in my opinion, why the first home buyer only can buy the house under the cap which is so low at 700k and 650k in Wellington? Why they cant get the 10% deposit to buy the more expensive house (with more potential) rather than just apartment or townhouse? The rules look pretty and nice but it actually lock down the potential for the low income people became more heathy in the future.

There are few plans and rules they can do and adjust to solve the housing problems rather than current new rules.
+ Most important is building more houses (they failed it but need to focus on it);
+ Secondly, if its too hard they can build some more motorway to north and south where people feel easily to commute from long distance to main central of Auckland, Wellington or Hamilton;
+ Thirdly, price cap must be increased to at least 1 million or even removed for first home buyer and the deposit requirement also can be reduced to 5% or removed (but once in life only, the next one's price cap and deposit requirement will be back to normal).

I love the way Labour treat the low income people, however, they rule the country so bad in economics. I hope they can hear me and add my suggestion to their rules.


PS: Sorry for my bad English, but as an investor in both shares and property, I cannot handle my feeling for the new rules from Labour. For some people like me who has or image to have one or two property for renting out. The new rules will make us never become supper rich that every investors' dream. The supper rich people will still manipulate the property market.

SBQ
07-04-2021, 07:13 PM
Ten Year Bright-light test is fair enough in my opinion. However the rest of the new rules will only damage the Property Investors but wont help the first home buyer.

Firstly, If they think interest deduction is not fair for the home owner, just let them can claim interest expenses in their income. It is more reasonable than make the property industry cant claim the interest while the other industry still can. In the end of the day, people do not invest in housing market because the returns is low, the property investor take the risk to get low annual returns so they get higher capital gain is reasonable.

Secondly, the price cap is so stupid in my opinion, why the first home buyer only can buy the house under the cap which is so low at 700k and 650k in Wellington? Why they cant get the 10% deposit to buy the more expensive house (with more potential) rather than just apartment or townhouse? The rules look pretty and nice but it actually lock down the potential for the low income people became more heathy in the future.

There are few plans and rules they can do and adjust to solve the housing problems rather than current new rules.
+ Most important is building more houses (they failed it but need to focus on it);
+ Secondly, if its too hard they can build some more motorway to north and south where people feel easily to commute from long distance to main central of Auckland, Wellington or Hamilton;
+ Thirdly, price cap must be increased to at least 1 million or even removed for first home buyer and the deposit requirement also can be reduced to 5% or removed (but once in life only, the next one's price cap and deposit requirement will be back to normal).


What you describe is a tax system like the US where home owners are allowed to deduct mortgage interest expense off their income (keep in mind CGT applies in the US on the principal residence home). But NZ's tax system is nothing remotely the same or anywhere else in the OECD. For eg. in Canada, it's mandatory every individual resident files a tax return where as in NZ, people live without a worry of IRD going after them for not filing. I do appraise NZ's approach to having a simple tax system with few tax deductions (or credits) and NO complex tax software required!!!

I do find the "Brightline test" rather unique as it still does not address taxing of the capital gains. Everyone knows that in a 10 year period, the amount of CG is considerable in a house and if the risk is to "sell within 10 years risking tax on the CG... ONLY a fool will do so". It's like saying do you want to take a 33% hit paying tax on the 7th year you sell the investment property or just wait 3 more years and walking away without any tax? I'm biased yes because coming from Canada, no time period applies on the taxing of capital gains. The US is a bit more generous having 2 categories (short term and long term CGT). My personal view is more extreme ; bring in CGT in NZ and re-balance the whole investment scheme by removing the FIF on foreign share investments and have a straight out CGT on both asset classes (nationally and overseas). It's not a complex system as that's how they do it overseas - I still do believe NZ investors in holding residential properties for the 10+ year time frame are still getting away with a sweet ride.

The 1st home owner buyer cap has been raised but asy you say it's not enough. Well 1st time home owners should NOT be in the position of buying more expensive properties. They don't get the right to choose to live in ritzy expensive neighbourhoods, nor the luxury to have a detached dwelling with a large back yard, etc. If you look at how the rest of the world lives, (in multistory apartment complexes) there should be no complaint.

What you describe, is again something Canada has done for the past many decades. Unfortunately the problem in NZ is we have this very very restrictive RMA that dictates how high and how close etc. we can build on a piece of property. NZ building has adopted a 'passive' approach design for building houses (that is sun orientation is used to heat the homes) - very different to overseas where house are built CLOSE together and depend on active ventilation / central heating. It's an argument that do you value the heat from the sun or heat from electricity / fossil fuel - for the sake of saving mother nature? we let people live more sparsely instead of high density? As for the price cap for the 1st time home buyer - well i've mentioned before what Canada has done. They've forced the banks to have mandatory 5% deposit regardless of the principle amount. Cdn gov't does offer a 5% (10% on new builds) 'JOINT' deposit to the home owner which is capped at $500K ; but this does not stop the person from choosing a more expensive place while getting the joint deposit. I don't think NZ is bold enough to take these steps and would rather just string along the problem by raising the caps every year or so.

Keep in mind, the recent changes made were to single out property speculators or the mom & dad / 1% that manages to own 5 or more residential properties. It's not all about creating a level playing field with these people because they had it so good for decades. While the middle class get shafted with Kiwi Saver that proportionately pays a far high tax on their portfolio investment. Come on? PIE funds at 28% ??? it's robbery compared to the capital gains we've seen in real estate prices in NZ. Compare both asset classes on a 10+ year time frame (because we all know those in the rental property game never sell within 10 years).

Aaron
08-04-2021, 07:18 AM
Mike Hosking nails it points out the only reason house prices are high is cheap money.

He says a lot of other stuff which may or may not be right. He points out real estate has never been in a bubble and never crashed. The USA and Ireland might disagree but that was over a decade ago. behind the pay wall sorry.

https://www.nzherald.co.nz/nz/mike-hosking-on-rental-property-law-changes-governments-new-rules-dont-make-a-jot-of-difference/O56A5MP6O4AZGUVNBECDDPWBVE/

So if you are worried about inflation in house and asset prices you need to raise interest rates pure and simple.

A 30 year trend of lower and lower interest rates would need to change so I guess the only debate is will it happen.

I would suggest not.

alokdhir
08-04-2021, 07:56 AM
Mike Hosking nails it points out the only reason house prices are high is cheap money.

He says a lot of other stuff which may or may not be right. He points out real estate has never been in a bubble and never crashed. The USA and Ireland might disagree but that was over a decade ago. behind the pay wall sorry.

https://www.nzherald.co.nz/nz/mike-hosking-on-rental-property-law-changes-governments-new-rules-dont-make-a-jot-of-difference/O56A5MP6O4AZGUVNBECDDPWBVE/

So if you are worried about inflation in house and asset prices you need to raise interest rates pure and simple.

A 30 year trend of lower and lower interest rates would need to change so I guess the only debate is will it happen.

I would suggest not.

When public chat hosts starts thinking they know the best way forward then God bless our world ...lol

Interest rates are not and will not be decided on the basis of house prices alone ...These rates actually effect real economy activity in more ways then not ...rates determine how small and large businesses are profitable or not ...they determine levels of NZD which helps or hinders exporters working for the economy and many more important sectors .

The only reason Govt has chosen to try tax side roadblocks for property prices as all other sectors are struggling in most difficult covid induced environment ...they had no choice but to target only property prices as no other sector can take anymore burden of higher rates

NZ economy will collapse if Mike 's suggestions are put to place and RBNZ starts raising rates for controlling property prices ...

fungus pudding
08-04-2021, 08:06 AM
When public chat hosts starts thinking they know the best way forward then God bless our world ...lol



The same could be said for many economists.
What is undoubtedly true is the old Fungus oft-repeated adadge ........................'Interest rates and assett prices are the opposite ends of a see-saw.' That is why the best time to buy real estate is when interest rates are sky-high, and the worst time is when they are very low.

SBQ
08-04-2021, 09:13 AM
The same could be said for many economists.
What is undoubtedly true is the old Fungus oft-repeated adadge ........................'Interest rates and assett prices are the opposite ends of a see-saw.' That is why the best time to buy real estate is when interest rates are sky-high, and the worst time is when they are very low.

In that 40min speech by Jacinda when she made the announcement some weeks ago, her gov't WAS CONSULTED by these very same ECONOMISTS that the NZ housing market was about to see a slight correct or drop. I understand exactly what she was saying that during that time, their gov't was not in the position to place any new further tax issues.

However when these SAME economists got it wrong and the NZ gov't sees a +20 or 30% rise in house prices within a year? No gov't and I mean NO gov't should be complacent about the situation and action must be done. I'm sick of people blaming the Labour Party and if the National Party had something better to say, then front up with some real solutions but nope, they're too busy pointing fingers.

You know I use to think NZ was a very progressive country but all i've seen is more and more wealth inequality. I'm with alokdhir that these talk show hosts know nothing better because they only see in NZ's eyes to rave ratings. They never take the example abroad because they don't know everything and more importantly, their listeners don't care how people do things abroad.

There ARE solutions to the problem as I rant below:

The Canadian gov't for many decades have kept an eye on the housing market. They've increased supply at a massive scale at where it matters like in Vancouver, any visitor there will see the massive #s of high rise apartments, even suburbs like Burnaby are building these tall 40 story buildings like crazy. A close friend visited Auckland few years ago and he asked me.. "Where are these high rise buildings? as we drive down Ponsonby and around Mission Bay. Then the discussion on "Lane Houses" came up and I showed him how NZ adds more supply by sub-dividing a serviced lot and you 'build a driveway down 1 side of the boundary' - he had a laugh because regulations doesn't allow that in Vancouver ; you have the back alley access that would serve as access to build a Lane House with no extra cost required on such side driveway.

Furthermore the Cnd gov't created a 2 tiered system. The 1% rich are slapped with taxation in all ways from 20% surcharge on rates (if the property is held in a trust / company / or not a principle resident), Vacancy Tax aka Ghost houses for leaving the home empty or a vacation home, more importantly CGT and if proven frequent profiting, then the CGT could be shifted to being taxed at full income rates.

Whereas the 1st home buyer gets the benefit of tax free CG, joint venture deposits with the gov't, and banks being forced to allow a 5% deposit regardless of state of the economy, tax free investment schemes like TFSA, RRSP conversion to deposit on a mortgage; by the way the difference being with the 'KS -> 1st home deposit' is as I said before, the KS funds pay tax every year in say like a PIE fund 28% so the individual has lost out on tax free compounding. The only benefit the person has by via the KS deposit to mortgage is it allowed withdrawal early yinstead of waiting until retirement age; this is a big difference to Canada's RRSP where the CGT on the untaxed compound gain is paid at retirement, but is complete waived if going to a deposit on a 1st home.

But the proof isn't by reading the fine print. I see my middle class friends back in Canada and compare them to my cousins (middle class here in NZ). There is no comparison. The former is able to achieve more, address rising tuition at uni fees, house affordability, larger and more affordable SUVs, but most of all, at the time of retirement, their nest eggs will grow far more than what KS would provide here.

Aaron
08-04-2021, 10:02 AM
When public chat hosts starts thinking they know the best way forward then God bless our world ...lol

Interest rates are not and will not be decided on the basis of house prices alone ...These rates actually effect real economy activity in more ways then not ...rates determine how small and large businesses are profitable or not ...they determine levels of NZD which helps or hinders exporters working for the economy and many more important sectors .

The only reason Govt has chosen to try tax side roadblocks for property prices as all other sectors are struggling in most difficult covid induced environment ...they had no choice but to target only property prices as no other sector can take anymore burden of higher rates

NZ economy will collapse if Mike 's suggestions are put to place and RBNZ starts raising rates for controlling property prices ...

I don't think he was suggesting raising interest rates, especially as he was buying more property.

He appreciates why house prices are high and sounds like he is making the most of cheap money. Basically he is pointing out the FACT that house prices are high due to low interest rates and easy access to credit.

As FP says possibly the worst time to buy a house except as time goes on and debt increases there will be no foreseeable time when interest rates will rise again. In fact inflation and low interest rates might prove now to be a good time to buy.

No sane person with capital to invest in a company or in a first home buyer would accept the current returns being offered. Creditism is the name of the game. How it plays out is anyones guess, talk show host or economist anyone who suggests with 100% confidence what the future will bring is full of s*it.

Aaron
08-04-2021, 10:07 AM
The same could be said for many economists.
What is undoubtedly true is the old Fungus oft-repeated adadge ........................'Interest rates and assett prices are the opposite ends of a see-saw.' That is why the best time to buy real estate is when interest rates are sky-high, and the worst time is when they are very low.

So FP when the baby boomers tell younger generations how hard they had it with high interest rates they are talking s*it as it would have been the best time to buy property???

fungus pudding
08-04-2021, 01:38 PM
In that 40min speech by Jacinda when she made the announcement some weeks ago, her gov't WAS CONSULTED by these very same ECONOMISTS that the NZ housing market was about to see a slight correct or drop. I understand exactly what she was saying that during that time, their gov't was not in the position to place any new further tax issues.

I didn't name the economists. What makes you think they're the same ones? They do come in several types/styles/forms with differing opinions or philosophies.

fungus pudding
08-04-2021, 01:57 PM
So FP when the baby boomers tell younger generations how hard they had it with high interest rates they are talking s*it as it would have been the best time to buy property???

Yes of course. Hard at the time but look how well they've done. (The first rental property I bought, circa 1970, cost me $3100) High interest rates will mean a lower capital price or debt, and when the pendulum swings - the owner now has low outgoings, with a relatively small capital debt on an assett that now has a higher nominal value. Conversley a purchaser who enters the market when interest rates are low will be paying a higher price, and when the pendulum inevitably swings again the borrower will be paying a higher interest on an assett that has fallen - or at best - stopped rising.

SBQ
08-04-2021, 03:56 PM
No sane person with capital to invest in a company or in a first home buyer would accept the current returns being offered. Creditism is the name of the game. How it plays out is anyones guess, talk show host or economist anyone who suggests with 100% confidence what the future will bring is full of s*it.

Why should residential homes be viewed as an investment for return? The 1st home owner should not look at it that way. But it still doesn't fix the problem. 10 year time frame to wait where CG are tax free? Investors in NZ are not looking at annual returns - it's the cumulative capital gains that matters.

By the way the CPI factors rental costs in their inflation figures. If rent prices go sky high (which I highly doubt), this should be reflected as inflation. But long gone are the days double digit central bank inflation. There is no foreseeable reason why rates will go that high, not when places like in the EU you have negative rates.

Cheap $ also depends on the amount borrowed. Just because the interest rates are low does not mean 'cheap money'. It's the chicken or the egg example? Don't blame the central banks for adjusting rates lower... blame the behaviour of the greedy 1% & landlords that can leverage to buying multiple residential properties. Canada has done this very at curbing that kind of behaviour out of the housing market.


@fungus_pudding: I didn't name the economists. What makes you think they're the same ones? They do come in several types/styles/forms with differing opinions or philosophies.

None of them are any good. As Warren Buffet famously said if these 'economists' knew anything, then they themselves would be rich.. and I mean REAL rich. Yet they're still stuck teaching at uni.

I also don't buy the low or high interest rate argument when to buy a house. They should not be viewed as an investment. But 40+ years of NZ's neglect on the housing issue has let the open free market turn houses here into a profit making commodity.

stoploss
08-04-2021, 05:11 PM
Why should residential homes be viewed as an investment for return? The 1st home owner should not look at it that way. But it still doesn't fix the problem. 10 year time frame to wait where CG are tax free? Investors in NZ are not looking at annual returns - it's the cumulative capital gains that matters.

By the way the CPI factors rental costs in their inflation figures. If rent prices go sky high (which I highly doubt), this should be reflected as inflation. But long gone are the days double digit central bank inflation. There is no foreseeable reason why rates will go that high, not when places like in the EU you have negative rates.

Cheap $ also depends on the amount borrowed. Just because the interest rates are low does not mean 'cheap money'. It's the chicken or the egg example? Don't blame the central banks for adjusting rates lower... blame the behaviour of the greedy 1% & landlords that can leverage to buying multiple residential properties. Canada has done this very at curbing that kind of behaviour out of the housing market.



None of them are any good. As Warren Buffet famously said if these 'economists' knew anything, then they themselves would be rich.. and I mean REAL rich. Yet they're still stuck teaching at uni.

I also don't buy the low or high interest rate argument when to buy a house. They should not be viewed as an investment. But 40+ years of NZ's neglect on the housing issue has let the open free market turn houses here into a profit making commodity.
Hi SBQ, rental prices are in the CPI however the weighting is imo not right . A lot of families spend 50 % of their take home weekly pay on the rent. The weighting should be higher ....

SBQ
08-04-2021, 05:35 PM
Hi SBQ, rental prices are in the CPI however the weighting is imo not right . A lot of families spend 50 % of their take home weekly pay on the rent. The weighting should be higher ....

I fully agree!!! but somehow the people in 'that camp' who own the houses (multiple houses to make a profit), express every 'other' excuse on why houses costs so much in NZ. You know, blame the banks, blame the central banks with low interest rates, blame the supply issue, blame every other reason except.... They themselves are part of the cause for making prices go so high in the first place. Remember since 1991 (if I recall correctly) NZ home ownership has been on the decline. Why? Because that decline has been taken over by the profit element of the wealthy buying more and more houses. Listen to the first 3 minutes of Ms Ardern's 40 min speech. Some real shocking stats on how many houses were sold to those that already owned 4 or more houses.

