NZ 1st homebuyers are ScReWeD...

[TeslaGod]

We know how much Kiwi's love splurging on property during a pandemic, so the endless lockdown in Auckland must be delivering another huge windfall to sellers as the lemmings pile in - gimme some more of that mountainous debt and 'propertee' they cry, desperately trying to outbid each other.

It's going to get worse before it gets better.

[kiora]

It's called dark humour

Some people get it

Most people don't.

I wonder if these guys get it?
https://www.nzherald.co.nz/business/inland-revenue-uses-new-powers-to-write-to-wealthy-kiwis-demanding-wealth-details/C4JCMZDYIWJ55YKG6W2WIKBKGA/

[Aaron]

I wonder if these guys get it?
https://www.nzherald.co.nz/business/inland-revenue-uses-new-powers-to-write-to-wealthy-kiwis-demanding-wealth-details/C4JCMZDYIWJ55YKG6W2WIKBKGA/

I wonder if TeslaGod and SBQ got their letters from IRD? The problems of the super rich, must be hard.

I thought there was some hope for first home buyers when I saw this headline.

https://www.msn.com/en-nz/news/national/flying-off-the-shelves-pak-nsave-supermarket-selling-9c-avocados-cheap-deal-or-marketing-ploy/ar-AAPLFZl?ocid=msedgntp

Reading below the headline it might not be the game changer I was hoping for. I suspect you would need a sustained drop in Avocado prices to make a real difference to aspirations for home ownership.

[SBQ]

I wonder if TeslaGod and SBQ got their letters from IRD? The problems of the super rich, must be hard.

I thought there was some hope for first home buyers when I saw this headline.

https://www.msn.com/en-nz/news/national/flying-off-the-shelves-pak-nsave-supermarket-selling-9c-avocados-cheap-deal-or-marketing-ploy/ar-AAPLFZl?ocid=msedgntp

Reading below the headline it might not be the game changer I was hoping for. I suspect you would need a sustained drop in Avocado prices to make a real difference to aspirations for home ownership.

I can assure you IRD audits have changed focus from looking at the small businesses (because so many have been wiped out), to those that do have money. Both TeslaGod and I have accountants.

As i've been saying all along, when you reach to a level of high net worth, your focus on life is not to be more greedy. The wealth came out from society and therefore one should contribute it back to society. I'm doing so through charity, and volunteering (much what Peter Lynch has been doing since he left managing his Magellen Fund in the early 90s). IRD needs to understand that if they want to go on a witch hunt after rich people, there will be consequences. What is the value of my contribution to society? I've paid millions in taxes since moving to NZ over 20 years ago and IRD needs to look at "Do they still want my taxes?" NZ is not the only place in the world where I can show my philanthropy and being a Cdn citizen, my liquid assets can easily flow to Canada if I choose to move back there. This is the advantage of not owning real estate, the conversion of houses to cash can not go without scrutiny by the tax dept.

Mr TeslaGod, do you have plans to give most of your wealth away for good cause or will you do what most rich people do in NZ - form a trust and let it sit in perpetual?

[TeslaGod]

Mr TeslaGod, do you have plans to give most of your wealth away for good cause or will you do what most rich people do in NZ - form a trust and let it sit in perpetual?

My accountant/lawyer takes care of those matters.

I prefer using my time growing my wealth,and of course passing on my knowledge/experience to those who want to learn.

[Aaron]

As i've been saying all along, when you reach to a level of high net worth, your focus on life is not to be more greedy. The wealth came out from society and therefore one should contribute it back to society. I'm doing so through charity, and volunteering (much what Peter Lynch has been doing since he left managing his Magellen Fund in the early 90s). IRD needs to understand that if they want to go on a witch hunt after rich people, there will be consequences. What is the value of my contribution to society? I've paid millions in taxes since moving to NZ over 20 years ago and IRD needs to look at "Do they still want my taxes?" NZ is not the only place in the world where I can show my philanthropy and being a Cdn citizen, my liquid assets can easily flow to Canada if I choose to move back there. This is the advantage of not owning real estate, the conversion of houses to cash can not go without scrutiny by the tax dept.
Your message is coming through a bit confused to me. You say your focus is now on contributing/giving back to society through charity and volunteering. No doubt to causes you support and in amounts you are comfortable giving.

Yet in the same paragraph you threaten to pick up and leave if you are asked to contribute through taxation.