Can we really blame this kind of behaviour? You know, their children and next generation after will never have to worry about buying a house so the playing field is like, a "1st come 1st serve or better get it before there's no way you'll afford to own one type of deal".

The CPI has been unrealistic since the start. You can't say CPI of 2% inflation is total inflation each year when houses have doubled in 5 years? The gov'ts don't care and the economists don't care. What I see is the common person getting screwed in every way and what is left of society when the next generation can't afford to buy their 1st home? It's the same kind of thing I see with NZ education; you have the rich or the families that scrape just enough $ to send their children to private school because they think public education is crap. I mean I can understand the difference if say maybe 1% would end up at private schooling but not when there's like 30% of all schools in the major cities in NZ are private schooling. Something is not right here with this segregation shift in society.

Waltzing
10-04-2021, 06:42 PM
few monthss of this should sjow the way forward.

https://www.interest.co.nz/property/109883/number-properties-being-auctioned-increased-strongly-over-march-number-properties

Bjauck
06-05-2021, 06:58 AM
The Reserve Bank has clearly thrown the responsibility for tackling high rents and First Home Buyers being priced out of NZ housing on to the Government.

“[T]he house price level may be sustainable in a market sense, even though rents may be high and deposits unaffordable for prospective first-home buyers.
“In this case, there are social costs that go beyond the implications of house prices for the Bank’s financial stability mandate and these call for a broader public policy response,” the report said"
https://www.stuff.co.nz/national/politics/300300673/reserve-bank-ponders-what-constitutes-an-unaffordable-house

SBQ
06-05-2021, 08:55 AM
The Reserve Bank has clearly thrown the responsibility for tackling high rents and First Home Buyers being priced out of NZ housing on to the Government.

“[T]he house price level may be sustainable in a market sense, even though rents may be high and deposits unaffordable for prospective first-home buyers.
“In this case, there are social costs that go beyond the implications of house prices for the Bank’s financial stability mandate and these call for a broader public policy response,” the report said"
https://www.stuff.co.nz/national/politics/300300673/reserve-bank-ponders-what-constitutes-an-unaffordable-house

There's a lot of waffle in that report and it fails the key reasons why property investors in NZ take on such a high leverage positions (likewise with 1st home owners). Personally I don't believe the central or reserve bank should be held accountable for the housing problem as their primary goal is monetary policy. This whole consultation and assessment process will go down no different to when Jacinda issued that Tax Working Group inquiry (WASTE OF TIME). You can not differentiate lending between those that want to buy their 1st home vs those that are buying for rental investments because they are not mutually exclusive situations (as they are buying the SAME asset).

The key problem for investment behaviours is not that interest rates are low but rather in NZ, the #1 the best game in town is still owning houses. Why has the gov't and the reserve bank not pointed out this key issue? Because it seems so elementary that if you want to cool things down, you tackle the INCENTIVES of why people are getting rich off houses. The framework is entirely wrong. Now if it was the case of owning shares in a company; no one cares but the investors themselves if the share price rockets up or crashes as not everyone own shares as investments.

Take away the tax advantage by owning houses. It's that simple. Canada has done well in this aspect and for the past decade (and particularly in the past few years), home ownership has increased. Yes there are hots spots like Vancouver and Toronto but they do not add up to the same proportions we see in NZ where if you take the largest density populations (Alk/Wgt/Chc and Tauranga etc) that 'may' account for like say 80 or 90% of NZ's population that is under the unaffordable housing situation.

Again, NZ is not a unique case as there are plenty of OECD small nations that manage home ownership a lot better and deter investment away (leaving their population to invest in more productive assets).

It's all down to bad gov't policy.

fungus pudding
06-05-2021, 08:59 AM
The Reserve Bank has clearly thrown the responsibility for tackling high rents and First Home Buyers being priced out of NZ housing on to the Government.

“[T]he house price level may be sustainable in a market sense, even though rents may be high and deposits unaffordable for prospective first-home buyers.
“In this case, there are social costs that go beyond the implications of house prices for the Bank’s financial stability mandate and these call for a broader public policy response,” the report said"
https://www.stuff.co.nz/national/politics/300300673/reserve-bank-ponders-what-constitutes-an-unaffordable-house

The market will sort out rent levels as long as the govt. keep their noses out of it. Housing would too, once again if the govt kept out of it. Town planning and zoning restricts new supply. Sort that out - and let the market solve any problems.

Bjauck
06-05-2021, 12:59 PM
The market will sort out rent levels as long as the govt. keep their noses out of it. Housing would too, once again if the govt kept out of it. Town planning and zoning restricts new supply. Sort that out - and let the market solve any problems.

The government is entwined with housing through tax policies, benefits and regulations. They cannot be divorced. “The market” operates within the parameters set by government.

As SBQ says, it is all down to bad government policy. However it need not be bad...

Panda-NZ-
24-05-2021, 04:17 AM
House prices everywhere seem to be increasing:

In america not known for high house prices with all that spare land and rather minimalist regulation.

Even in the state of Idaho (where?)

https://www.youtube.com/watch?v=Hdpd5U811Ho

SBQ
24-05-2021, 08:36 AM
House prices everywhere seem to be increasing:

In america not known for high house prices with all that spare land and minimalist regulation.

Even in the state of Idaho (where?)

https://www.youtube.com/watch?v=Hdpd5U811Ho

A 11.6% nationally in the US, rise in house prices? I can handle that. In NZ it's an entirely different level. Boise would be a hot spot but it could also mean house prices there have been low far too long or their economy is doing far better than other states etc. Certainly not systemic nation wide unaffordable housing that we have in NZ.

Canada is more along the lines of the US in terms of past house price rise since start of Covid. I was reading today their central bank is giving more guidance that buyers be cautious of low interest rates pushing people into longer term mortgages and end up paying far too much. Unlike NZ, N. America is VAAAAAAST and choices are far and wide to where you want to live & work - especially when there's 'remote working' available for the masses. The biggest losers are the states that hit residence the most in taxation like California and NY. Remote working out of your home allows them to leave those states and move to what we see, smaller less populated states, small townships for which again, always have low low prices.

peetter
30-05-2021, 11:16 AM
There's a lot of waffle in that report and it fails the key reasons why property investors in NZ take on such a high leverage positions (likewise with 1st home owners). Personally I don't believe the central or reserve bank should be held accountable for the housing problem as their primary goal is monetary policy. This whole consultation and assessment process will go down no different to when Jacinda issued that Tax Working Group inquiry (WASTE OF TIME). You can not differentiate lending between those that want to buy their 1st home vs those that are buying for rental investments because they are not mutually exclusive situations (as they are buying the SAME asset).

The key problem for investment behaviours is not that interest rates are low but rather in NZ, the #1 the best game in town is still owning houses. Why has the gov't and the reserve bank not pointed out this key issue? Because it seems so elementary that if you want to cool things down, you tackle the INCENTIVES of why people are getting rich off houses. The framework is entirely wrong. Now if it was the case of owning shares in a company; no one cares but the investors themselves if the share price rockets up or crashes as not everyone own shares as investments.

Take away the tax advantage by owning houses. It's that simple. Canada has done well in this aspect and for the past decade (and particularly in the past few years), home ownership has increased. Yes there are hots spots like Vancouver and Toronto but they do not add up to the same proportions we see in NZ where if you take the largest density populations (Alk/Wgt/Chc and Tauranga etc) that 'may' account for like say 80 or 90% of NZ's population that is under the unaffordable housing situation.

Again, NZ is not a unique case as there are plenty of OECD small nations that manage home ownership a lot better and deter investment away (leaving their population to invest in more productive assets).

It's all down to bad gov't policy.


Property investment is the best way to build wealth in most of the world for average low-middle income person. You can spin it any way you want to, but easy to get leverage is the way to og. Not everyone can start a business and shares will not give you the same return as 80% leveraged property. You might think property investors are evil, but the overwhelming majority are just families trying to get out of the wage slaving and paying half of their incomes to government who sqanders it on admin and stupidities.

Taking this option away, taxing expenses, making it hard to invest in property will only result in taking away one of the ways to get ahead. Shame on people for trying to take care of themselves and getting out of the rat race. Let's force them to fail and daddy government can support them while they spend 60years slaving in a job they hate and when they retire, they'll live on beans and rice.

SBQ
30-05-2021, 06:06 PM
Property investment is the best way to build wealth in most of the world for average low-middle income person. You can spin it any way you want to, but easy to get leverage is the way to og. Not everyone can start a business and shares will not give you the same return as 80% leveraged property. You might think property investors are evil, but the overwhelming majority are just families trying to get out of the wage slaving and paying half of their incomes to government who sqanders it on admin and stupidities.

Taking this option away, taxing expenses, making it hard to invest in property will only result in taking away one of the ways to get ahead. Shame on people for trying to take care of themselves and getting out of the rat race. Let's force them to fail and daddy government can support them while they spend 60years slaving in a job they hate and when they retire, they'll live on beans and rice.

I made that statement many times in the past posts here. Yes houses are still best game in town in NZ but no one in that camp is willing to say it's a good thing for NZ society. Why would they? They got the houses, they got the nice cars, they send their kids to private schools, they use the private health care system instead of public. It's a real shame no one really talks much about it in gov't and at least try to see how other countries address this issue. NZ is a small country and is limited to investment choices? That's another lie - so are many OECD countries similar to NZ population and they don't impose investment restrictions (Sweden, Singapore, etc).

Don't take my comments as being so rash, have a read here about NZ's vast inequality here:

https://berl.co.nz/our-pro-bono/inequality-and-new-zealand

You know the higher house prices go in NZ, the more inequality we have in NZ. A system of 'the haves' that own the houses vs the 'have nots' that end up renting forever. So what does the mom & pop have to do with their spare cash? Well I lay the blame of many decades of NZ's obsession of owning houses and after 40 years the results are clear ; NZ's productivity per capita pales in comparison to most OECD nations. But no one wants to talk about that in NZ gov't - they want to string along the top 5% of the wealthy just so they get their votes. There are many ways you can address this problem and give the working class the upper hand over the top 5%; but i'm not seeing that here in NZ. I wish I could be more positive about this but coming from a background of finance - the way I see Kiwi Saver structured and the way NZ's tax system works ; the only thing that is most likely to occur is more higher house prices in the future.

peetter
30-05-2021, 06:31 PM
I made that statement many times in the past posts here. Yes houses are still best game in town in NZ but no one in that camp is willing to say it's a good thing for NZ society. Why would they? They got the houses, they got the nice cars, they send their kids to private schools, they use the private health care system instead of public. It's a real shame no one really talks much about it in gov't and at least try to see how other countries address this issue. NZ is a small country and is limited to investment choices? That's another lie - so are many OECD countries similar to NZ population and they don't impose investment restrictions (Sweden, Singapore, etc).

Don't take my comments as being so rash, have a read here about NZ's vast inequality here:

https://berl.co.nz/our-pro-bono/inequality-and-new-zealand

You know the higher house prices go in NZ, the more inequality we have in NZ. A system of 'the haves' that own the houses vs the 'have nots' that end up renting forever. So what does the mom & pop have to do with their spare cash? Well I lay the blame of many decades of NZ's obsession of owning houses and after 40 years the results are clear ; NZ's productivity per capita pales in comparison to most OECD nations. But no one wants to talk about that in NZ gov't - they want to string along the top 5% of the wealthy just so they get their votes. There are many ways you can address this problem and give the working class the upper hand over the top 5%; but i'm not seeing that here in NZ. I wish I could be more positive about this but coming from a background of finance - the way I see Kiwi Saver structured and the way NZ's tax system works ; the only thing that is most likely to occur is more higher house prices in the future.

The residential property investing is not just NZ thing, it's normal around the globe and most countries don't blame their government fails on property investors.


And the only inequality in NZ is inequality of effort and entitlement. There are tens of thousands of immigrants from second and third world coming here creating wealth for their families starting from nothing. Then there are locals who can't be bothered to lift a finger. Just go and ask average farmer. I talked to some I worked for and they all say the same. Honest day of work is not good enough for locals.

And on top you have a government working on creating as many of people dependend on them as possible to boost their voter base.

mfd
30-05-2021, 08:07 PM
The residential property investing is not just NZ thing, it's normal around the globe and most countries don't blame their government fails on property investors.


And the only inequality in NZ is inequality of effort and entitlement. There are tens of thousands of immigrants from second and third world coming here creating wealth for their families starting from nothing. Then there are locals who can't be bothered to lift a finger. Just go and ask average farmer. I talked to some I worked for and they all say the same. Honest day of work is not good enough for locals.

And on top you have a government working on creating as many of people dependend on them as possible to boost their voter base.

There is massive inequality of opportunity - we don't even have an inheritance tax. How can a society be equal when people can get a free ride from their parents work, on top of all the other advantages to coming from a rich family?

peetter
30-05-2021, 09:56 PM
There is massive inequality of opportunity - we don't even have an inheritance tax. How can a society be equal when people can get a free ride from their parents work, on top of all the other advantages to coming from a rich family?

I fail to see how somebody's parents working smart and hard and passing something to children is anything wrong? There's plenty of opportunities to do this nowadays. My parents had nothing, gave me nothing and I am on my way to retire by 45. I do it by sacrificing and working harder than others. Anyone can do it, literally anyone. I came here, had nothing, lived in car and worked at kiwi orchards. 5 years later I own my own property and invest in stocks.

There is full equality of opportunity. If you're poor in NZ, it's by choice. That's a fact. Coming from post soviet country, I can tell you anyone living on minimum wage in NZ is rich. Living here is a breeze.

kiora
31-05-2021, 06:00 AM
"While many legislators have pushed for raising the minimum wage, with more and more cities across the US roll out higher minimum wage laws, Buffett does not favor this solution. In an op-ed for the Wall Street Journal in 2015, Buffett wrote that raising the minimum wage would actually create more problems for our market system.

Instead, he offers a different way to help and incentivize struggling Americans.

“The Earned Income Tax Credit is the single best way,” Buffett said."
https://finance.yahoo.com/news/warren-buffett-identifies-single-best-way-help-struggling-americans-150507164.html

artemis
31-05-2021, 06:54 AM
There is massive inequality of opportunity - we don't even have an inheritance tax. How can a society be equal when people can get a free ride from their parents work, on top of all the other advantages to coming from a rich family?

There is inequality of outcomes to be sure. Inequality of opportunity not so much with free education, various taxpayer safety nets, businesses crying out for workers at many skill levels. Opportunities right there but ignored - not much use.

As they say - 'the harder I work, the luckier I get'.

mfd
31-05-2021, 07:21 AM
I fail to see how somebody's parents working smart and hard and passing something to children is anything wrong?

I didn't say it's wrong, but it's clearly incompatible with having equality of opportunity. If two children are raised in the same city, receive the same education, but one is gifted a house and a wad of cash to start a business while the other gets nothing, in what way did they have equality of opportunity?

ynot
31-05-2021, 07:55 AM
I fail to see how somebody's parents working smart and hard and passing something to children is anything wrong? There's plenty of opportunities to do this nowadays. My parents had nothing, gave me nothing and I am on my way to retire by 45. I do it by sacrificing and working harder than others. Anyone can do it, literally anyone. I came here, had nothing, lived in car and worked at kiwi orchards. 5 years later I own my own property and invest in stocks.

There is full equality of opportunity. If you're poor in NZ, it's by choice. That's a fact. Coming from post soviet country, I can tell you anyone living on minimum wage in NZ is rich. Living here is a breeze.

My hat off to you Peetter.
This effort is less often acknowledged as a virtue in God's own. Especially today.

fungus pudding
31-05-2021, 08:12 AM
I fail to see how somebody's parents working smart and hard and passing something to children is anything wrong? There's plenty of opportunities to do this nowadays. My parents had nothing, gave me nothing and I am on my way to retire by 45. I do it by sacrificing and working harder than others. Anyone can do it, literally anyone. I came here, had nothing, lived in car and worked at kiwi orchards. 5 years later I own my own property and invest in stocks.

There is full equality of opportunity. If you're poor in NZ, it's by choice. That's a fact. Coming from post soviet country, I can tell you anyone living on minimum wage in NZ is rich. Living here is a breeze.

You're a prime example of fungus's guiding mantra 'learn to live below your means'. If you do that, you will have a surplus, which, no matter how small, will snowball through the magic of compound interest. Anyone adopting this simple pracise cannot possibly fail to eventually become financially independent. And practised long enough, will actually become wealthy.

iamaskier
31-05-2021, 09:02 AM
I fail to see how somebody's parents working smart and hard and passing something to children is anything wrong? There's plenty of opportunities to do this nowadays. My parents had nothing, gave me nothing and I am on my way to retire by 45. I do it by sacrificing and working harder than others. Anyone can do it, literally anyone. I came here, had nothing, lived in car and worked at kiwi orchards. 5 years later I own my own property and invest in stocks.

There is full equality of opportunity. If you're poor in NZ, it's by choice. That's a fact. Coming from post soviet country, I can tell you anyone living on minimum wage in NZ is rich. Living here is a breeze.

Honestly - good on you. It sure sounds like you are more driven and have a better work ethic than most.

Probably a fair few more years living out of a car to afford a deposit nowadays though right? Average house price in NZ has apparently doubled since 2013 (https://www.newshub.co.nz/home/money/2021/05/house-prices-increase-21-percent-as-govt-reserve-bank-changes-fail-to-hit-market.html).

I really don't understand how people can think this is a desirable situation overall. If we're looking to avoid creating massive societal problems for ourselves, the average kiwi needs to be able to afford a home in NZ without sacrificing everything (including kids). I mean what are we saying here? That the best way of getting ahead unfortunately means we have to burden the new market entrants with more than we did ourselves? Where does this end?

SBQ
31-05-2021, 09:38 AM
"While many legislators have pushed for raising the minimum wage, with more and more cities across the US roll out higher minimum wage laws, Buffett does not favor this solution. In an op-ed for the Wall Street Journal in 2015, Buffett wrote that raising the minimum wage would actually create more problems for our market system.

Instead, he offers a different way to help and incentivize struggling Americans.

“The Earned Income Tax Credit is the single best way,” Buffett said."
https://finance.yahoo.com/news/warren-buffett-identifies-single-best-way-help-struggling-americans-150507164.html


Unfortunately NZ has a similar program but grossly ineffective:

https://www.ird.govt.nz/working-for-families/payment-types

This is a payment if your annual family income is $30,576 or less after tax. It tops up your family's income to at least $588 a week after tax. To get this payment you must work for salary or wages and not be self-employed. A single parent must work at least 20 hours a week. In a two parent family, one or both parents between them, must work at least 30 hours a week.

The EITC in the US applies to INDIVIDUALS and not based on NZ's subsidy which is based on having children. Anotherwords, only families are eligible in NZ.

Hope this is not getting too off topic but at least great discussion and relevent to the problems we have in NZ.

SBQ
31-05-2021, 10:08 AM
Honestly - good on you. It sure sounds like you are more driven and have a better work ethic than most.

Probably a fair few more years living out of a car to afford a deposit nowadays though right? Average house price in NZ has apparently doubled since 2013 (https://www.newshub.co.nz/home/money/2021/05/house-prices-increase-21-percent-as-govt-reserve-bank-changes-fail-to-hit-market.html).

I really don't understand how people can think this is a desirable situation overall. If we're looking to avoid creating massive societal problems for ourselves, the average kiwi needs to be able to afford a home in NZ without sacrificing everything (including kids). I mean what are we saying here? That the best way of getting ahead unfortunately means we have to burden the new market entrants with more than we did ourselves? Where does this end?

Those in peetter's camp may not know it or see the problem of higher house prices having an affect on society. Why would they when they have the house(s) and their children will get the benefit? I myself have already noticed how bad things are around NZ with a high % of private schools, the wide use of private health care by the rich, hell there's no reason for those people in that camp to ever care about the future of the 'have nots'.

I'm not buying this excuse that NZ's situation of high housing prices is no different to abroad. My Cdn roots can't help express how bad this situation is in NZ (exemplified in the following link):

https://www.cbc.ca/news/canada/milennials-taxes-rich-wealth-resource-movement-inequality-pandemic-1.5726557

The NZ Green Party proposed a wealth tax but it would hit nearly 50% of the NZ's population. Maybe over time it may be scaled back. The real problem is NZ's wealth is mostly held in real estate vs in Canada, most of the wealth is held in businesses and stock ownership. The top 10% of the rich in NZ pretty much comprise their wealth in real estate - a tough issue if the Green Party wants to impose a wealth tax. (far easier to tax bank accounts and investments in stocks and bonds than large physical assets like houses).

ynot
31-05-2021, 10:33 AM
Although I commend peetters efforts I also agree with you 100% SBQ. Timing is often everything when it comes to investment and no doubt peetter would have a bigger challenge on his hands if he was starting out today. Its fairly obvious today that many young kiwis as stareing down the barrel of an insurmountable challenge to enter the propery market.
I always believed in the past that with some effort, attaining your own home in NZ was almost a birthright, and whats more should be any elected governments priority to ensure this is possible.
Kiwi governments have failed Kiwis miserably.

iamaskier
31-05-2021, 10:59 AM
Those in peetter's camp may not know it or see the problem of higher house prices having an affect on society. Why would they when they have the house(s) and their children will get the benefit? I myself have already noticed how bad things are around NZ with a high % of private schools, the wide use of private health care by the rich, hell there's no reason for those people in that camp to ever care about the future of the 'have nots'.

I am kind of perplexed by this though, in the sense that I don't feel like ones social circle has to be particularly large in order to see the effects of this first hand. And even if not, it's not really hard to think through.

Personally, I've seen the value of property go up hugely but it honestly brings me zero joy while I watch friends who would meet any definition of "good with money" struggle to get on the ladder because they didn't buy 3 years ago or had a kid so were down to 1 income for a bit or had the audacity to work and travel for a year or two or any number of other things that have suddenly become barriers. How are we prepared to accept this?

PS I spent a year work/travel in Canada, absolutely loved it - incredible experience - ultimately got lucky with the timing is all.

PSS. peetter, my comment is more about the state of affairs in general.

peetter
31-05-2021, 11:32 AM
I should probably clarify couple things.

I lived in a car because I wanted to, not because I had to. It was only for couple months and one of the best experiences. Living like this allows you to travel and save at incredible rate. And I just bought this year, so you'd be wrong if you think I'd change my opinion if I was just starting. I am actually starting on my way to get deposit on investment property.

I don't think the house prices should rise in a rate they do now. I think healthy growth between 3-7% should be the goal. However I don't blame landlords one bit for the prices. The blame is 100% on governments. The issue is not of people investing in housing, rentals are necessary. People need rentals for various reasons. The issue is with building regulations, NZ approach to living in houses and goverments ignoring the issue. What current government is doing is shameful shifting of blame to people who provide rental accomodation in a time when there's 20000 people on HNZ waitlist. I don't think Labour made the crisis. They just ignored it and instead of trying to solve it they are now panicking and trying to use envy to redirect public anger to somebody else. This is disgusting.

ynot
31-05-2021, 11:51 AM
Bang on mate. Its our obligation as Kiwis to be screaming from the rooftops. THIS IS NOT GOOD ENOUGH. DO YOU JOB !!!

Joshuatree
31-05-2021, 12:31 PM
Many , not all, of these house investors are the disgusting ones on an uneven playing field , running those houses at loss , claiming interest and all manner of things deducted, raising the rent at any opportunity and not maintaining their properties. Thank Dog its changing and first home buyers have more chances here on and renters have more rights. Greed and materialism ahead of ethics, caring or compassion.

iamaskier
31-05-2021, 12:39 PM
I should probably clarify couple things.

I lived in a car because I wanted to, not because I had to. It was only for couple months and one of the best experiences. Living like this allows you to travel and save at incredible rate. And I just bought this year, so you'd be wrong if you think I'd change my opinion if I was just starting. I am actually starting on my way to get deposit on investment property.

I don't think the house prices should rise in a rate they do now. I think healthy growth between 3-7% should be the goal. However I don't blame landlords one bit for the prices. The blame is 100% on governments. The issue is not of people investing in housing, rentals are necessary. People need rentals for various reasons. The issue is with building regulations, NZ approach to living in houses and goverments ignoring the issue. What current government is doing is shameful shifting of blame to people who provide rental accomodation in a time when there's 20000 people on HNZ waitlist. I don't think Labour made the crisis. They just ignored it and instead of trying to solve it they are now panicking and trying to use envy to redirect public anger to somebody else. This is disgusting.

I certainly don't begrudge the player but I reckon from a societal good perspective, the game is f##ked (and it seems we agree). There will always be people who manage to make the leap (and again good on you) but what I don't like seeing is that this is rapidly becoming the exception rather than the norm and encompasses and ever shrinking set of personal situations. I generally agree with what you're saying though with the added caveat that some of the bleating from pockets of landlords has been a little on the nose.

I feel like this garners way less attention than it should and I cant help but think that we haven't cottoned on to how much we're embedding a 2-tier society and that young people on a large scale haven't fully had the reality bite yet.

artemis
31-05-2021, 03:16 PM
.... Personally, I've seen the value of property go up hugely but it honestly brings me zero joy while I watch friends who would meet any definition of "good with money" struggle to get on the ladder because they didn't buy 3 years ago or had a kid so were down to 1 income for a bit or had the audacity to work and travel for a year or two or any number of other things that have suddenly become barriers. How are we prepared to accept this?.....

An excerpt from yesterday's article at the below link -

''The Home Loan Affordability Report shows first home buyers in Auckland would need to save $84,400 for a 10% deposit on a home at the region’s lower quartile price of $844,000 in April. That would take a couple working full time at the median rates of pay for 25-29 year olds in Auckland just over four and half years if they were able set aside 20% of their after-tax pay each week, which would be no mean feat.''

Is it really no mean feat to save 20% of (median) take home pay for a few years? Depends on what they are willing to do to save - forgo instant gratification, upskill, overtime, second jobs, live at home, take in flatmates, delay babies, live carefully, lower expectations, plan ahead - can be done and plenty do.

Of course it is harder for a single person or a single income household.

The article does make the point that serviceability can still be a barrier. But those that increase their skills and income while saving a deposit have improved their servicing position.

https://www.interest.co.nz/property/110616/housing-market-may-be-turning-point-prices-bottom-market-declining-april

iamaskier
31-05-2021, 05:03 PM
An excerpt from yesterday's article at the below link -

''The Home Loan Affordability Report shows first home buyers in Auckland would need to save $84,400 for a 10% deposit on a home at the region’s lower quartile price of $844,000 in April. That would take a couple working full time at the median rates of pay for 25-29 year olds in Auckland just over four and half years if they were able set aside 20% of their after-tax pay each week, which would be no mean feat.''

Is it really no mean feat to save 20% of (median) take home pay for a few years? Depends on what they are willing to do to save - forgo instant gratification, upskill, overtime, second jobs, live at home, take in flatmates, delay babies, live carefully, lower expectations, plan ahead - can be done and plenty do.

Of course it is harder for a single person or a single income household.

The article does make the point that serviceability can still be a barrier. But those that increase their skills and income while saving a deposit have improved their servicing position.

https://www.interest.co.nz/property/110616/housing-market-may-be-turning-point-prices-bottom-market-declining-april

Depends on rents which I'd say chew up a fair bit but in general terms, you'd hope 20% was achievable.

As you've alluded to the next para reads "However their problems wouldn’t end there, because if they were able to scrape together a 10% deposit, the mortgage payments on a lower quartile-priced home would chew up 42.6% of their take home pay, putting it squarely into unaffordable territory, even though interest rates are at record lows."

So it takes a not insignificant amount of time for a couple (single need not apply) to scratch together a measly 10% deposit on a house in the lower quartile in Akl? At which point they are totally at the mercy of the interest rate winds? That's before relatively ordinary life events like kids, loss of job etc... Who knows might get unlucky and prices are up another 300k in the interim. It used to just be AKL but now everywhere has seemingly gone the same way.

Although people have and will continue to make the jump the knife edge these people are forced to live on is getting ever finer, I just don't see any scenario in which this is a good thing long term...

artemis
01-06-2021, 05:22 AM
....Although people have and will continue to make the jump the knife edge these people are forced to live on is getting ever finer, I just don't see any scenario in which this is a good thing long term...

First home buyers who save a deposit and take on a mortgage do usually set themselves up for a frugal few years, and are subject to unplanned life events over that time. But they have the opportunity to spend that time improving their skills and household income. Then even a couple of years in to paying down a mortgage there is starting to be light at the end of the tunnel and it quietly gets easier.

It depends for the most part on what their plan is and if they work that plan. Not everyone wants to hunker down for a few years to set up a stable home situation. If they have other priorities, fair enough.

iamaskier
01-06-2021, 05:55 AM
First home buyers who save a deposit and take on a mortgage do usually set themselves up for a frugal few years, and are subject to unplanned life events over that time. But they have the opportunity to spend that time improving their skills and household income. Then even a couple of years in to paying down a mortgage there is starting to be light at the end of the tunnel and it quietly gets easier.

It depends for the most part on what their plan is and if they work that plan. Not everyone wants to hunker down for a few years to set up a stable home situation. If they have other priorities, fair enough.

I don't think that some sacrifice shouldn't be required, but the point (which is also made in the article that you posted) is that the situation has gone way way beyond simply "living frugal for a few years". And for what? So the previous lot can enjoy those crazy capital gains they're somehow entitled to? Lol.

ynot
01-06-2021, 07:06 AM
I don't think that some sacrifice shouldn't be required, but the point (which is also made in the article that you posted) is that the situation has gone way way beyond simply "living frugal for a few years". And for what? So the previous lot can enjoy those crazy capital gains they're somehow entitled to? Lol.

Government owns this mess, "previous lot" didn't create this problem.

iamaskier
01-06-2021, 07:41 AM
Government owns this mess, "previous lot" didn't create this problem.

Although you're quoting me, I'm taking this as a general comment as I never said they did?

Zaphod
01-06-2021, 08:33 PM
The EITC in the US applies to INDIVIDUALS and not based on NZ's subsidy which is based on having children. Anotherwords, only families are eligible in NZ.


Formal advice to the government proposes that the scheme should be extended to those without children as well. A review of the scheme is imminent, so perhaps New Zealand will end up with a very similar scheme.

SBQ
01-06-2021, 09:57 PM
Formal advice to the government proposes that the scheme should be extended to those without children as well. A review of the scheme is imminent, so perhaps New Zealand will end up with a very similar scheme.

LOL - just like the formal advice by the TWG that some sort of CGT should be implemented in NZ - only to be cut down by Ms Ardern in the same week they announced it. What is imminent - NZ gov't is not serious about leveling the playing field.

There are probably a dozen implementations that the Canadian gov't has done to discourage inequality (all around taxation and mostly implemented in the past 30+ years). What has NZ done in that same period? Bring in Kiwi Saver (which still screws those that contribute to it vs those that buy houses). Bring in Working for Families tax credit? - screws the individual. More money for WINZ beneficiaries? (no program to remove their dependency).

The only reason why I can shout about these issues and compare to what other countries do is more to do that people in NZ have no idea. The gov't has no idea - they never look abroad to see how similar problems are addressed. They want to reinvent the wheel. Then the OECD year after year keeps reporting that NZ has the highest 'real return' rise in housing prices among the OECD.

Just the other day I was looking at trusts in NZ and in Canada. NZ trusts are taxed flat rate 33% - but we have no capital gains tax (ideal for owning houses in the trust). In Canada, there's a whole new level of trusts available such as Inter Vivos (while alive) and Testamentary (trusts formed upon the death of a person). It seems in NZ they make no distinction between the two in terms of tax treatment. But in Canada, all Inter Vivos trusts formed are flat rate taxed at the highest marginal tax bracket (because rich people should pay more). There are special trusts like an Hensen Trust in Canada where upon death (testamentary) the settlor in his will creates a trust for the beneficiary who has disabilities. The tax dept will grant a special status to the trust where the trust is taxed at individual rates (which is much lower than the top marginal tax rate in a conventional trust). Seems fair? I think so since people with disabilities should have the benefit. Also Trusts in Canada every 21 years the assets are reassessed and CGT is paid despite the assets have not been sold.

peetter
02-06-2021, 12:31 PM
There are probably a dozen implementations that the Canadian gov't has done to discourage inequality (all around taxation and mostly implemented in the past 30+ years). What has NZ done in that same period? Bring in Kiwi Saver (which still screws those that contribute to it vs those that buy houses). Bring in Working for Families tax credit? - screws the individual. More money for WINZ beneficiaries? (no program to remove their dependency).

I'd like to know if any of these actually worked? I find most policies governments introduce to tackle inequality are extremely ineffective. Then again most of them are just take from rich an give to those that don't know how to work with money.

I wonder why no government has ever introduced mandatory practical finance classes at schools, that would teach how to use compound interest to build wealth and how to avoid credit card and personal loan debt. My bet is on governments actually wanting to have poor class.

Zaphod
02-06-2021, 03:07 PM
LOL - just like the formal advice by the TWG that some sort of CGT should be implemented in NZ - only to be cut down by Ms Ardern in the same week they announced it. What is imminent - NZ gov't is not serious about leveling the playing field.

The review is imminent, not the Government actually doing anything about it. Modern voters only care about intent, not results.

ynot
02-06-2021, 03:21 PM
LOL - just like the formal advice by the TWG that some sort of CGT should be implemented in NZ - only to be cut down by Ms Ardern in the same week they announced it. What is imminent - NZ gov't is not serious about leveling the playing field.

There are probably a dozen implementations that the Canadian gov't has done to discourage inequality (all around taxation and mostly implemented in the past 30+ years). What has NZ done in that same period? Bring in Kiwi Saver (which still screws those that contribute to it vs those that buy houses). Bring in Working for Families tax credit? - screws the individual. More money for WINZ beneficiaries? (no program to remove their dependency).

The only reason why I can shout about these issues and compare to what other countries do is more to do that people in NZ have no idea. The gov't has no idea - they never look abroad to see how similar problems are addressed. They want to reinvent the wheel. Then the OECD year after year keeps reporting that NZ has the highest 'real return' rise in housing prices among the OECD.