Not that I care you should go wherever suits you and your generous spirit. Ideally a country with a low(no) tax rate that relies on people’s generosity rather than taxation.

[TeslaGod]

Your message is coming through a bit confused to me. You say your focus is now on contributing/giving back to society through charity and volunteering. No doubt to causes you support and in amounts you are comfortable giving.

Yet in the same paragraph you threaten to pick up and leave if you are asked to contribute through taxation.

Not that I care you should go wherever suits you and your generous spirit. Ideally a country with a low(no) tax rate that relies on people’s generosity rather than taxation.

It's a vehicle to writing off tax.

You choose were your money goes/not towards Grant Robertsons café account.

[Aaron]

It's a vehicle to writing off tax.

You choose were your money goes/not towards Grant Robertsons café account.

So not so generous then? Also NZ Taxpayer stumps up with one third if you can claim a donations rebate.
Wouldn't people paid to look at where money would best be spent to help the country (bureaucrats) be able to allocate funds to the needy better than someone focused on increasing their personal wealth.

[fungus pudding]

So not so generous then? Also NZ Taxpayer stumps up with one third if you can claim a donations rebate.
Wouldn't people paid to look at where money would best be spent to help the country (bureaucrats) be able to allocate funds to the needy better than someone focused on increasing their personal wealth.

No. Read the budget and you'll see all sorts of govt. expenditure that you won't be happy about. I promise.

[SBQ]

Your message is coming through a bit confused to me. You say your focus is now on contributing/giving back to society through charity and volunteering. No doubt to causes you support and in amounts you are comfortable giving.

Yet in the same paragraph you threaten to pick up and leave if you are asked to contribute through taxation.

Not that I care you should go wherever suits you and your generous spirit. Ideally a country with a low(no) tax rate that relies on people’s generosity rather than taxation.

Philanthropy comes net of taxation. The problem is the role of IRD (or any tax dept) is beyond just enfocing tax laws and what often happens is the auditors stretch too far beyond what tax they are looking for. This threatens the plan of any charity goal. Kiora's link where IRD is going after 'wealthy' people and their spouse is a clear example of this. Generally wealthy people have accountants and lawyers and have the pockets to fight vs the small business owner usually just accepts IRD's ruling and suffers. In the US it's been shown time and time that the IRS is "simply outgunned" when they try to go after the very rich ; for which when the IRS does want to go after any major corporation for any tax grab, they need to be 100% sure. Unfortunately in my experience, this is not the case for tax auditors in Canada or in NZ. Therefore what generally happens is the news of greedy tax auditors in NZ serve as a deterrent to attract wealth in NZ. I'm thinking of a clear example what comes to my mind, some decades ago Jane Cameron had sold her ownership of Katmandu to Goldman Sac. Her windfall of wealth lead to charity but ran into IRD problems as during that time, NZ had gift duty. So she changed her residency by moving to Australia and began to gift her wealth to NZ recipients. IRD didn't like this and technically, could not tax her directly as she was a NZ non-tax resident. However, what IRD did instead was they taxed the recipients of the charity. In my view this very nasty and sets a clear example of how low dirty IRD operates.

A Canadian example I can think of occurred in the early 90s where Canada experienced a huge wave of wealthy migrants from HK/China. They bought up properties, owned expensive cars, flashed their wealth until the tax authorities went on a auditing spree as these migrants were unaware that Canada (like NZ) taxes residents on a "worldwide basis". The end result? These 'astronauts' ended up moving back, or even better, hopped across to the US where US tax laws are more friendly to wealthy migrants. I recall an economic impact study in Canada during the time that showed Canada's GDP was not only affected by the loss of their spending, but the greater problem being their social / business ties were lost, all attributed because of tax audits. (ie. these wealthy people have ties that have a direct impact on the economy ; such as when Trudeau opens his mouth against the Saudi's political handling of that journalist killing, The Saudi gov't simply cancelled a billion $ military contract with a private Canadian company = loss jobs etc). On a cumulative level, the audits fared worse for the Canadian economy.

I'm not saying there's a fine line about how much taxes should be paid or not. What i'm getting at is having some common sense, for which tax departments don't have. So if IRD wants to create a war by going after the rich AND their spouse (in thinking they're hiding assets), i'm afraid they will lose, a complete waste of time, and the end result will have consequences.

[SBQ]

No. Read the budget and you'll see all sorts of govt. expenditure that you won't be happy about. I promise.

LOL My wife (who works in public health) tells me all about this on a daily basis. You will not find ANY affluent, charitable, philanthropic, person agreeing that sending more money to the tax dept is a better way than giving $ directly to charity and to the people in need. It's basic economics that proves gov'ts are always inefficient compared to the private sector.

[fungus pudding]

LOL My wife (who works in public health) tells me all about this on a daily basis. You will not find ANY affluent, charitable, philanthropic, person agreeing that sending more money to the tax dept is a better way than giving $ directly to charity and to the people in need. It's basic economics that proves gov'ts are always inefficient compared to the private sector.

The danger is govt's will always find things to spend your money on. That's to get voters to think the generous govt. should be re-elected. 'They take your money and buy you some things' Problem is if too much goes to charity, the only way to make themselves popular again is to raise taxes; so those who prefer to pay tax will have to pay more - then those people - who are now nearly penniless, have to rely on food banks, which are funded by those who prefer to donate to charities rather than pay tax. So here we all are in this never ending circle of giving away our hard earned money. The only way to avoid it is to convert everything into bank notes - and burn it all. Best time to do that is the week before you die - cos sure as Allah made little green apples - they'll come looking for you. Well - not so much you - it's the now non-existent money they want.

[Aaron]

The danger is govt's will always find things to spend your money on. That's to get voters to think the generous govt. should be re-elected. 'They take your money and buy you some things' Problem is if too much goes to charity, the only way to make themselves popular again is to raise taxes; so those who prefer to pay tax will have to pay more - then those people - who are now nearly penniless, have to rely on food banks, which are funded by those who prefer to donate to charities rather than pay tax. So here we all are in this never ending circle of giving away our hard earned money. The only way to avoid it is to convert everything into bank notes - and burn it all. Best time to do that is the week before you die - cos sure as Allah made little green apples - they'll come looking for you. Well - not so much you - it's the now non-existent money they want.

No doubt there is waste this could be but one example.
https://www.stuff.co.nz/entertainment/books/126723896/book-industry-shocked-at-500000-grant-for-unknown-literary-project

I was going to suggest to SBQ that he move to a country without a central govt as "basic economics has proven gov'ts are always inefficient compared to the private sector."

I think the govt in Somalia is relatively small but that said I understand their tax collection dept is very efficient. Maybe Monaco would be a better bet.

Don't forget SBQ economics is a social science so not science at all. It is not like maths, no right or wrong answer, but you believe what you want to believe. You are probably a good christian as well.

[SBQ]

No doubt there is waste this could be but one example.
https://www.stuff.co.nz/entertainment/books/126723896/book-industry-shocked-at-500000-grant-for-unknown-literary-project

I was going to suggest to SBQ that he move to a country without a central govt as "basic economics has proven gov'ts are always inefficient compared to the private sector."

I think the govt in Somalia is relatively small but that said I understand their tax collection dept is very efficient. Maybe Monaco would be a better bet.

Don't forget SBQ economics is a social science so not science at all. It is not like maths, no right or wrong answer, but you believe what you want to believe. You are probably a good christian as well.

You've missed my point about the whole idea of charity. The social benefit is greater by those that gift directly to society than to pay that in taxes and assume the gov't will do a better job. Not all gov'ts are the same and philanthropy by individuals is far and few in NZ. The use of non-profit trusts is well abused in this country, ie Ngai Taku is a clear example having economic wealth grow from $185M in 1998 to $1.6B last year or so. It an absurd figure when their respected members still knock on gov't doors for hand outs.

The beauty about economics is it's quite simply, "the study of choices". If you've paid your taxes, contributed to society, then the last thing the gov't should do is have IRD screw around you. It's the wrong incentive... and WINZ recipients never get screwed by IRD.

[Panda-NZ-]

I'm not saying there's a fine line about how much taxes should be paid or not. What i'm getting at is having some common sense, for which tax departments don't have. So if IRD wants to create a war by going after the rich AND their spouse (in thinking they're hiding assets), i'm afraid they will lose, a complete waste of time, and the end result will have consequences.

These people will want to flee to safe places when climate change hits. So we should be getting our money's worth.

Hidden trusts like david seymour has, and 0% tax is unacceptable either in the US or here.