Just the other day I was looking at trusts in NZ and in Canada. NZ trusts are taxed flat rate 33% - but we have no capital gains tax (ideal for owning houses in the trust). In Canada, there's a whole new level of trusts available such as Inter Vivos (while alive) and Testamentary (trusts formed upon the death of a person). It seems in NZ they make no distinction between the two in terms of tax treatment. But in Canada, all Inter Vivos trusts formed are flat rate taxed at the highest marginal tax bracket (because rich people should pay more). There are special trusts like an Hensen Trust in Canada where upon death (testamentary) the settlor in his will creates a trust for the beneficiary who has disabilities. The tax dept will grant a special status to the trust where the trust is taxed at individual rates (which is much lower than the top marginal tax rate in a conventional trust). Seems fair? I think so since people with disabilities should have the benefit. Also Trusts in Canada every 21 years the assets are reassessed and CGT is paid despite the assets have not been sold.
I'm not familiar with how Canada run things today but I lived up there from 1980 to 84 and was impressed with how things worked. Unemployment benefit which paid well at around 80% of your previous wage but only for 1 year. After that you either worked or ended up begging. Certainly encouraged you
to find new employment asap.
The dentist scheme was also impressive. Pay your compulsory annual dental insurance and that was it. No dental bills.
Perogies weren't half bad either !

iceman
02-06-2021, 10:43 PM
The biggest mistake made by the current Government (or rather last term) was to cancel the Social Investment program thoughtfully introduced by Bill English after serious study over a decade before he implemented it. He got almost all social providers, including Maori, to buy into it. But because National brought it in, Labour had to cancel it. A big and very shortsighted mistake not to give it a decade or so and the assess the results. I think they may have been surprisingly good for NZ with lower crime and poverty and less inequality. Housing policies on their own will not achieve any of that.

Panda-NZ-
03-06-2021, 12:20 AM
Nats cancelled the NZ super contributions which cost us tens of billions over a decade too. Then sold assets so the dividends are gone.

Most social support in NZ goes to pensioners for a "health" issue which we should ideally aim to change worldwide, if possible, to free up Trillions.

artemis
03-06-2021, 05:55 AM
The biggest mistake made by the current Government (or rather last term) was to cancel the Social Investment program thoughtfully introduced by Bill English after serious study over a decade before he implemented it. He got almost all social providers, including Maori, to buy into it. But because National brought it in, Labour had to cancel it. A big and very shortsighted mistake not to give it a decade or so and the assess the results. I think they may have been surprisingly good for NZ with lower crime and poverty and less inequality. Housing policies on their own will not achieve any of that.

Completely agree, and that serious study included a whole lot of data gathering and analysis. Labour has sort of retained the Young Parent Payment that provides very specific support for teen parents with a medium / long term view to encourage them not to be long term beneficiaries. 'Sort of' because I hear on the grapevine that it is much less resourced these days - anecdotally, but where are the measurements? Including the effectiveness of the YPP. The few measures I can see bundle the YPP in with the Youth Payment which is not the same thing at all.

I think the next cab off the rank was to removes the school scattergun decile system and use the funds to target support to the pupils identified as at risk. Hard to argue with that.

artemis
03-06-2021, 05:56 AM
..... Most social support in NZ goes to pensioners for a health issue which we should ideally aim to change worldwide if possible to free up Trillions.

Can you explain what you mean by that?

Panda-NZ-
03-06-2021, 06:57 AM
I mean stopping aging through developing treatments specifically for it.

Research into that is cost neutral when worldwide we're spending $10T pet year on it.

Panda-NZ-
03-06-2021, 07:26 AM
https://figure.nz/chart/2eIStXKBWssxMIze

A helpful infographic on welfare.

Acommodation supplement should definately be axed, subsidy for the property industry.

peetter
03-06-2021, 08:12 AM
Panda-NZ - Does this include HNZ, or is that completely apart of this? I'd be interested to know how much goes there.

Panda-NZ-
03-06-2021, 08:17 AM
The Income related rents is public housing I think.

SBQ
03-06-2021, 11:44 AM
I'd like to know if any of these actually worked? I find most policies governments introduce to tackle inequality are extremely ineffective. Then again most of them are just take from rich an give to those that don't know how to work with money.

I wonder why no government has ever introduced mandatory practical finance classes at schools, that would teach how to use compound interest to build wealth and how to avoid credit card and personal loan debt. My bet is on governments actually wanting to have poor class.

They DO have an affect and the stats between Canada and NZ prove it with the latter having a much lower GDP/capita. We don't have to look far how much of the wealth in NZ is tied up in real estate. The pillars of house & education is how people in NZ judge their outcomes and creates poor social mobility. It's not about taking from the rich and giving to the poor but rather, it's about not leaving the weakest member of society behind. I'm sadden to see NZ's culture - high # of private schools, wide disparity in cost of housing among the rich and poor. A general lack of philanthropy by the wealthy in NZ. Again key word i'm hitting at is NZ's lack of social mobility.

My time in highschool (1986 - 1991) in Canada is still very different to NZ highschool today. We had auto mechanics courses all the years (from grade 9 and 10 you had small engine mechanics, wood work, metal work, etc) At Grade 10 and 11 (age 16) many learned to drive a car so they could do auto-mechanics courses. The shop at our highschool had full lifts, cleaning stations, a comprehensive workshop where major repairs could be done like engine pulls and transmissions. In Grade 11 it was mandatory we ALL had to pass doing brake repairs. Likewise, you could not graduate highschool without finishing either Home Economics or the Knitting course (where pretty much all the women enrolled in). Compound interested was taught in Home Economics ; likewise about how banking works, cheque writing, briefly on the stock markets, etc. I suppose if you wanted this kind of level of education in NZ you needed to go to a private school? I dunno?

Going back to social mobility, I saw in my class everyone who was rich and poor. We had no silly 'school uniforms' and it was apparent you could tell who was rich and who was poor by the clothing they wore. But it did not change our Canadian culture in that no one leaves anyone behind. We chummed with all races, I recall 1 classmate that wore the same clothing all the time with holes in it etc. and we respected that; he was our goalie when we played street hockey. When he got hurt at the goalie net we all helped him up. My closer friends, some were on welfare (NZ dole) and through highschool they were able to break that cycle of poverty. The gov't provided further training after highschool (he didn't graduate) so he could get his ABE (Adult Basic Education) standard as he had an interest in computers. So in order for him to continue on with his computer studies, ABE had to be done. Shortly after, he was recruited by the RCMP (police force) at a time when they were upgraded computer systems for the country. He got a decent paying job there and 30 years later he's retired with a tax free pension (yes RCMP pensions are tax free). If I can see cases like this during my time seeing my children go through here in NZ ; i'll be glad to report. But so far what i'm seeing is the 'haves' send their kids to private schools to get that opportunity. They rather not have their children mix with that lower social-economic group or school in fear it lowers their standard. I dunno but it seems all wacked to me when families are constantly moving house searching from one school to another. I never saw this kind of thing or heard of it growing up in Canada. (mainly on part due to lack or low % of private schools there).

SBQ
03-06-2021, 12:08 PM
I'm not familiar with how Canada run things today but I lived up there from 1980 to 84 and was impressed with how things worked. Unemployment benefit which paid well at around 80% of your previous wage but only for 1 year. After that you either worked or ended up begging. Certainly encouraged you
to find new employment asap.
The dentist scheme was also impressive. Pay your compulsory annual dental insurance and that was it. No dental bills.
Perogies weren't half bad either !

I left (well became non-resident in Canada) in 1998 though I still kept close contact with my friends there. It seemed the very things I hated in Canada at the time have came to NZ. For eg. Canada had limits on foreign content on how much an RRSP (ie like Kiwi Saver) can have - 2/3rds must be of Cdn content / shares etc. They scrapped that. Upon arrival to NZ, there was no FIF or IRD did not tax capital gains on overseas investments. Now they did with FIF attacking all sorts of pension funds etc. During the same period, Canada introduced RDSP (Disability savings plans), RESP (education saving span), and the best of all, TFSA (tax free savings accounts) : ALL with the intent that gains and incomes in those investment portfolios grow 100% tax free when used for the benefit of (well disability, education, & and emergency funding). Anotherwords the gov't there is saying to the people that instead of the gov't nannying individuals on say their disabilities. They want the people to take control of their own investments; all through tax incentives. House affordability problem? No problem. 2 years ago Trudeau passed a new budget for FTHOI program where the Gov't of Canada goes hand in hand with the new home owner in buying the house:

https://www.cmhc-schl.gc.ca/en/consumers/home-buying/first-time-home-buyer-incentive

Key note; they give you 5 - 10% deposit (10% on new builds) and is repayable when the house is sold or in 25 years time. (naturally during that time the house price will rise) but the biggest benefit is there's no skin on the home owner because it's not treated like a bank loan where interest payments have to be made. It's a partnership deal where the rise in house price = home owner benefits + bank of Canada benefits. You think something like this can be done in NZ? Come on Jacinda! The rest of the world is leaving NZ behind in addressing affordability problems in houses, education, and retirement planning.

Panda-NZ-
03-06-2021, 12:25 PM
I like canada's bilingualism. The PM often randomly switches to french during a press conference which is nice. :)

Panda-NZ-
03-06-2021, 12:32 PM
Jacinda has a mandate to build houses so should focus on that (with a successful policy this time).
They don't have one yet for tax change.

SBQ
03-06-2021, 05:19 PM
Jacinda has a mandate to build houses so should focus on that (with a successful policy this time).
They don't have one yet for tax change.

I do not believe increasing the supply of houses will change the direction of house prices going up. The cost of building materials has doubled in the past 10 years and from desperation, architects are left with building boring single story houses with the same kind of cladding and layouts. You know put the garage on the left or right side / rotate it 90deg, that kind of deal. There's no budget to improve the performance of the house such as heating and proper ventilation.

peetter
04-06-2021, 09:20 AM
They DO have an affect and the stats between Canada and NZ prove it with the latter having a much lower GDP/capita. We don't have to look far how much of the wealth in NZ is tied up in real estate. The pillars of house & education is how people in NZ judge their outcomes and creates poor social mobility. It's not about taking from the rich and giving to the poor but rather, it's about not leaving the weakest member of society behind. I'm sadden to see NZ's culture - high # of private schools, wide disparity in cost of housing among the rich and poor. A general lack of philanthropy by the wealthy in NZ. Again key word i'm hitting at is NZ's lack of social mobility.

My time in highschool (1986 - 1991) in Canada is still very different to NZ highschool today. We had auto mechanics courses all the years (from grade 9 and 10 you had small engine mechanics, wood work, metal work, etc) At Grade 10 and 11 (age 16) many learned to drive a car so they could do auto-mechanics courses. The shop at our highschool had full lifts, cleaning stations, a comprehensive workshop where major repairs could be done like engine pulls and transmissions. In Grade 11 it was mandatory we ALL had to pass doing brake repairs. Likewise, you could not graduate highschool without finishing either Home Economics or the Knitting course (where pretty much all the women enrolled in). Compound interested was taught in Home Economics ; likewise about how banking works, cheque writing, briefly on the stock markets, etc. I suppose if you wanted this kind of level of education in NZ you needed to go to a private school? I dunno?

Going back to social mobility, I saw in my class everyone who was rich and poor. We had no silly 'school uniforms' and it was apparent you could tell who was rich and who was poor by the clothing they wore. But it did not change our Canadian culture in that no one leaves anyone behind. We chummed with all races, I recall 1 classmate that wore the same clothing all the time with holes in it etc. and we respected that; he was our goalie when we played street hockey. When he got hurt at the goalie net we all helped him up. My closer friends, some were on welfare (NZ dole) and through highschool they were able to break that cycle of poverty. The gov't provided further training after highschool (he didn't graduate) so he could get his ABE (Adult Basic Education) standard as he had an interest in computers. So in order for him to continue on with his computer studies, ABE had to be done. Shortly after, he was recruited by the RCMP (police force) at a time when they were upgraded computer systems for the country. He got a decent paying job there and 30 years later he's retired with a tax free pension (yes RCMP pensions are tax free). If I can see cases like this during my time seeing my children go through here in NZ ; i'll be glad to report. But so far what i'm seeing is the 'haves' send their kids to private schools to get that opportunity. They rather not have their children mix with that lower social-economic group or school in fear it lowers their standard. I dunno but it seems all wacked to me when families are constantly moving house searching from one school to another. I never saw this kind of thing or heard of it growing up in Canada. (mainly on part due to lack or low % of private schools there).

Most of what you're describing is just human decency. I went to public school and was one of the poor kids and most of the kids didn't really cared about it too. In last couple of years I realized, school is not there to make you successful, but to make you into unquestioning drone. So when i have kids, I'll send them to public school and teach them the important knowledge at home.


As far as government policies goes, they might help. Problem in NZ seems to be, there's nobody that has enough intelect in government to actually come up with the working ones...


I do not believe increasing the supply of houses will change the direction of house prices going up. The cost of building materials has doubled in the past 10 years and from desperation, architects are left with building boring single story houses with the same kind of cladding and layouts. You know put the garage on the left or right side / rotate it 90deg, that kind of deal. There's no budget to improve the performance of the house such as heating and proper ventilation.

Incresing suply won't change the direction, but will keep the price increases at reasonable rate. From what I understand, the biggest part of the cost are not materials, but consents and admin. Decrease cost of that and you'll have enough to finally bring 21st century building quality to NZ.

Panda-NZ-
04-06-2021, 12:28 PM
Incresing suply won't change the direction, but will keep the price increases at reasonable rate. From what I understand, the biggest part of the cost are not materials, but consents and admin. Decrease cost of that and you'll have enough to finally bring 21st century building quality to NZ.

Costs are similar to a build a house from Auckland to otago so it must be the land price.

people need to know there's an NZ outside the largest city.

peetter
04-06-2021, 12:55 PM
Costs are similar to a build a house from Auckland to otago so it must be the land price.

people need to know there's an NZ outside the largest city.


I assumed we're talking about build cost on top of the land.

Panda-NZ-
04-06-2021, 02:44 PM
Yep. Materials/build/admin/consent fees (same) vs land (different in price) across the regions.

Panda-NZ-
04-06-2021, 03:08 PM
The crown, the rightful & elected representative of the people (rather than Iwi) should release a bit more but its about expanding out from the city and there should be land in other places which is affordable.

SBQ
04-06-2021, 03:14 PM
I assumed we're talking about build cost on top of the land.

Yes. In 2009 build cost on my cousin's house (avg spec here in Chch by large group builder) was $1300/m2. Today it's easily double that cost /m2. Even the recent lumber spike in America, timber still costs more in NZ than over there by a long shot.

Like everything else in NZ (ie pension plans, taxation), also the building development is entirely different to in America. We use land in the most inefficient way vs in N. America new sub divisions follow a 'grided' pattern where more sections can fit per hectare (and their lot sizes are much larger too - how is this so?). You have in Auckland where older, typically larger sections, do the sub-divide route; you lose land in this way of development because every lot has to have a SIDE DRIVE WAY access to the rear dwelling. Horribly inefficient vs a back alley street access that already exists in early sub divisions in all the major cities in N. America.

Then there's the issue of funding the subdivision development that differs. Local councils are compelled to charge high rates because at the national level, there's little or not funding in the release of crown land. Likewise to the private land owners that sell and all this cost "Developmental Contribution Fees" is paid to local councils, which all adds to the high price. How is this model sustainable compared to N. American models of releasing land for development? It seems like the gov'ts in NZ have taken a stance of non-action and let the private sector try and sort out the lowest cost way of developing land... leading to all sorts of repetitive red tape. ie. You don't need a fire engineer to certify a building all over again and again if the same conventional building materials are used. But that's what local city councils want. A repetition of the same requirement, testing, book reference, blah blah just to get the rubber stamp.

On a macro level, new subdivisions should have an acceptable whole base geotech report. But again, local city councils want a "site specific" geo tech report for every section before a house is built on (all adds unnecessary cost to building if they simply use the same rib raft foundation to support TC2 or TC3).

These issues are systemic in NZ building - every area you look at requires some engineer / specialist. Just like when I talk to NZ financial advisers about taxation - they make no comment on it and say they can gladly refer you to a 'tax accountant' ; pile on more fees... unnecessary.

As for costs building up in Auckland vs Chch? Without a doubt there is a consolable higher cost to build in Auckland. It always has been back in 2009 when my uncle was practicing architect work and when I built our houses here in Chch in that same year. The key reason is labour costs are higher which is a major component in building anything. Unlike in California, NZ does not have cheap Mexican labour and our labour + OSH safety requirements + scaffolding for the most basic builds like on a single story roof, adds to the much higher cost of building.

SBQ
04-06-2021, 03:21 PM
The crown, the rightful & elected representative of the people (rather than Iwi) should release a bit more but its about expanding out from the city and there should be land in other places which is affordable.

Lol not without a protest by the respected local Iwi on any crown land. Look what happened up on the North Shore when Jacinda had to pay $40M? to settle a disputed land deal with Fletcher? Not all Iwis think alike. Canada many years ago had similar issues when trying to develop the oil pipeline across to the Pacific Ocean. A unanimous outcome is virtually impossible and what 1 specific group getting paid for that land, sets the same example for the rest.

Over the road here in Chch is Wigram Skies - (use to be the old Wigram Airforce base). Under agreement, that crown land was awarded to Ngai Tahu and as everyone I speak to; "How can you not lose when the land is given to you?" The gov't loses out on that revenue (both CCC and national level gov't) - so no wonder the DC fees are so high.

Panda-NZ-
05-06-2021, 11:41 AM
If the land is given for free to a first home buyer that will get affordable homes real quick. That's also an option.

Sadly you're right the brown tape will get in the way to that concept.

nizzy
07-06-2021, 08:52 AM
Yes. In 2009 build cost on my cousin's house (avg spec here in Chch by large group builder) was $1300/m2. Today it's easily double that cost /m2. Even the recent lumber spike in America, timber still costs more in NZ than over there by a long shot.

Like everything else in NZ (ie pension plans, taxation), also the building development is entirely different to in America. We use land in the most inefficient way vs in N. America new sub divisions follow a 'grided' pattern where more sections can fit per hectare (and their lot sizes are much larger too - how is this so?). You have in Auckland where older, typically larger sections, do the sub-divide route; you lose land in this way of development because every lot has to have a SIDE DRIVE WAY access to the rear dwelling. Horribly inefficient vs a back alley street access that already exists in early sub divisions in all the major cities in N. America.

Then there's the issue of funding the subdivision development that differs. Local councils are compelled to charge high rates because at the national level, there's little or not funding in the release of crown land. Likewise to the private land owners that sell and all this cost "Developmental Contribution Fees" is paid to local councils, which all adds to the high price. How is this model sustainable compared to N. American models of releasing land for development? It seems like the gov'ts in NZ have taken a stance of non-action and let the private sector try and sort out the lowest cost way of developing land... leading to all sorts of repetitive red tape. ie. You don't need a fire engineer to certify a building all over again and again if the same conventional building materials are used. But that's what local city councils want. A repetition of the same requirement, testing, book reference, blah blah just to get the rubber stamp.

On a macro level, new subdivisions should have an acceptable whole base geotech report. But again, local city councils want a "site specific" geo tech report for every section before a house is built on (all adds unnecessary cost to building if they simply use the same rib raft foundation to support TC2 or TC3).

These issues are systemic in NZ building - every area you look at requires some engineer / specialist. Just like when I talk to NZ financial advisers about taxation - they make no comment on it and say they can gladly refer you to a 'tax accountant' ; pile on more fees... unnecessary.

As for costs building up in Auckland vs Chch? Without a doubt there is a consolable higher cost to build in Auckland. It always has been back in 2009 when my uncle was practicing architect work and when I built our houses here in Chch in that same year. The key reason is labour costs are higher which is a major component in building anything. Unlike in California, NZ does not have cheap Mexican labour and our labour + OSH safety requirements + scaffolding for the most basic builds like on a single story roof, adds to the much higher cost of building.


New bespoke build costs in Auckland have been around 4500- 5000 per sqm (bespoke are always higher than group builds). I've recently heard 2 people being given a rough estimate of $7000 per sqm for renovations!

fungus pudding
07-06-2021, 08:57 AM
New bespoke build costs in Auckland have been around 4500- 5000 per sqm (bespoke are always higher than group builds).

Not necessarily.

kiora
07-06-2021, 10:11 AM
Well it is highly likely

fungus pudding
07-06-2021, 10:32 AM
Posters should include the post, or at least the (snipped) relavent part of the post they are replying to. I have just read a post which says 'it is highly likely'. Brilliant! What is highly likely, or am I supposed to scroll through prior posts and guess which one is being replied to? This thread in particular is hopeless to follow because so many posts are not attributed to anything at all.
This is not a text or SMS between two parties messaging each other. It is a forum open to the hundreds of members of sharetrader. It shouldn't be difficult to follow the standard practice of such forums.
While I don't wish to pick on anyone, scroll through and look at Panda's posts as an example. To know what he's on about means reading previous posts and often a bit of guesswork. (Here's an example from another thread he has posted on 'It's easier when the relationship is not formalised though'). That is all it says. What is it about? Those posts are best ignored, and I'd say they often are by many readers.

SBQ
07-06-2021, 10:48 AM
New bespoke build costs in Auckland have been around 4500- 5000 per sqm (bespoke are always higher than group builds). I've recently heard 2 people being given a rough estimate of $7000 per sqm for renovations!

$4500 is not uncommon in Auckland - my issue is... how sustainable can that be? My cousin is in middle of their construction sub-divising a lot. For 2 dwellings (they demolished the old house) his build is minimum $4,500/m2. Since he works for My Food Bag - he's betting on the recent share float to fund his home project. With $2M or $3M build costs, the price of the land might not be too expensive in comparison.

$7,000m2 is insane but not so in 10 or 15 years time...

fungus pudding
10-06-2021, 05:34 PM
This govt. is getting sillier by the day.

https://www.stuff.co.nz/life-style/homed/real-estate/125403569/new-builds-will-be-exempt-from-new-tax-rules

artemis
11-06-2021, 07:25 AM
This govt. is getting sillier by the day. ....

Not to worry, the consultation document is only 143 pages long and there is a full month to make submissions. Anyone with two or three tax law degrees will be able to understand it easily.

fungus pudding
11-06-2021, 07:53 AM
Not to worry, the consultation document is only 143 pages long and there is a full month to make submissions. Anyone with two or three tax law degrees will be able to understand it easily.

Yeah, but to tax a new building, or maybe a renovated building on profit, while taxing an existing building on turnover, certainly makes the mind spin - particularly when you consider the unintended and unforeseen consequences. Surely there are enough older members of the Labour party, who will remember Rowling's disastrous spec tax, to warn this current lot of incompetent MPs that they are heading down a dangerous path.

Bjauck
15-06-2021, 09:13 AM
Yeah, but to tax a new building, or maybe a renovated building on profit, while taxing an existing building on turnover, certainly makes the mind spin - particularly when you consider the unintended and unforeseen consequences. Surely there are enough older members of the Labour party, who will remember Rowling's disastrous spec tax, to warn this current lot of incompetent MPs that they are heading down a dangerous path. This new rule does seem ridiculous.

However 32% increase in the national median price for a home seems over-inflated too. I would suggest that residential housing investors should provide a deposit of more than 50% plus a stamp duty of 5% or more which could be offset against any future brightline taxes payable.

https://www.stuff.co.nz/life-style/homed/real-estate/300333073/buyers-need-to-find-extra-200k-to-buy-a-home-real-estate-institute-data-shows

peetter
15-06-2021, 12:55 PM
This new rule does seem ridiculous.

However 32% increase in the national median price for a home seems over-inflated too. I would suggest that residential housing investors should provide a deposit of more than 50% plus a stamp duty of 5% or more which could be offset against any future brightline taxes payable.

https://www.stuff.co.nz/life-style/homed/real-estate/300333073/buyers-need-to-find-extra-200k-to-buy-a-home-real-estate-institute-data-shows

You know taxation is not an answer to everything right? How far do you think the taxation can go? Everything Labour government did so far included increasing taxes or creating new ones. But not one of the policies actually introduced any possibility of a solution to the problem.

I certainly agree with you the property prices went overboard this year. But you need to remember that current government was voted in 4 years ago on promise of fixing property crisis and did nothing about it until now... and all they did now is blame property investors for raising prices.

Panda-NZ-
15-06-2021, 01:56 PM
Closing a tax rort is not a new tax. plus there's still 0% on the capital gain.

Meanwhile:
https://www.newshub.co.nz/home/money/2021/06/measly-pay-rises-workplace-culture-and-poor-management-driving-kiwi-professionals-to-quit-jobs.html

Great place to have wealth, not so much to work for a wage.

peetter
15-06-2021, 02:22 PM
There was no "tax rort". Rather than this abomination of tax on expense, proper inflation adjusted CGT would be better.

But labour only did this for tax revenue, so they got tax on expense plus CGT reacharound at 39% personal income tax without inflation adjustment...

SBQ
15-06-2021, 02:51 PM
You know taxation is not an answer to everything right? How far do you think the taxation can go? Everything Labour government did so far included increasing taxes or creating new ones. But not one of the policies actually introduced any possibility of a solution to the problem.

I certainly agree with you the property prices went overboard this year. But you need to remember that current government was voted in 4 years ago on promise of fixing property crisis and did nothing about it until now... and all they did now is blame property investors for raising prices.

If you think it's not the property investors causing the prices to rise so fast, then who do you think is pushing all the prices up so high?

Just on talk radio after picking kids up at school, there was a man complaining how at a Harcourts auction in their showroom, they wanted to bid on this house. After some fierce bidding, there was as he quoted, "A Chinese a man that informed the auctioneer that he wants to place a 20% HIGHER bid on ALL the listings there on that day". Some months later he was able to get some information on the Chinese bidder and it turned out, he flew in from Australia to buy all the houses to do none other than to rent them out.

If there are NO OTHER demand controls apart from taxation that the NZ gov't has, then what should you suggest the NZ gov't can do to swell the demand away? Specifically dividing those like that overseas buyer and the 1st home buyer group?

And if you think taxation is a horrible tool - what taxation is there on houses in NZ? ; consider how other OECD nations address the demand issue, or let me put it in another way, where else in the OECD has no form of capital gains tax on the sale of multiple houses over the long term? It's clear you know the investment landscape is strongly skewed with the top 10% (as a rough figure) of NZ's richest own nothing but real estate while the top 10% in the US or Canada amass their wealth through equity ownership of shares on the stock exchange.

I'm afraid I strongly disagree - the wealthy in NZ have got away booking huge gains with the excuse that it's their retirement nest egg (at the cost of robbing the next generation when they try to buy their 1st home). There's 1 issue when people make a lot of money in retirement through share ownership in businesses, and another entirely different issue with you turn houses (as an investment asset) into a motive of profiting.

As I mentioned before.. it doesn't matter who Labour or National was in power. The bottom line is NZ's obsession of using houses as tools to profit that spills over into gov't that these politicians themselves don't want to address the issue with real tools and real action. The way I see it, it comes down to bad gov't policy.

Also if you ask any person in the residential investment game, they will say, "It's still the best game in town". Better than any working class person stuck in Kiwi Saver. So for as long as we have this unlevel playing field in terms of taxation, you're never going to fix the house problem in NZ.

If my rants come too strong, my apologies. All I want is to hit it where it hurts to those that are in illusion to the problem.

peetter
15-06-2021, 03:05 PM
If you think it's not the property investors causing the prices to rise so fast, then who do you think is pushing all the prices up so high?

Just on talk radio after picking kids up at school, there was a man complaining how at a Harcourts auction in their showroom, they wanted to bid on this house. After some fierce bidding, there was as he quoted, "A Chinese a man that informed the auctioneer that he wants to place a 20% HIGHER bid on ALL the listings there on that day". Some months later he was able to get some information on the Chinese bidder and it turned out, he flew in from Australia to buy all the houses to do none other than to rent them out.

If there are NO OTHER demand controls apart from taxation that the NZ gov't has, then what should you suggest the NZ gov't can do to swell the demand away? Specifically dividing those like that overseas buyer and the 1st home buyer group?

And if you think taxation is a horrible tool - what taxation is there on houses in NZ? ; consider how other OECD nations address the demand issue, or let me put it in another way, where else in the OECD has no form of capital gains tax on the sale of multiple houses over the long term? It's clear you know the investment landscape is strongly skewed with the top 10% (as a rough figure) of NZ's richest own nothing but real estate while the top 10% in the US or Canada amass their wealth through equity ownership of shares on the stock exchange.

I'm afraid I strongly disagree - the wealthy in NZ have got away booking huge gains with the excuse that it's their retirement nest egg (at the cost of robbing the next generation when they try to buy their 1st home). There's 1 issue when people make a lot of money in retirement through share ownership in businesses, and another entirely different issue with you turn houses (as an investment asset) into a motive of profiting.

As I mentioned before.. it doesn't matter who Labour or National was in power. The bottom line is NZ's obsession of using houses as tools to profit that spills over into gov't that these politicians themselves don't want to address the issue with real tools and real action. The way I see it, it comes down to bad gov't policy.

Also if you ask any person in the residential investment game, they will say, "It's still the best game in town". Better than any working class person stuck in Kiwi Saver. So for as long as we have this unlevel playing field in terms of taxation, you're never going to fix the house problem in NZ.

If my rants come too strong, my apologies. All I want is to hit it where it hurts to those that are in illusion to the problem.

I have no problem with proper CGT adjusted to inflation.

As for what government should do, there's plenty of better ways to deal with the issue than taxation. And if they were started 4 years ago, the rise in prices would now probably be much lower.

Rich vs poor debate - you'll never make poor rich by taking money of the rich. It has been tried many times, never worked and never will.

Bjauck
15-06-2021, 04:47 PM
You know taxation is not an answer to everything right? How far do you think the taxation can go? Everything Labour government did so far included increasing taxes or creating new ones. But not one of the policies actually introduced any possibility of a solution to the problem.


I certainly agree with you the property prices went overboard this year. But you need to remember that current government was voted in 4 years ago on promise of fixing property crisis and did nothing about it until now... and all they did now is blame property investors for raising prices.


Tax is not the answer to everything - although an increase in tax revenue would help to boost government revenue and help repay Covid expenses and debt.


I do not think the government is blaming property investors. However they may be trying to rectify some of the imbalances in the NZ investment environment. Real estate Property investors have been acting rationally by seeking out the best investment in the NZ tax and investment environment that will provide the best after-tax returns for their risk tolerance.


Many property investors, who have been investing in residential real estate, may well have received handsome leveraged capital gains on the equity they invested. That is why I am also suggesting the non-tax rule that investors should be expected to provide a deposit of over 50% of the purchase price of their investment real estate purchases.


It would be unrealistic to expect this government to fix NZ's chronic property market malaise within a few years during a Covid pandemic. This crisis has been building up for generations and had been ignored by previous governments of red, blue and purple shades!

artemis
16-06-2021, 06:31 AM
ECON101 - and the government has since 2017 tells us the country needs more new builds and was voted in on that basis. So the question is - if there is demand for them, even massive government funding for social housing and Kiwibuild and underwrites, why haven't they happened? And how does changing tax rules for existing rental properties support more new builds, when they did not happen under the previous tax rules?

Because reasons?

fungus pudding
16-06-2021, 07:52 AM
Tax is not the answer to everything - although an increase in tax revenue would help to boost government revenue and help repay Covid expenses and debt.


Easily said, but it very much depends where we sit on the Laffer curve. Seems to me we are very near the peak.

Bjauck
16-06-2021, 08:01 AM
Easily said, but it very much depends where we sit on the Laffer curve. Seems to me we are very near the peak. With respect to taxation on Investor returns from residential real estate, we are nowhere near the peak. With respect to taxation of wage and salary earnings then we are more likely to be near the peak.

winner69
16-06-2021, 08:18 AM
OMG bringing the Laffer Curve into the discussion.

“How high should the top personal income tax rate be?”

“Well, the Laffer curve says its got to be between 0% and 100%”

fungus pudding
16-06-2021, 09:01 AM
OMG bringing the Laffer Curve into the discussion.

“How high should the top personal income tax rate be?”

“Well, the Laffer curve says its got to be between 0% and 100%”

That's a silly remark. The trick is to find the point on the curve that is most efficient; or more importantly, to recognise that raising taxes (or prices in business) does not necessarily make for increased revenue (or turnover).

P.S. Laffer sees 0% and 100% as the two known points that produce the same result. There is always a high figure and a low figure that will produce equal revenue.

SBQ
16-06-2021, 11:52 AM
OMG bringing the Laffer Curve into the discussion.

“How high should the top personal income tax rate be?”

“Well, the Laffer curve says its got to be between 0% and 100%”

Capital gain on houses in NZ is not considered income and therefore, does not form in part of the tax revenue by IRD.

However, what matters to the person investing is what after tax benefit do they see? A) Buy houses or B) Kiwi Saver funds ? Historically it's always been the former that has the choice for making $ - and therefore taxation being of moot interest in the Laffer Curve (maximising efficiency).

SBQ
16-06-2021, 11:54 AM
OMG bringing the Laffer Curve into the discussion.

“How high should the top personal income tax rate be?”

“Well, the Laffer curve says its got to be between 0% and 100%”

Capital gain on houses in NZ is not considered income and therefore, does not form in part of the tax revenue by IRD.

However, what matters to the person investing is what after tax benefit do they see? A) Buy houses or B) Kiwi Saver funds ? Historically it's always been the former that has the choice for making $ - and therefore taxation being of moot interest in the Laffer Curve (maximising efficiency).

Panda-NZ-
19-06-2021, 12:46 PM
https://www.oneroof.co.nz/news/39651

Say it aint so, its about the land.

Panda-NZ-
22-06-2021, 11:59 PM
Maybe there's been too much stimulus or its been too broad.

The govt could wind down some work so residential property has a chance.

Interesting to contrast this situation to that described on the first page.
Where are all the people coming from? NZ must be an attractive destination.

SBQ
23-06-2021, 12:17 PM
Maybe there's been too much stimulus or its been too broad.

The govt could wind down some work so residential property has a chance.

Interesting to contrast this situation to that described on the first page.
Where are all the people coming from? NZ must be an attractive destination.

As I been saying all along. The demand is fueled by tax advantages (or lack of income tax) on housing investments. You know the people that have the $ and income that can borrow cheap money.

In addition to a supply problem but the latter above is by far the #1 incentive bar none.

peetter
24-06-2021, 11:49 AM
As I been saying all along. The demand is fueled by tax advantages (or lack of income tax) on housing investments. You know the people that have the $ and income that can borrow cheap money.

In addition to a supply problem but the latter above is by far the #1 incentive bar none.

These "tax advantages" are completely normal across most of the world including depreciation on real estate and no ring fencing. The ring fencing actually makes property investing less advantageous compared to business as you can deduct losses on business against your income. I think what you're trying to get to is no CGT. Well for most of those horrible investors, CGT doesn't matter, because they won't sell for decades or they'll just leave it to their children.

You know the #1 problem is not investors, but supply. Saying otherwise is plain lying. There's 20000 people on HNZ waitlist and thousands in emergency housing and you're saying problem is there are people who provide rentals. Most of the investors took a step back to wait for government to reveal the new rules and houses are still flying off the shelves and prices rising.