[fungus pudding]

You've missed my point about the whole idea of charity. The social benefit is greater by those that gift directly to society than to pay that in taxes and assume the gov't will do a better job. Not all gov'ts are the same and philanthropy by individuals is far and few in NZ. The use of non-profit trusts is well abused in this country, ie Ngai Taku is a clear example having economic wealth grow from $185M in 1998 to $1.6B last year or so. It an absurd figure when their respected members still knock on gov't doors for hand outs.

The beauty about economics is it's quite simply, "the study of choices". If you've paid your taxes, contributed to society, then the last thing the gov't should do is have IRD screw around you. It's the wrong incentive... and WINZ recipients never get screwed by IRD.

Oh yes they do - fortunately. That bloke lurking around in your street could well be watching the 'sickness beneficary' next door to make sure he's not painting the house on the other side of the road - just for a bit of Xmas cash. He is probably from Social Welfare - but he knows the IRD's phone no.

[TeslaGod]

I personally believe the government is already preparing to prop up the real estate market with the new RMA rules allowing for higher density per section driving up land prices from 2023/ The New free trade deal that "may" open up to more UK'S citizens.

(NZ is a very racist country that prefers immigration from Anglo-Saxon countries/its a good for its profile economy/ wealth and image)

"Ardern said the visa arrangement could look similar to what the UK has agreed with Australia, which allows people up to the age of 35 to spend three years living and working in either country - New Zealand's current arrangement is for people up to the age of 30 to spend two years living and working in the UK."

There's likely to be more net inflows than out in this arrangement.

[Bjauck]

I personally believe the government is already preparing to prop up the real estate market with the new RMA rules allowing for higher density per section driving up land prices from 2023/ The New free trade deal that "may" open up to more UK'S citizens. Is there a new minimum section size per dwelling? Remaining larger city sections may find development has less red tape - but they still need to access infrastructure and find materials and tradies. Surrounding properties may lose value if neighbourhood character is denigrated?


(NZ is a very racist country that prefers immigration from Anglo-Saxon countries/its a good for its profile economy/ wealth and image)
...


Wow - what is that based on?

Are you comparing NZ with other countries? If so, which countries? Recent years have shown that NZ has a very high immigration rate for its population size. In 2018 the most common citizenship of immigrants was in order - China, India, Phillipines, and Australia. Only one of those countries could remotely be called "Anglo-Saxon" and this without knowing what ethnicities comprised the Australia Citizens arriving in NZ.

It looks like the recent immigration policy worked against NZ's traditional immigration source countries?

https://www.stats.govt.nz/news/new-zealand-net-migration-rate-remains-high

[TeslaGod]

Bjuack:

-We won't catch up on supply because of lack of infrastructure/builders/ it will only encourage land banking pushing up land prices.

-Id prefer the status quo increasing immigration from Asia , makes our offspring internationally more attractive/ There trying to even out the demographics as is Australia./Pandering to the insecure playing catch up.
Which technically makes this racist/ either way is a positive for my net position.



The only colour I see is the colour of money.

[artemis]

I personally believe the government is already preparing to prop up the real estate market with the new RMA rules allowing for higher density per section driving up land prices from 2023/ The New free trade deal that "may" open up to more UK'S citizens.

(NZ is a very racist country that prefers immigration from Anglo-Saxon countries/its a good for its profile economy/ wealth and image)

"[COLOR=#000000][FONT=&]Ardern said the visa arrangement could look similar to what the UK has agreed with Australia, which allows people up to the age of 35 to spend three years living and working in either country - New Zealand's current arrangement is for people up to the age of 30 to spend two years living and working in the UK."

There's likely to be more net inflows than out in this arrangement.

That last sentence could well be correct. A few years ago I read about a survey in the UK that showed a majority of those surveyed wanted to leave the UK and live somewhere else. The main reason - no not the weather - traffic.

[Bjauck]

That last sentence could well be correct. A few years ago I read about a survey in the UK that showed a majority of those surveyed wanted to leave the UK and live somewhere else. The main reason - no not the weather - traffic. Maybe those ex-Pat Brit pensioners who are facing Brexit problems in Spain & Portugal will be looking for retirement villas in NZ?

https://www.euronews.com/2021/02/28/britons-living-in-spain-faced-with-post-brexit-reality

[dobby41]

You've missed my point about the whole idea of charity. The social benefit is greater by those that gift directly to society than to pay that in taxes and assume the gov't will do a better job. Not all gov'ts are the same and philanthropy by individuals is far and few in NZ.