RMA should have been changed years ago to allow easier and cheaper development. There also needs to be a shift in NZ mentality to accept you can't grow a city without building apartment buildings.

ynot
26-06-2021, 02:06 PM
https://www.google.com.au/amp/s/thespinoff.co.nz/business/25-06-2021/bernard-hickey-how-hope-for-a-generation-was-lost/%3famp

Bernard Hickey has nailed it.
I agree there is zero future for many young Kiwis hoping to own a home here.
The property market in NZ is an absolute discgrace.

fungus pudding
26-06-2021, 02:20 PM
As I been saying all along. The demand is fueled by tax advantages (or lack of income tax) on housing investments. You know the people that have the $ and income that can borrow cheap money.

In addition to a supply problem but the latter above is by far the #1 incentive bar none.

It is only a supply problem. Nothing more

Zaphod
26-06-2021, 02:41 PM
https://www.google.com.au/amp/s/thespinoff.co.nz/business/25-06-2021/bernard-hickey-how-hope-for-a-generation-was-lost/%3famp

Bernard Hickey has nailed it.
I agree there is zero future for many young Kiwis hoping to own a home here.
The property market in NZ is an absolute discgrace.

Coupled with a complete lack of strategy to improve productivity or to create a high paying jobs, NZ's future is decidedly bleak.

JohnnyTheHorse
26-06-2021, 02:43 PM
https://www.google.com.au/amp/s/thespinoff.co.nz/business/25-06-2021/bernard-hickey-how-hope-for-a-generation-was-lost/%3famp

Bernard Hickey has nailed it.
I agree there is zero future for many young Kiwis hoping to own a home here.
The property market in NZ is an absolute discgrace.

The societal flow on effects paints a bleak picture for NZ.


It is only a supply problem. Nothing more

I believe this to be incorrect. The root cause is excess liquidity through money printing / low rates. For example, you could not have prices at current levels due to lack of supply, but no excess liquidity (i.e. even if there was a shortage of houses, there would be an even greater shortage of people that could afford a $1m mortgage at 7% interest). On the contrary, you can achieve current prices due to excess liquidity alone, without an associated true undersupply. If you need evidence of this look at the 2008 housing bust.

smpl
26-06-2021, 02:52 PM
The root cause is excess liquidity through money printing / low rates.

I agree with this statement. I would also say that debt is a large contributing factor. I mean, if banks did not grant such large loans it would stop the insane leveraging into this asset class. The house of cards will all come crashing down in the end.

ynot
26-06-2021, 02:57 PM
The societal flow on effects paints a bleak picture for NZ.



I believe this to be incorrect. The root cause is excess liquidity through money printing / low rates. For example, you could not have prices at current levels due to lack of supply, but no excess liquidity (i.e. even if there was a shortage of houses, there would be an even greater shortage of people that could afford a $1m mortgage at 7% interest). On the contrary, you can achieve current prices due to excess liquidity alone, without an associated true undersupply. If you need evidence of this look at the 2008 housing bust.
Young Kiwis wanting to own a home have nothing to loose by going to Aus and having a crack. Even if they were to be unfortunate enough to fail over there, they would be no worse of than if they had stayed here and paid $500 pw rent for the rest of their days.
Anyway I believe if they try hard enough in Aus they will make it in the end. The opportunities for people prepared to work hard in Aus leave NZ a distant second in making a better life for yourself.
I would not be surprised to see more Kiwis crossing the ditch soon enough.

SBQ
26-06-2021, 09:08 PM
These "tax advantages" are completely normal across most of the world including depreciation on real estate and no ring fencing. The ring fencing actually makes property investing less advantageous compared to business as you can deduct losses on business against your income. I think what you're trying to get to is no CGT. Well for most of those horrible investors, CGT doesn't matter, because they won't sell for decades or they'll just leave it to their children.

You know the #1 problem is not investors, but supply. Saying otherwise is plain lying. There's 20000 people on HNZ waitlist and thousands in emergency housing and you're saying problem is there are people who provide rentals. Most of the investors took a step back to wait for government to reveal the new rules and houses are still flying off the shelves and prices rising.

RMA should have been changed years ago to allow easier and cheaper development. There also needs to be a shift in NZ mentality to accept you can't grow a city without building apartment buildings.

Investing in rental properties has ALWAYS been about the capital gain. You are incorrect - every other OECD nation deals with capital gains in a way by taxing it. NZ DOES NOT and if you read closely to what i've been saying, buying houses in NZ is still the best game in town because of the amount of capital gain.

Read my links here in another thread which is discussed in parallel to this thread:

https://www.sharetrader.co.nz/showthread.php?11274-ADRIAN-ORR-our-NEW-RBNZ-GOVERNOR&p=892227&viewfull=1#post892227

The important part is what I posted in quotes. Why? I say it's fueled by the behaviour of the people knowing that NZ does not tax long term capital gains on residential houses. It has nothing, absolutely nothing.. about the way rental properties can generate an income.

But don't take my word for it, here's what Bernard Hickey said in ynot's post:


That housing supply shortage was created by the three main pieces of legislation that now govern New Zealand: the 1989 Public Finance Act, the 1988 State Sector Act and the 1991 Resource Management Act. Collectively, they corralled councils and the government into prioritising public debt reduction and reducing public infrastructure spending. They drove the expansion of privately provided housing, especially rental housing when combined with easier credit and no capital gains tax.


The latter about 'easier credit' I blame it on the behaviour aspect of investors. Owning 5 houses isn't enough and I know a family friend that is aiming to buy his 10th house before he retires.

@ Zaphod: lack of productivity due to tax laws that disadvantage the working class and give the benefit to all those that own houses. What NZ has is the complete opposite of what Canada has where the middle working class get TAX FREE or deferred taxes on their investment savings plans. NZ's Kiwi Saver funds pay taxes, Canada's RRSP defers the taxes or there are tax free options like TFSA, RESP, RDSP, etc. While the wealthy, they lose those tax benefits when their incomes go past a higher point. They call it 'claw backs' on their CCP pension funds (ie NZ super).

Who is going to disagree with Bernard Hickey?

peetter
26-06-2021, 11:00 PM
Investing in rental properties has ALWAYS been about the capital gain. You are incorrect - every other OECD nation deals with capital gains in a way by taxing it. NZ DOES NOT and if you read closely to what i've been saying, buying houses in NZ is still the best game in town because of the amount of capital gain.

Read my links here in another thread which is discussed in parallel to this thread:

https://www.sharetrader.co.nz/showthread.php?11274-ADRIAN-ORR-our-NEW-RBNZ-GOVERNOR&p=892227&viewfull=1#post892227

The important part is what I posted in quotes. Why? I say it's fueled by the behaviour of the people knowing that NZ does not tax long term capital gains on residential houses. It has nothing, absolutely nothing.. about the way rental properties can generate an income.

But don't take my word for it, here's what Bernard Hickey said in ynot's post:



The latter about 'easier credit' I blame it on the behaviour aspect of investors. Owning 5 houses isn't enough and I know a family friend that is aiming to buy his 10th house before he retires.

@ Zaphod: lack of productivity due to tax laws that disadvantage the working class and give the benefit to all those that own houses. What NZ has is the complete opposite of what Canada has where the middle working class get TAX FREE or deferred taxes on their investment savings plans. NZ's Kiwi Saver funds pay taxes, Canada's RRSP defers the taxes or there are tax free options like TFSA, RESP, RDSP, etc. While the wealthy, they lose those tax benefits when their incomes go past a higher point. They call it 'claw backs' on their CCP pension funds (ie NZ super).

Who is going to disagree with Bernard Hickey?


Investing in houses is the best game in town almost anywhere. CGT hasn't changed that in any country. Even with tax free share investments and CGT on property, you'll never beat the property just because the leverage gives you better returns. Also tax free retirement fund gives you money when retired, so government doesn't have to give you back part of what you paid during working decades, but does nothing for your quality of life during your working years.

There's no better way for low to middle class salary earner to get wealthy than property. Not everyone is capable to start business.

I am all for CGT, it will change nothing... well something... share gains will be taxed.

fungus pudding
27-06-2021, 06:38 AM
Investing in rental properties has ALWAYS been about the capital gain.

Speak for yourself. It certainly wasn't for me - or others I know. When I began buying houses in the 1960s I never gave one thought to capital gain. I invested to build an income. Full stop. So did other landlords I got to know.

Bjauck
27-06-2021, 08:10 AM
Investing in houses is the best game in town almost anywhere. CGT hasn't changed that in any country. Even with tax free share investments and CGT on property, you'll never beat the property just because the leverage gives you better returns. Also tax free retirement fund gives you money when retired, so government doesn't have to give you back part of what you paid during working decades, but does nothing for your quality of life during your working years.

There's no better way for low to middle class salary earner to get wealthy than property. Not everyone is capable to start business.

I am all for CGT, it will change nothing... well something... share gains will be taxed. Investing in home ownership and investor Real estate is still one of the best investment avenues in the countries we like to compare NZ with - for example the UK, Australia and Canada. However those countries do try to have a tax system so that investment real estate property gains have a similar tax burden to gains from other investments. This is achieved through CGT, stamp duties and a grossing up of pension plan contributions and with gross income accumulating in pension plans.

I think consequently those countries have a stock market capitalisation at a size more in keeping with the size of their economies - unlike NZ's.

SBQ
27-06-2021, 08:44 AM
Speak for yourself. It certainly wasn't for me - or others I know. When I began buying houses in the 1960s I never gave one thought to capital gain. I invested to build an income. Full stop. So did other landlords I got to know.


@ peetter

Investing in houses is the best game in town almost anywhere. CGT hasn't changed that in any country. Even with tax free share investments and CGT on property, you'll never beat the property just because the leverage gives you better returns. Also tax free retirement fund gives you money when retired, so government doesn't have to give you back part of what you paid during working decades, but does nothing for your quality of life during your working years.

There's no better way for low to middle class salary earner to get wealthy than property. Not everyone is capable to start business.


Even in 2000, working on the passive income was all talked about in rental properties. When I 1st arrived to NZ I was surprised of this that the philosophy was "getting the tenants to PAY FOR the mortgage!" I thought how can this be as this was never the case back in Canada because the focus was capital gain there. I questioned if you can sucker tenants to pay enough rent $ that would service 100% of the mortgage like in a business, then why the hell can't the tenant go for a mortgage themselves? I have friends back in Canada that worked on the angle the rental income only 'supplements' their mortgage and because of this, it is still NOT the best game in town.

Overall you've missed my point and as what Bernard Hickey has been saying, NZ has on demand controls on the purchase of multiple houses by investors. No one is saying that the principal resident should be tax free. What other countries have done is at least, discourage the activity of MULTIPLE HOUSE ownership - where do you draw the line and what is the ethical point of view. There's a social mobility problem in NZ. What I miss in Canada so much is the working class does GET the benefit on various gov't registered investment plans and you will be mistaken (as a close friend in Vancouver who invested early in real estate there told me), buying stocks hindsight would of been the better option. When regular families can have RESP, TFSA, that the question being able to afford for their children's uni education is solved through investment which is tax free. The Cdn gov't even matches grants to these investment schemes ensuring that a better Canada is rooted on education. The culture and education there tells us that owning multiple houses returns you less and far less productive than any other venture. Likewise, the banks there have moral suasion meaning they are not quick to lend $ to a person that already owns 2 or 3 properties (in favour to lending to the 1st home owner - which is gov't CMHC backed insured). All the new measures that the Cdn gov't has done in the past 30 years - what has the NZ gov't done in respect to housing affordability? PISS ALL NOTHING and Bernard Hickey has pushed this question why and formally says today - there's no hope - move over to Australia.

You don't have to take my word on this issue or agree that buying multiple houses is the best game in town in say Canada. I know it's not by just looking at the total make up of investments made in Canada. In NZ we probably have like 80% of the wealth tied in bricks and motar and 20% in the NZX. In Canada it's closer to the other way around.

I STRONGLY suggest the people to hear out and read what Bernard Hickey had to say in ynot's link. Let me repost:

https://thespinoff.co.nz/business/25-06-2021/bernard-hickey-how-hope-for-a-generation-was-lost/

Because I can assure you, those in that camp winning, sitting on multiple house ownership, is too busy gloating on how much their wealth is and how they're able to send their kids to expensive private school etc. We've become a society about 'all for myself and who cares about the others'.

Oh and peetter's comment that not everyone can start a business. Let me ask you what exactly does the word "shareholder" mean? Warren Buffet insists that owning stocks means you are a "PART OWNER of THAT BUSINESS", either big or small investor - everyone gets the same benefit. Unfortunately in NZ, our Kiwi Saver funds are taxed, just like the PIE funds etc. Why is the productive class fooled into this issue that a 3% matching from the employer means they're all of a sudden a shareholder with purpose when their retirement fund pales in value to the same person working in Canada or in the US under a deferred tax scheme? Quite certainly in NZ, the table has been skewed towards the tax free nature of owning multiple houses.

ynot
27-06-2021, 09:15 AM
Absolutely.
You need look no further than Australia's
9% employer super contribution or the 15% tax cap on salary sacrifice contrbutions on super to see NZ govt effort to assist the kiwi middle class to save toward retirement is non existent.
Successive NZ governments have failed the middle class to the extreme.
Now they are going to fail their children as well.
The damage from this situation can not be overstated.

peetter
27-06-2021, 10:09 AM
Even in 2000, working on the passive income was all talked about in rental properties. When I 1st arrived to NZ I was surprised of this that the philosophy was "getting the tenants to PAY FOR the mortgage!" I thought how can this be as this was never the case back in Canada because the focus was capital gain there. I questioned if you can sucker tenants to pay enough rent $ that would service 100% of the mortgage like in a business, then why the hell can't the tenant go for a mortgage themselves? I have friends back in Canada that worked on the angle the rental income only 'supplements' their mortgage and because of this, it is still NOT the best game in town.

Overall you've missed my point and as what Bernard Hickey has been saying, NZ has on demand controls on the purchase of multiple houses by investors. No one is saying that the principal resident should be tax free. What other countries have done is at least, discourage the activity of MULTIPLE HOUSE ownership - where do you draw the line and what is the ethical point of view. There's a social mobility problem in NZ. What I miss in Canada so much is the working class does GET the benefit on various gov't registered investment plans and you will be mistaken (as a close friend in Vancouver who invested early in real estate there told me), buying stocks hindsight would of been the better option. When regular families can have RESP, TFSA, that the question being able to afford for their children's uni education is solved through investment which is tax free. The Cdn gov't even matches grants to these investment schemes ensuring that a better Canada is rooted on education. The culture and education there tells us that owning multiple houses returns you less and far less productive than any other venture. Likewise, the banks there have moral suasion meaning they are not quick to lend $ to a person that already owns 2 or 3 properties (in favour to lending to the 1st home owner - which is gov't CMHC backed insured). All the new measures that the Cdn gov't has done in the past 30 years - what has the NZ gov't done in respect to housing affordability? PISS ALL NOTHING and Bernard Hickey has pushed this question why and formally says today - there's no hope - move over to Australia.

You don't have to take my word on this issue or agree that buying multiple houses is the best game in town in say Canada. I know it's not by just looking at the total make up of investments made in Canada. In NZ we probably have like 80% of the wealth tied in bricks and motar and 20% in the NZX. In Canada it's closer to the other way around.

I STRONGLY suggest the people to hear out and read what Bernard Hickey had to say in ynot's link. Let me repost:

https://thespinoff.co.nz/business/25-06-2021/bernard-hickey-how-hope-for-a-generation-was-lost/

Because I can assure you, those in that camp winning, sitting on multiple house ownership, is too busy gloating on how much their wealth is and how they're able to send their kids to expensive private school etc. We've become a society about 'all for myself and who cares about the others'.

Oh and peetter's comment that not everyone can start a business. Let me ask you what exactly does the word "shareholder" mean? Warren Buffet insists that owning stocks means you are a "PART OWNER of THAT BUSINESS", either big or small investor - everyone gets the same benefit. Unfortunately in NZ, our Kiwi Saver funds are taxed, just like the PIE funds etc. Why is the productive class fooled into this issue that a 3% matching from the employer means they're all of a sudden a shareholder with purpose when their retirement fund pales in value to the same person working in Canada or in the US under a deferred tax scheme? Quite certainly in NZ, the table has been skewed towards the tax free nature of owning multiple houses.


You're wrong. Unless you're extremely lucky, you won't get higher return from shares than property as a beginner investor. You can put down 5% here. Buy house needing a lot of work. Spend some time fixing it and increase value of that house by tens of thousands of dollars. This only snowballs when you know what to do. On the other hand that 5% deposit would only double in 10 years in sharemarket.

I do agree with you that the government should give people better tax free option to save for retirement though. And as I said before, I am all for CGT.

I don't want to go discussion about what's greedy and not. I am from post soviet country, so I am pretty alergic to people who think redistribution of wealth is the way to go.

Bjauck
27-06-2021, 11:28 AM
...
I don't want to go discussion about what's greedy and not. I am from post soviet country, so I am pretty alergic to people who think redistribution of wealth is the way to go.
Behind the old Iron Curtain, weren't the Communist Party Officials in effect the born-again aristocracy with privileged access to healthcare, cars and appartments etc?

It is not necessarily a question of redistributing wealth, but just ensuring a fair rate of tax is levied on all investment returns. It makes me laugh when many of those promoting a "flat tax", conveniently ignore capital and non-income gains. In effect they want a flat income tax, while keeping capital gains mostly untaxed. In other words they want to keep a highly regressive overall tax system with the onus on income earners and GST.

fungus pudding
27-06-2021, 12:31 PM
The societal flow on effects paints a bleak picture for NZ.