Taken to the extreme (and the US is heading that way fast) the people with the money to hand out start to decide who wins and who loses - not the people who elect the Govt.
The wealthy become the rulers by largesse.

[SBQ]

I personally believe the government is already preparing to prop up the real estate market with the new RMA rules allowing for higher density per section driving up land prices from 2023/ The New free trade deal that "may" open up to more UK'S citizens.

(NZ is a very racist country that prefers immigration from Anglo-Saxon countries/its a good for its profile economy/ wealth and image)

"Ardern said the visa arrangement could look similar to what the UK has agreed with Australia, which allows people up to the age of 35 to spend three years living and working in either country - New Zealand's current arrangement is for people up to the age of 30 to spend two years living and working in the UK."

There's likely to be more net inflows than out in this arrangement.


I applaud and welcome the changes coming to the RMA. As i've spoken loudly before, the RMA has been a key stumbling block for increasing the supply of housing in NZ. I gave many examples of what Canada has done to remove red tape. I don't know the details of the new rules and how they will abolish the RMA, but from what i've heard, (correct me if i'm wrong), up to 50% site coverage, new increased building height (for 3 story builds!!!) on conventional residential lots. I have a 790m2 lot where I get new real estate agents knocking on my door every few months. I had building plans some 4 or 5 years ago but the PIM came back too restrictive and I told the architects to hold. My wish was to change the RMA to make building easier... How fast can both gov't parties can agree on?

On a per title basis, I do not think this will increase the price of houses in NZ (assuming housing supply is boosted). The trend will be smaller dwellings and lower price points for young families in these new builds.

[Panda-NZ-]

Taken to the extreme (and the US is heading that way fast) the people with the money to hand out start to decide who wins and who loses - not the people who elect the Govt.
The wealthy become the rulers by largesse.

Plus it's bad for the economy and the environment.

No more yacht fleets please.

[TeslaGod]

... How fast can both gov't parties can agree on?

On a per title basis, I do not think this will increase the price of houses in NZ (assuming housing supply is boosted). The trend will be smaller dwellings and lower price points for young families in these new builds.

2023 / Dwellings will be cheaper/land under it will increase in value /3 units 3 plots= land value ~2x

Cashed up land-bankers(myself incl) will jump all over an increasing OCR slowing real estate market in 2022/23

[TeslaGod]

Housing markets going to get real feral real fast if swap rates in the wholesale money markets don't get better in a hurry.

Could have a flood of over leveraged homeowners and property developers flooding the market/technically this could tank the economy, the RBNZ needs to let it happen before stepping in.

FYI I want the housing market to tank.

I'm Cashed up ready to go hard over the next 12/24 months .

[Bjauck]

Housing markets going to get real feral real fast if swap rates in the wholesale money markets don't get better in a hurry.

Could have a flood of over leveraged homeowners and property developers flooding the market/technically this could tank the economy, the RBNZ needs to let it happen before stepping in. Unfortunately there are always buyers who think property prices only go higher. Let's hope L2V rules provide sufficient buffer, because the NZ government has let NZ residential property dominate the investment environment to such a great extent.


FYI I want the housing market to tank.

I'm Cashed up ready to go hard over the next 12/24 months . Have you sold all your NZ residential real estate?

[TeslaGod]

Have you sold all your NZ residential real estate?

No just one in Wellington and one recently in Auckland to developers.

Holding the majority of my real estate portfolio adding to my share portfolio, quite stressful but very exciting and profitable.

In the off chance the real estate market turns ugly I'm very well capitalized and ready to purchase more if housing becomes heavily discounted over the next couple of years.

Unfortunately I see the RBNZ stepping in.

I have posted on this forum and predicted negative interest rates will be coming in the coming years, and they will.

I do feel bad for FHBs with the DTI coming, the systems designed for me not them unfortunately.

[Logen Ninefingers]

No just one in Wellington and one recently in Auckland to developers.

Holding the majority of my real estate portfolio adding to my share portfolio, quite stressful but very exciting and profitable.

In the off chance the real estate market turns ugly I'm very well capitalized and ready to purchase more if housing becomes heavily discounted over the next couple of years.

Unfortunately I see the RBNZ stepping in.

I have posted on this forum and predicted negative interest rates will be coming in the coming years, and they will.

I do feel bad for FHBs with the DTI coming, the systems designed for me not them unfortunately.

You seem to be a very confused individual...the market could crash and it'll be a blood bath, interest rates are going higher, the Reserve Bank is going to step in, interest rates are going negative, swap rates must get better in a hurry.......you're all over the place. But as usual your posts are all "me, me, me, me" and how whatever happens you'll be a winner. Maybe you are like the proverbial cockroach after a nuclear holocaust - always ready to come crawling out from under some rock.

As I've posited here before, you come across as desperately insecure and desperate to have people read about how wealthy you are and how well you are doing and will do. Desperately insecure....and it's all ultimately pointless as this is an anonymous forum and nobody knows who the heck you are.

[Logen Ninefingers]

“If interest rates get low enough as they did in New Zealand, and they have around the world, then actually movements in interest rates at that level have very limited impact.
“Is there really much difference between your base rate being quarter of a basis point, minus quarter of a basis point? Psychologically it’s not a huge amount of difference is it,” (John) Key said during a webinar to launch a New Zealand Initiative report, Walking the Path to the Next Global Financial Crisis, on Thursday.

-----------------

Makes me why the DH's at The Reserve Bank kept lowering interest rates even when they were at crazy low levels; all they've done is to encourage a bunch of frenzied speculators to take on far too much debt. Negative interest rates: most people have now woken up to the idiocy of that kind of thinking....it's like your accelerator has fully hit the floor so you cut a hole in the car to keep pushing it down - it's absurdist & it only encourages out of control speculation and runaway inflation. MuskRat is dreaming about it happening with great fondness, meanwhile interest rates are on their way up.

[TeslaGod]

You seem to be a very confused individual...the market could crash and it'll be a blood bath, interest rates are going higher, the Reserve Bank is going to step in, interest rates are going negative, swap rates must get better in a hurry.......you're all over the place. But as usual your posts are all "me, me, me, me" and how whatever happens you'll be a winner. Maybe you are like the proverbial cockroach after a nuclear holocaust - always ready to come crawling out from under some rock.

As I've posited here before, you come across as desperately insecure and desperate to have people read about how wealthy you are and how well you are doing and will do. Desperately insecure....and it's all ultimately pointless as this is an anonymous forum and nobody knows who the heck you are.

Me and my clique from the central bank.

https://youtu.be/7edeOEuXdMU

[TeslaGod]

Typo wrong thread

[Logen Ninefingers]

Hard to be jealous of MuskRat when no-one knows if he / she has $1 or $1,000,000,000 in their bank account.

I think maybe it is a person who likes to play at being wealthy, and spends most of their time on-line acting out the part because they get a kick out of it.

[TeslaGod]

Hard to be jealous of MuskRat when no-one knows if he / she has $1 or $1,000,000,000 in their bank account.

I think maybe it is a person who likes to play at being wealthy, and spends most of their time on-line acting out the part because they get a kick out of it.

Your envy makes you seem ugly in my visualisation of you.

I have not said I'm worth 1b.

I have stated I have a net worth to the value of *8 figures which is easily achievable holding a large or even a small real estate portfolio in certain suburbs.

Perhaps if you spent more time on educating yourself instead of complaining about me and every political issue in the world today you would be a far happier wealthier individual.

Like me.

(*NZ real estate >1.5 trillion)

[Logen Ninefingers]

Your envy makes you seem ugly in my visualisation of you.

I have not said I'm worth 1b.

I have stated I have a net worth to the value of *8 figures which is easily achievable holding a large or even a small real estate portfolio in certain suburbs.

Perhaps if you spent more time on educating yourself instead of complaining about me and every political issue in the world today you would be a far happier wealthier individual.

Like me.

(*NZ real estate >1.5 trillion)

Impossible to verify, sadly. I just cannot believe that a genuinely wealthy person would spend so much time boasting on an internet chat forum. Seems like the behaviour of a fantasist.

My advice to you is to keep working hard and maybe one day you really will be wealthy. You can do it!

[TeslaGod]

Impossible to verify, sadly. I just cannot believe that a genuinely wealthy person would spend so much time boasting on an internet chat forum.

You "don't believe" is the reason why you are in the financial position you are.

I'm going back to sleep after spending 10 minutes checking my portfolio on the NYSE it's just after lunch in New York.

You have a great day at your tax slave job.

I'll be going for a run down the beach after a late breakfast at 11am.

And I'm happy to share my life /advice on this forum.

It's the least I can do.

[artemis]

Hard to be jealous of MuskRat when no-one knows if he / she has $1 or $1,000,000,000 in their bank account.