I believe this to be incorrect. The root cause is excess liquidity through money printing / low rates. For example, you could not have prices at current levels due to lack of supply, but no excess liquidity (i.e. even if there was a shortage of houses, there would be an even greater shortage of people that could afford a $1m mortgage at 7% interest). On the contrary, you can achieve current prices due to excess liquidity alone, without an associated true undersupply. If you need evidence of this look at the 2008 housing bust.

Slap up 200,000 new houses and of course you'll see prices and rents drop.

RTM
27-06-2021, 12:32 PM
https://www.google.com.au/amp/s/thespinoff.co.nz/business/25-06-2021/bernard-hickey-how-hope-for-a-generation-was-lost/%3famp

Bernard Hickey has nailed it.
I agree there is zero future for many young Kiwis hoping to own a home here.
The property market in NZ is an absolute discgrace.

Jeeze that's a depressing Sunday read. Suits the day. No easy answers that are politically acceptable. Thanks for posting it.

ynot
27-06-2021, 12:52 PM
[QUOTE=RTM;892417]Jeeze that's a depressing Sunday read. Suits the day. No easy answers that are politically acceptable. Thanks for posting it.[/QUOTE

Hate to be the bearer of bad news but we do need to face the implications. We have in effect stolen what I consider the birthright of all Kiwis, to own a home.
Whats more, it's obvious politicians don't give a rats a... . They still get their fat paychecks.

beetills
27-06-2021, 02:01 PM
Are u saying that a flick of the hair,a toothy grin and a frown can't fix this?
Under new laws that may come in this would be considered hate speech.

beetills
27-06-2021, 02:07 PM
Are u saying that the flick of the hair,a toothy grin and a frown can't fix the housing problem?
This is hate speech and Kris Fafoi must be advised pronto.

SBQ
27-06-2021, 05:29 PM
Slap up 200,000 new houses and of course you'll see prices and rents drop.

Except there's no real plan to increase the supply - there never was as Mr Hickey had described. One gov't party in power after another ; all kept rolling a long doing nothing.

You aware it's technically impossible to increase the building density in any major urban area of NZ? (i'm speaking about the RMA).

fungus pudding
27-06-2021, 05:43 PM
Except there's no real plan to increase the supply - there never was as Mr Hickey had described. One gov't party in power after another ; all kept rolling a long doing nothing.

You aware it's technically impossible to increase the building density in any major urban area of NZ? (i'm speaking about the RMA).

It's not technically impossible at all. But it is legally challenging to navigate the rma.

SBQ
27-06-2021, 06:27 PM
It's not technically impossible at all. But it is legally challenging to navigate the rma.

I wouldn't bet on it. As Mr Hickey interviewed the person from Wellington that spoke for the council, the move to intensify building density came with outrage by the camp that is also known as the NIMBY (Not In My Back Yard) association. Vancouver has a bit of that but the need was greater an up went these 40 story high rise apartments.

The Auckland Unitary Plan is also at risk - slowing butchered up so more and more areas become exempted in the way how the Greenies want things.

ynot
27-06-2021, 07:02 PM
Are u saying that a flick of the hair,a toothy grin and a frown can't fix this?
Under new laws that may come in this would be considered hate speech.

yea, na. probably beyond fixing if were being honest.
Anyway yes, just getting my 2 cents worth in before the thought police come to get me.

Bjauck
27-06-2021, 09:19 PM
I wouldn't bet on it. As Mr Hickey interviewed the person from Wellington that spoke for the council, the move to intensify building density came with outrage by the camp that is also known as the NIMBY (Not In My Back Yard) association. Vancouver has a bit of that but the need was greater an up went these 40 story high rise apartments.

The Auckland Unitary Plan is also at risk - slowing butchered up so more and more areas become exempted in the way how the Greenies want things. NZ has made acquiring a home so expensive that home-owners jealously guard their properties and home values. That is understandable.

I am not surprised NIMBYism thrives in NZ. The compensation provisions in the Public Works Act are seriously outdated. Neighbouring properties to any works/developments do not have to to be compensated. Also, as soon as a notice of requirement is stuck on a land title, the way to obtain compensation involves a convoluted process including an application to the environment court. Compensation does not include fair compensation for non-monetary effects. The acquiring authority is under no obligation to purchase/compensate in a timely manner after plans are first published or a requirement lodged and can take years over it.

Disc: That is my understanding and opinion. If you are involved in a public works situation DYOR.

Aaron
30-06-2021, 03:35 PM
It is only a supply problem. Nothing more

Are you sure could it be a demand problem?

https://www.stuff.co.nz/business/industries/125610150/house-prices-would-double-in-five-years-if-net-migration-returned-to-precovid-levels-anz-research-shows

I suspect it is largely a monetary policy problem.

https://www.nzherald.co.nz/business/reserve-bank-of-nz-needs-to-raise-official-cash-rate-soon-to-counter-inflation-economist/7YV3PBC67PVJWULBVOSGGZ2PNY/

Rodd Carr and the climate change commission considered the perfect number of livestock NZ should maintain, but I think they overlooked what the perfect number of humans might be for a country our size. I reckon about 5mill.

Topagent
04-07-2021, 07:46 AM
100% a supply problem. The interesting thing is that there are a lot of people wanting to sell but they continue to wait as there is a real fear of lack of choice for the next purchase. If every house I appraised came to the market you would feel like they would supply each other. We need new builds and lots of them to free up stock. In my city we only have just over 500 houses for sale ... 12 years ago we sat over 2000.

kiora
04-07-2021, 08:30 AM
50 % of Auckland population wasn't born in NZ
For the rest of NZ it is 30 %
"New Zealand's resident population provisionally reached 5 million in March 2020, Stats NZ said today.

"This is a significant event for New Zealand,” population insights senior manager Brooke Theyers said.

“It is also the fastest million in our history, taking 17 years after reaching 4 million in 2003.""
https://www.stats.govt.nz/news/new-zealands-population-passes-5-million

Which is also saying as much as it is a supply problem it is created by the demand problem.
Where is the demand coming from?

Bjauck
04-07-2021, 09:08 AM
50 % of Auckland population wasn't born in NZ
For the rest of NZ it is 30 %
"New Zealand's resident population provisionally reached 5 million in March 2020, Stats NZ said today.

"This is a significant event for New Zealand,” population insights senior manager Brooke Theyers said.

“It is also the fastest million in our history, taking 17 years after reaching 4 million in 2003.""
https://www.stats.govt.nz/news/new-zealands-population-passes-5-million

Which is also saying as much as it is a supply problem it is created by the demand problem.
Where is the demand coming from?

NZ has failed to ensure that supply has kept with the demand created as a result of its immigration policies. A boost to the economy looks great. However as opposed from a big boost to productivity, it is from a big boost to immigration, for which the country has poorly catered. Then it causes pain and stress and blame scapegoating.

Perhaps it is more convenient to blame supposedly self-centred nimbies for complaining about urgent intensification, as opposed to properly planning new towns, infrastructure and residential building to gradually cater for policies that result in less rapid population growth.

Why has NZ decided upon a path to overpopulating? An opportunity squandered?

SBQ
07-07-2021, 12:06 PM
NZ has failed to ensure that supply has kept with the demand created as a result of its immigration policies. A boost to the economy looks great. However as opposed from a big boost to productivity, it is from a big boost to immigration, for which the country has poorly catered. Then it causes pain and stress and blame scapegoating.

Perhaps it is more convenient to blame supposedly self-centred nimbies for complaining about urgent intensification, as opposed to properly planning new towns, infrastructure and residential building to gradually cater for policies that result in less rapid population growth.

Why has NZ decided upon a path to overpopulating? An opportunity squandered?

Perhaps we (the people of NZ) need to know how many properties all these politicians own? I'm a firm believer that when a financial adviser is selling you a product, you also must look at what they're investing in. So if NZ politicians are saying housing is a problem ; perhaps the people need to look at if issues such as CGT, will affect their investments in houses.

How they say, 'self serving their own interests?'

I will go as far as placing those NIMBY people in the same category as the NZ politicians. My uncle studied to be an architect in Auckland and my complaints about how poorly planned Auckland is when I compared to great cities overseas like Vancouver in how they future proof their developments. I was explaining how overseas sub divisions are 'grided' and often divided by an alley way road way to service the back yards of the houses. The response from him was "these grid like developments are boring" and then I say at the cost of what? Burning more fuel / energy because the street ways are not straight? How about the extra requirement to build long driveways for individual lots that get sub divided? (when in Vancouver the back alley road already serves as road access to building 'lane houses'.

Bjauck
07-07-2021, 07:08 PM
I will have to agree to disagree with you on Nimbies for various reasons including the value of the investment in their properties and antiquated NZ Compensation provisions.

I am always impressed by Inner Sydney. They have interesting street layouts and still provide service lanes for the properties too. However providing the rear service lane is important when you have terraced houses.

I have only had a fleeting visit to Vancouver driving from Seattle. However it is a well laid out city and it felt like coming home when crossing over from Washington state!

ynot
08-07-2021, 04:25 AM
Perhaps we (the people of NZ) need to know how many properties all these politicians own? I'm a firm believer that when a financial adviser is selling you a product, you also must look at what they're investing in. So if NZ politicians are saying housing is a problem ; perhaps the people need to look at if issues such as CGT, will affect their investments in houses.

How they say, 'self serving their own interests?'

I will go as far as placing those NIMBY people in the same category as the NZ politicians. My uncle studied to be an architect in Auckland and my complaints about how poorly planned Auckland is when I compared to great cities overseas like Vancouver in how they future proof their developments. I was explaining how overseas sub divisions are 'grided' and often divided by an alley way road way to service the back yards of the houses. The response from him was "these grid like developments are boring" and then I say at the cost of what? Burning more fuel / energy because the street ways are not straight? How about the extra requirement to build long driveways for individual lots that get sub divided? (when in Vancouver the back alley road already serves as road access to building 'lane houses'.
With regard to Vancouvers lane layout I wonder what the original thinking was to build this way. When I was there in the 80's I dont think laneway development had started. I just assumed it was more logical planning from the original developers. It struck me at the time as being very clever thinking to layout a community in that manner. Lightyears ahead of what I ever saw growing up in Auckland. The mess unfolding with Auckland subdivision of recent times i find disturbing. Absolute shambles.

JBmurc
08-07-2021, 09:44 AM
With regard to Vancouvers lane layout I wonder what the original thinking was to build this way. When I was there in the 80's I dont think laneway development had started. I just assumed it was more logical planning from the original developers. It struck me at the time as being very clever thinking to layout a community in that manner. Lightyears ahead of what I ever saw growing up in Auckland. The mess unfolding with Auckland subdivision of recent times i find disturbing. Absolute shambles.

Its not Just Auckland down southern lakes Queenstown is a mess ....all about fitting as many homes onto the land ..nothing around roading that makes sense many roads through these subdivision's not much bigger than a single lane ,,then as the sections are so small but house 3-4+ individuals all with cars >>and there is talk of even more housing feeding into roads overwhelmed with traffic

https://crux.org.nz/community/ladies-mile-qldc-frozen-in-the-headlights/?fbclid=IwAR1bhEYZk3INxKdjA1Ll7hLyBXNpvqXWtkU1wF0x vx8YoWH5Q2E8Ed3ws7k

look at the clip at the bottom of the article ....that starts 4kms out from Frankton roundabout another several kms to Qtn CBD ....and this is with very little tourism ..

Now Qtn only has tiny 16,700 population ...and they can't sort the traffic issues that have been around for over a decade ..

SBQ
08-07-2021, 09:52 AM
With regard to Vancouvers lane layout I wonder what the original thinking was to build this way. When I was there in the 80's I dont think laneway development had started. I just assumed it was more logical planning from the original developers. It struck me at the time as being very clever thinking to layout a community in that manner. Lightyears ahead of what I ever saw growing up in Auckland. The mess unfolding with Auckland subdivision of recent times i find disturbing. Absolute shambles.

Yes the term Lane Way houses never existed back then. The purpose of having alley ways was simply for back yard access to the houses. ie:

1) Storage or rubbish: since it was unsightly to leave the rubbish bags out in the front of the houses, storing them behind the house along the alley way was logical. Also some city bylaws required secure storage of the rubbish so wild animals would not ravage around making a mess.

2) Safety: yes quite often children would play in the back alley ways, away from the main road traffic. Growing up we had BMX jumps, played hockey, things kids do growing up, and parents knew playing right in front of the house where traffic could be busy was not safe. Normally the only vehicles that went down the back alleys roads were residents. I don't think in NZ, people understand the relevance of this? When you drive to your home on a main street with vehicles behind you (rushing) to get into you driveway, it's more difficult and stressful driving in (or backing in) at the front of your house. If you had your parking spot or garage in the back of the house, driving down the alleyway meant you would be less rushed in driving into the garage because there's normally not a queue of cars that would line up in the alley way.

3) But above all, the service lane provides easy of access of ALL dwellings when it comes to construction of houses. No cranes are required, no close interaction with the neighbour's fence adjacent to each house like what we have here in NZ with individually sub-divide lots. You get more privacy without seeing cars drive close along the side of your home.

In another thread, i've been criticized with the attitude that "this is NZ, and that is how we do things here". So it's without question and no surprise how the housing market has gone so unaffordable. Those that stand to gain from owning multiple houses are quick to say it's a supply problem and it's not a NIMBY issue. It seems the culture here is no one like myself, is allowed to question why? NZ should not look at how other countries address the housing supply problem. We have a Treaty of Waitangi where i've seen numerous times that the local Iwis just get the land, and sell it off for commercial gain. Very different than what I would see would be a better plan:

Speaking for housing for indigenous people, here's what's happening to the town where I grew up in Canada:

https://www.princegeorgecitizen.com/local-news/aboriginal-housing-development-will-provide-homes-and-care-for-at-risk-seniorselders-3928359

"The entire project will eventually have 200 affordable housing units on the 2.8-hectare site."

Here in NZ, because of this stupid RMA, we boast about fitting 16 titled service lots per hectare. The above example is over 70 per hectare and though there may be some examples of this density of building in NZ, such projects are not a common occurrence due to over regulations and restrictions (to the point that they're not economically viable in NZ). In Canada, the gov't provides the grants and subsidies for increasing the supply of building higher density projects (not by simply giving city land back to the 1st Nations - in return, the gov't builds projects FOR THEM as they have higher priority). Here in Chch, i've seen Ngai Tahu take huge areas of land (ie Wigram) and flip it off where they pocket the funds so their balance sheets will grow to $100M figures. I use to applaud certain Iwis that would move on and make progress but when I look closer, what Ngai Tahu has done is not a good example as many who are part Ngai Tahu, continue to live in subsistence living standards (meaning they don't equally share the wealth and the continue to put their hand out to the gov't on basic issues like health care etc because Ngai Tahu does a poor job in helping their Iwi. It's a joke and I hate to say it. No wonder Bernard Hickey has lost all hope in NZ for future generations wanting to get into a home. (less those top 5% that already have equity from richer parents).

Oh and about the NIMBY issue. This it not to say that NIMBY does not exist in other places like Vancouver. For those in that camp there, they complain about a 5 - 10 story build complex. For NZ, they complain about single story houses being built in front of them believing it disrupts their hillside view.

JBmurc
08-07-2021, 09:54 AM
double post

ynot
08-07-2021, 10:27 AM
Living in NZ has it's good points, dont get me wrong but crikey, we have managed our growth badly.
After seeing some great very livable apartments being built in Vancouver in the 80,s I can't help but think we could have easily achieved similar affordable housing here with a little foresight. Sadly foresight is not something we do.

Bjauck
08-07-2021, 10:56 AM
Living in NZ has it's good points, dont get me wrong but crikey, we have managed our growth badly.
After seeing some great very livable apartments being built in Vancouver in the 80,s I can't help but think we could have easily achieved similar affordable housing here with a little foresight. Sadly foresight is not something we do. Sadly not many good points in relation to housing and urban development. Foresight is sadly lacking here. Things are left to become urgent or a crisis. Then plans are rushed through. Hence much of the nimbyism arises as residents think their interests and concerns are brushed aside.

The new developments in S Auckland have large dwellings on small sections with narrow roads. There are few public spaces, playgrounds or parks. Residents' cars end up being parked on the roads creating numerous bottlenecks and choke points. I think the latest regulations have fewer requirements for off street parking - not very practical for suburban Auckland with its patchy public transport. Are we creating the slum housing of the future?

TeslaGod
26-08-2021, 02:32 PM
BlackRock , one of the largest landlords in the world

Looks to Realestate and infrastructure

Economic growth increasing demand

Higher construction cost limit supply.

Who am I to argue, win win for me.

SBQ
26-08-2021, 05:50 PM
BlackRock , one of the largest landlords in the world

Looks to Realestate and infrastructure

Economic growth increasing demand

Higher construction cost limit supply.

Who am I to argue, win win for me.

I'm not entirely against Blackrock buying up real estate in the US. Even Bill Gates has bought up vast amounts of farmland. The key distinction? They will pay capital gains tax. They're not gaming the system like investors do in NZ holding well past the Brightline test. Anotherwords, the examples there are not comparable to the examples I see in NZ.