I think maybe it is a person who likes to play at being wealthy, and spends most of their time on-line acting out the part because they get a kick out of it.

No idea about bank balances or asset values, but looking at the person's posts I don't doubt they have a few bob. But who cares? It's the internet, people can adopt personas or have opinions if they like. And others can criticise. If they like.

[Aaron]

Although maybe meant to be a positive note at the end of the article.

"But as for Olsen, he says while some commentators are increasingly willing to “write off” young people’s hopes of every owning a house, he is not convinced.
It’s getting harder, and more expensive, but it is still possible for many, he says. “I would never say young people are completely stuffed.”"

It is an admission that young people are stuffed but not "completely" stuffed. That might be young people with home owning parents who can lend a hand.

https://www.stuff.co.nz/business/127012780/the-house-price-expert-still-stuck-renting

[Aaron]

Aussie might have similar issues. I guess this quote from the article sums it up.

https://www.abc.net.au/news/2021-11-23/peter-costello-says-rba-irresponsible-on-interest-rates/100641036

Demographer Simon Kuestenmacher put it more succinctly.

"If you touch house prices, if you introduce any kind of policy that could make house prices fall, you will lose any election," he noted.

"Politicians shed crocodile tears about it and say, 'It's so sad that house prices are so expensive. We'll give you $10,000 of first home buyers grants'.

"But these drive house prices up because everybody has more money.

"It's a silly game when people pretend that they care."

[Toulouse - Luzern]

Aussie might have similar issues. I guess this quote from the article sums it up.

https://www.abc.net.au/news/2021-11-23/peter-costello-says-rba-irresponsible-on-interest-rates/100641036

Demographer Simon Kuestenmacher put it more succinctly.

"If you touch house prices, if you introduce any kind of policy that could make house prices fall, you will lose any election," he noted.

"Politicians shed crocodile tears about it and say, 'It's so sad that house prices are so expensive. We'll give you $10,000 of first home buyers grants'.

"But these drive house prices up because everybody has more money.

"It's a silly game when people pretend that they care."

What we require is of our Govt is honesty, skill, judgement, attention to the views and needs of the community and responsibility for the outcomes

There are those who would say the present RMA Amendment Bill going through a fast track Sub Committee community submissions process is evidence of the failure of Successive Governments to ensure housing that is reasonably affordable.

A basic principle is that people buying a house need to be better off as a result.

People getting into homes need to able to meet the payments.
Many of the Govt actions have made things worse.

Using the Edward de Bono thinking process - Look around LO, white facts:

2017 and 5500 families are on Housing Corp emergency list.
2021 and 17,500 families are on the Housing Corp emergency list.
318% increase = Failure

Govt Kiwibuild objective for 100,000 homes a failure in most peoples view. (No skill)

Blamed on the RMA not Govt Failures. Failure to take Responsibility and a lack of honesty and skill)

Leading to the proposed setting aside of all of the RMA and replacement with new legislation rushed through is confirmation of the Govt failure to provide affordable homes as they promised.

Repeated for emphasis: the RMA Amendment Bill is clear confirmation of failure.

(Failure of Judgment and honesty).

If Kiwi build is a failure it is apparent to some the RMA replacement proposals are as likely to fail.

Changes have long term and consequences and costs.

There are reasons for the Community to have an effective RMA and why it was set up in the first place.

Our Courts are valuable and the justice process essential.

The Minister is proposed in the RMA Amendment Bill as sole decision maker without appeal in may situations.

Our Court system and Court Appeal system is set aside.

This is a bad move many would say.

Too much power in too few hands. Too many changes all at once.

No Checks and Balances.

Courts sidelined.

Bad move.

Some may conclude - One size does not fit all and it is clear the Govt does not know best

Some would draw parallels with the initiatives of Nazi Germany in the 1930's to set aside law and justice and appeals and rush things through.

You cannot rely on politicians and those reporting to them to do other than toe the party line.

What we require of the Govt is honesty, skill, judgement, attention to the views and needs of the community and responsibility for the outcomes.

Admit their failures and work with the community for better outcomes within the rules of law and justice not the Minister as absolute power.

[SBQ]

@Toulouse - Luzern:

The RMA bill has NOT been approved and it would be interesting to see the outcome as in the past, previous gov'ts have tried to change the RMA without success.