TeslaGod
26-08-2021, 06:03 PM
I'm not entirely against Blackrock buying up real estate in the US. Even Bill Gates has bought up vast amounts of farmland. The key distinction? They will pay capital gains tax. They're not gaming the system like investors do in NZ holding well past the Brightline test. Anotherwords, the examples there are not comparable to the examples I see in NZ.

Obviously you don't understand how the wealthy especially in the U.S manage to avoid paying a CGT .

I'll give you a hint

I do exactly the same which is why I or they do not sell off real estate and land, or company shares for that matter.

SBQ
26-08-2021, 08:30 PM
Obviously you don't understand how the wealthy especially in the U.S manage to avoid paying a CGT .

I'll give you a hint

I do exactly the same which is why I or they do not sell off real estate and land, or company shares for that matter.

If you're talking about 'generational wealth transfer' in the US, those days are numbered. You need to get your facts straight! The US tax code is entirely different to IRD so you have a gross misunderstanding.

https://www.mpamag.com/us/news/general/biden-to-abolish-capital-gains-tax-loophole-for-real-estate-investors/253650

The US has estate death taxes or deemed disposition of assets upon death. Something that NZ does not have. All references for the US resident point to a lowering of CGT but not an entire elimination of CGT upon deemed disposition. So please point to some meaningful references before you make false claims.

TeslaGod
26-08-2021, 09:18 PM
If you're talking about 'generational wealth transfer' in the US, those days are numbered. You need to get your facts straight! The US tax code is entirely different to IRD so you have a gross misunderstanding.

https://www.mpamag.com/us/news/general/biden-to-abolish-capital-gains-tax-loophole-for-real-estate-investors/253650

The US has estate death taxes or deemed disposition of assets upon death. Something that NZ does not have. All references for the US resident point to a lowering of CGT but not an entire elimination of CGT upon deemed disposition. So please point to some meaningful references before you make false claims.
No I'm not referring to generational wealth transfer.

I'm referring to how they avoid a CGT and keep what they own.

Like me, so a CGT if introduced into NZ would not affect me at all.

Infact I get a tax rebate.

Smart people don't earn there wealth by giving half of it away, I guess that's were me and you differ SBQ.

SBQ
27-08-2021, 09:46 AM
No I'm not referring to generational wealth transfer.

I'm referring to how they avoid a CGT and keep what they own.

Like me, so a CGT if introduced into NZ would not affect me at all.

Infact I get a tax rebate.

Smart people don't earn there wealth by giving half of it away, I guess that's were me and you differ SBQ.

You have referred to nothing in how a US resident is exempted from paying CGT or income taxes. If you are referring to trusts, the IRS treats trusts no different to a separate entity and is taxed in the same way.

https://www.wealthmanagement.com/high-net-worth/how-are-trusts-taxed

Either the assets held by the individual or a trust or in a company, the IRS will apply taxation. The minute an asset such as a house or shares in a publicly traded company, is transferred, CGT does apply. But in NZ, IRD does not apply any tax on houses held for more than 10 years (and if demonstrated the intent is not for profiting).

So Mr TeslaGod, show us some substance. You have a lot of waffle in your posts.

TeslaGod
27-08-2021, 10:57 AM
You have referred to nothing in how a US resident is exempted from paying CGT or income taxes. If you are referring to trusts, the IRS treats trusts no different to a separate entity and is taxed in the same way.

https://www.wealthmanagement.com/high-net-worth/how-are-trusts-taxed

Either the assets held by the individual or a trust or in a company, the IRS will apply taxation. The minute an asset such as a house or shares in a publicly traded company, is transferred, CGT does apply. But in NZ, IRD does not apply any tax on houses held for more than 10 years (and if demonstrated the intent is not for profiting).

So Mr TeslaGod, show us some substance. You have a lot of waffle in your posts.

Well it looks like you spent all morning or all night searching Google to get your answer.

That's what I pay my accountant and lawyer's to do.

SBQ Wrong (as usual)

I'll give you another hint

It's impossible to be banned, taxed, or made illegal.

Joshuatree
03-03-2022, 12:28 PM
All go for the Sleepyhead town,re 1100 affordable homes to be built and a 100,000 Sq factory.Heaps of jobs.Took ages to get there,the regional council resisting change,amidst political posturing. Great it didn't end up going off shore.:t_up:

Balance
05-03-2022, 08:56 AM
All go for the Sleepyhead town,re 1100 affordable homes to be built and a 100,000 Sq factory.Heaps of jobs.Took ages to get there,the regional council resisting change,amidst political posturing. Great it didn't end up going off shore.:t_up:

https://www.stuff.co.nz/business/127...s-racist-email

The leftist racist supporters of Cindy attempt to cancel a business leader (Craig Turner) who shared ACT Dr Muriel Newman’s views & forwarded her email of Cindy’s hidden agenda to impose racist policies on all NZers.

We see some posters here (like Joshuatree especially) attempting at every turn (to cancel) to do the same - so embarrassed & alarmed are they that their hidden agenda is being exposed for all to see.

Muse
05-03-2022, 07:57 PM
https://www.stuff.co.nz/business/127...s-racist-email

The leftist racist supporters of Cindy attempt to cancel a business leader (Craig Turner) who shared ACT Dr Muriel Newman’s views & forwarded her email of Cindy’s hidden agenda to impose racist policies on all NZers.

We see some posters here (like Joshuatree especially) attempting at every turn (to cancel) to do the same - so embarrassed & alarmed are they that their hidden agenda is being exposed for all to see.

jeez can't you just leave it balance - every thread there you are, blasting away

arekaywhy
06-03-2022, 08:58 AM
https://www.stuff.co.nz/business/127...s-racist-email

The leftist racist supporters of Cindy attempt to cancel a business leader (Craig Turner) who shared ACT Dr Muriel Newman’s views & forwarded her email of Cindy’s hidden agenda to impose racist policies on all NZers.

We see some posters here (like Joshuatree especially) attempting at every turn (to cancel) to do the same - so embarrassed & alarmed are they that their hidden agenda is being exposed for all to see.

The link no longer works, here is new one...

https://www.stuff.co.nz/business/127955922/calls-for-sleepyhead-boycott-after-director-shares-racist-email

I note that they do not address any of the material in the letter. Neither do they explain what makes the letter racist. In fact, the letter is pointing out preferential racial treatment that might be in the pipeline if the current government manages to pass legislation that they have signaled is their intent. Food for thought.

How this relates to the thread though...

Unless it is going to affect the development they are planning in TK?

fungus pudding
06-03-2022, 09:36 AM
The link no longer works, here is new one...

https://www.stuff.co.nz/business/127955922/calls-for-sleepyhead-boycott-after-director-shares-racist-email

I note that they do not address any of the material in the letter. Neither do they explain what makes the letter racist. In fact, the letter is pointing out preferential racial treatment that might ......

?? Is pointing out preferential racial treatment not explaining what makes the letter racist?

arekaywhy
07-03-2022, 04:59 AM
?? Is pointing out preferential racial treatment not explaining what makes the letter racist?

No, that is merely stating what is in the letter. I'm not sure where you were going with that. Are you suggesting that the article merely saying what is in the letter amounts to explanation of why the letter is racist? Or are you saying that the letter is racist from your own perspective, as the letter is pointing out preferential racial treatment?

What annoys me about these rags we used to call newspapers is the seemingly constant shouts of racism when pointing at some random thing. It is then left up to the reader to work out what the hell they are on about. Then, 9 times out of 10, it turns out that there was no racism there at all, or a perceived slight against someone when REALLY stretching and with some serious racism goggles on, or, even worse, it turns out to be a beat up on someone highlighting racist behavior towards white folks, or perpetrated by anyone other than white folks, which is of-course ok these days in the eyes of our leftist media.

I get the feeling from the article that the latter is in play.

Ricky-bobby
01-04-2022, 08:49 AM
Property weakening?.. know someone who just bought in Wellington @ 600k under RV. Only offer on the place… it was a multi-million dollar property in a nice area. Also a few higher end properties here are not moving… feels like a rapid cooling is approaching.

Logen Ninefingers
25-05-2022, 02:37 PM
Looks like nobody wants to talk about property these days. Wasn’t that long ago it was all people could talk about, excitedly gabbing away to each other about the huge prices they were paying and the huge mortgages they were taking on.

Shareguy
16-06-2022, 07:25 AM
We are in interesting times. What will happen to the property market is a common question these days. In fact in boom times it seemed to be a topic that dominates conversations, not so much in down times.

My thoughts are that property will continue to go up and down but as a general rule will double every 10 years, based on historical figures. Will history repeat itself no one really knows.

We started buying investment properties about 18 years ago in Auckland. In those days it was very easy to get money. With some of our properties we were able to get 110% mortgages. The banks were literally giving money away. Properties then seemed to be way undervalued. In places like Otara below replacement cost, which just didn’t make sense. The tax advantages were huge.

Our friends and family thought we were mad as we continued buying until the bank said no more. Gareth Morgan was saying at that time on the Holmes show that property was going to crash 40 percent and we had huge debt and had signed personal guarantees. We had young kids at the time and I remember feeling absolute dread thinking what have you done “we are going to lose everything”

These days you’ve got huge development happening not only from the state but also from the private sector. Large sections have been cut up and replaced with eight townhouses. If this level of development continues it is not going to be long before there is an oversupply.

For anyone wanting to get into property investment like any investment research is important. To make the big bucks you have to take risks. Its a lot harder to do these days with plenty of storm clouds on the horizon. But you know there is always something and I still feel that property investment is the key to achieve long-term wealth.

Logen Ninefingers
16-06-2022, 10:32 AM
Credit crunch on its way, and property is an illiquid investment. Shares you can flick off at the drop of a hat in a falling market, houses you can't. Rich can 'happily' stay in and watch their equity (on paper wealth) drop while the desperate have to take whatever the shrinking pool of buyers offer. The economy just contracted in the first quarter while The Fed has just raised interest rates by 75 bps. I cannot imagine how bad things are going to be come 2023 but we are careening towards a very ugly recession.

The negative issues with ultra-low interest rates are many -
1/ They create dangerous asset price bubbles.
2/ They cover up for 'zombie' companies and unprofitable businesses that are exposed when interest rates rise.
3/ They promote malinvestment.
4/ They encourage people to invest in risky investments, since the safer option of income provided by saving / term deposits is no longer available.

Many Kiwi's will see their latent wealth vaporised, it is already happening to the crash in crypto and equities. These were never 'safe' investments. They were pumped up by excessive speculation caused by grossly irresponsible central bank policies.


'One in 10 Kiwis are now holding crypto assets, according to the latest survey conducted for markets regulator the Financial Markets Authority.

And direct investment in shares has overtaken term deposits in popularity for the first time in the survey, although KiwiSaver remains by far (64%) the most held type of investment.'

JBmurc
16-06-2022, 10:51 AM
We are in interesting times. What will happen to the property market is a common question these days. In fact in boom times it seemed to be a topic that dominates conversations, not so much in down times.

My thoughts are that property will continue to go up and down but as a general rule will double every 10 years, based on historical figures. Will history repeat itself no one really knows.

We started buying investment properties about 18 years ago in Auckland. In those days it was very easy to get money. With some of our properties we were able to get 110% mortgages. The banks were literally giving money away. Properties then seemed to be way undervalued. In places like Otara below replacement cost, which just didn’t make sense. The tax advantages were huge.

Our friends and family thought we were mad as we continued buying until the bank said no more. Gareth Morgan was saying at that time on the Holmes show that property was going to crash 40 percent and we had huge debt and had signed personal guarantees. We had young kids at the time and I remember feeling absolute dread thinking what have you done “we are going to lose everything”

These days you’ve got huge development happening not only from the state but also from the private sector. Large sections have been cut up and replaced with eight townhouses. If this level of development continues it is not going to be long before there is an oversupply.

For anyone wanting to get into property investment like any investment research is important. To make the big bucks you have to take risks. Its a lot harder to do these days with plenty of storm clouds on the horizon. But you know there is always something and I still feel that property investment is the key to achieve long-term wealth.


Yes we have seen the growth in NZ Property values used up this 2020's decade thanks to ultra low rates in just couple of years .. No way NZ Property doubles by 2030.... ZERO . the Property pumpers , RE agents purely selling a dream using once in a lifetime historic reason why it must happen again =Pure BS

.. As rates go higher holding Negative Yielding Investment Properties esp. now with new laws on ZERO Interest deductibles becomes a massive Liability ..Higher Council rates + Insurance costs ....

We have a perfect storm coming for NZ Property ... and as we have seen overseas ...and briefly here in 2008-09 ... the over-priced unliked by the banks
-Leasehold , Apartments ,Units , townhouses will be worse affected ....

I look back over the years and at present you can Buy a LARGE 700+ acre non Diary Farm in prime high rainfall area of NZ for $3-$4million .... less than pricing several years ago ... same time units have more than doubled??

Logen Ninefingers
16-06-2022, 11:23 AM
Yes we have seen the growth in NZ Property values used up this 2020's decade thanks to ultra low rates in just couple of years .. No way NZ Property doubles by 2030.... ZERO . the Property pumpers , RE agents purely selling a dream using once in a lifetime historic reason why it must happen again =Pure BS

.. As rates go higher holding Negative Yielding Investment Properties esp. now with new laws on ZERO Interest deductibles becomes a massive Liability ..Higher Council rates + Insurance costs ....

We have a perfect storm coming for NZ Property ... and as we have seen overseas ...and briefly here in 2008-09 ... the over-priced unliked by the banks
-Leasehold , Apartments ,Units , townhouses will be worse affected ....

I look back over the years and at present you can Buy a LARGE 700+ acre non Diary Farm in prime high rainfall area of NZ for $3-$4million .... less than pricing several years ago ... same time units have more than doubled??

It was a classic 'speculative mania' with irrational exuberance at all times highs. All this talk of property prices doubling every few years - with no thought at all given to underlying incomes - and it is clear people lost their heads. It was a mass delusion. Even the TV ads talking about 'yeah, this is a great buy' and levels of 'capital growth' that areas were experiencing....all feeding the mania. I take your point about farms: productive land sustaining a profitable business going for a certain understandable price, and here comes a sheetbox in Auckland selling for $1.5 million. Ridiculous. I can't imagine what people were thinking, but I do know that for a time there all people could talk about was property and property prices; excited and animated conversations, huge smiles, gesticulations......it was like if you mortgaged yourself up to the eye-balls and bought a wildly inflated bog standard house you had just won Lotto.

Amazing times, would be good to hear stories from others who experienced it & how they found it to be living through it, witnessing a full-blown speculative mania playing out. Historic really. Did anyone else find it as bizarre as I did?

JBmurc
16-06-2022, 12:00 PM
I was a very small time property Developer in Queenstown from early 2003 to 2007 ..not only developing new homes but units to land banking for future developments .. also into rental properties
Last property took me 14months to sell ... many low ball offers .

. wasn't too bad as me and my girlfriend lived in the house.. but I seen many very wealthy much larger developers hit the wall and go belly up ... I seen lake view close to CBD units that were sold for $700k++ go out the door for as low as $350k only months later during the GFC period..

Seen great sections that punters were fighting over for 300k+ got out the door by the streets for $175-200k...

And the GFC was pretty mild for NZ Property mainly because interest rates dropped like a stone ... I can recall paying 9% Floating rates prior to the GFC..
compare that to know where we have lending rates more than double like 1yr fixed ...1.99% to 2.19% going to 5%+ soon

Perfect storm coming

Logen Ninefingers
16-06-2022, 12:37 PM
I was a very small time property Developer in Queenstown from early 2003 to 2007 ..not only developing new homes but units to land banking for future developments .. also into rental properties
Last property took me 14months to sell ... many low ball offers .

. wasn't too bad as me and my girlfriend lived in the house.. but I seen many very wealthy much larger developers hit the wall and go belly up ... I seen lake view close to CBD units that were sold for $700k++ go out the door for as low as $350k only months later during the GFC period..

Seen great sections that punters were fighting over for 300k+ got out the door by the streets for $175-200k...

And the GFC was pretty mild for NZ Property mainly because interest rates dropped like a stone ... I can recall paying 9% Floating rates prior to the GFC..
compare that to know where we have lending rates more than double like 1yr fixed ...1.99% to 2.19% going to 5%+ soon

Perfect storm coming

I can remember the GFC being a real shock for many people, the fear was out there. But interest rates were cut massively in NZ and the government just borrowed to get through it without making any spending cuts, and we basically got through it quite quickly learning zero lessons while countries like the US and Ireland experienced a genuine property market crash.
It's an odd quirk of human psychology that until something happens, you have a very hard time convicing people that the event can or will happen. Humans are great in hindsight, but foresight is infinitely harder - particularly during the grip of a full-blown speculative mania when anyone sounding a note of caution is considered to be an insane outlier.

clips
16-06-2022, 07:39 PM
" and at present you can Buy a LARGE 700+ acre non Diary Farm in prime high rainfall area of NZ for $3-$4million .... less than pricing several years ago "

where is this property ??

JBmurc
16-06-2022, 09:57 PM
" and at present you can Buy a LARGE 700+ acre non Diary Farm in prime high rainfall area of NZ for $3-$4million .... less than pricing several years ago "

where is this property ??

Southland ... My wife's family run a farm in the area ... neighbouring farm have been on the market for some time one sold recently 4mill ..another one still on the market not sure if its this one but in the area... great farming land

https://www.trademe.co.nz/a/property/rural/southland/gore/waimumu/listing/3591998008

another just under 3mill

https://www.trademe.co.nz/a/property/rural/southland/southland/riversdale/listing/3617915404