I've just heard another small building company in Christchurch has closed shop (don't know the company name) on the basis that they can't source timer framing to build the houses. Meanwhile our logs continue to be exported to China.

Going back to the RMA, I do believe it will make a difference by allowing more dwellings per given site area. The reason is this, when you look overseas developed nations and how housing is built in urban areas, the houses are built CLOSER and they make BEST USE of the land. A lot of these gross 'setback boundaries' do nothing but grow weeds. Not everyone wants to live further and further away from the city centre or away from a desired region. Therefore as demonstrated in other major cities around the world, building a single story dwelling with a large outdoor yard is a waste of space. If the person desires the back yard, they can simply live away from the city hustle and bustle. We need to start thinking of building up and when you do so, you get better use of building materials. The way we build houses with dwangs / noggin in the timber framing is wasteful. A multistory dwelling condo uses a common wall between dwellings. Saves on the heating & cooling aspect too. Again, look overseas and see what they are doing to address social housing. They build multistory 5 levels like, and each family gets a door (if they want the back yard, they use a shared yard outside). However, what I see in NZ is a lot of NIMBYism.

Regarding around the housing problem in NZ, our gov't does not need to show honesty. The people know what the problem is. Just no one in gov't has the guts to fix it. Like change the tax laws that favour holding houses as an investment asset instead of Kiwi Saver (which it's paper gains are taxed annually and indefinitely until withdrawn). Jacinda did Strike 1 in the TWG, she did Strike 2 in Kiwi Build, will she do Strike 3 in changing the RMA?

[Aaron]

Property Investors and immigrants largely to blame for the house price crisis, according to the one roof survey. Labour govt thrown in there as well.

https://www.nzherald.co.nz/nz/oneroof-report-property-investors-blamed-for-nzs-soaring-house-price-rises/SEOMQZBB4DMSW4JDART6B5UGSY/

Reserves Banks loose monetary policy and constantly falling interest rates don't get a mention and the benefit of a guaranteed 1-3% (more like 7-8%) rise in prices with a tax free capital gain don't seem to get a mention. Property investors are only buying houses while it makes sense. A taxpayer subsidy via the accommodation supplement will have helped as well.

Yes supply issues constraining house supply is also playing a part, RMA, building consents etc.. According to Bascand of the RBNZ almost entirely a supply issue nothing the RBNZ can do about it. What a piece of s**t trying to deflect blame before it blows up when they try and raise interest rates. He can't be that ignorant, although that said according to the survey the general public do not hold the RBNZ responsible at all, so maybe I am wrong.

With immigration down, lots more houses being built, the possibility of interest rate rises (not much though) and recent minor tinkering around interest deductibility the outlook for the housing market might be less optimistic than in previous years. Possibly good news for first home buyers who haven't bought recently. Still pretty screwed at current prices though.

[Bjauck]

Property Investors and immigrants largely to blame for the house price crisis, according to the one roof survey. Labour govt thrown in there as well.

https://www.nzherald.co.nz/nz/oneroof-report-property-investors-blamed-for-nzs-soaring-house-price-rises/SEOMQZBB4DMSW4JDART6B5UGSY/

Reserves Banks loose monetary policy and constantly falling interest rates don't get a mention and the benefit of a guaranteed 1-3% (more like 7-8%) rise in prices with a tax free capital gain don't seem to get a mention. Property investors are only buying houses while it makes sense. A taxpayer subsidy via the accommodation supplement will have helped as well.

Yes supply issues constraining house supply is also playing a part, RMA, building consents etc.. According to Bascand of the RBNZ almost entirely a supply issue nothing the RBNZ can do about it. What a piece of s**t trying to deflect blame before it blows up when they try and raise interest rates. He can't be that ignorant, although that said according to the survey the general public do not hold the RBNZ responsible at all, so maybe I am wrong.

With immigration down, lots more houses being built, the possibility of interest rate rises (not much though) and recent minor tinkering around interest deductibility the outlook for the housing market might be less optimistic than in previous years. Possibly good news for first home buyers who haven't bought recently. Still pretty screwed at current prices though.
The RBNZ only acts within its remit from the government. The government's policy of trying to dampen investor demand for housing has been considered under part 3 of the RBNZ remit only since March of 2021. Even then the RBNZ is limited in what it can do given its inflation and maximum employment remits.

The current state of Housing is the government's responsibility.

[Aaron]

The RBNZ only acts within its remit from the government. The government's policy of trying to dampen investor demand for housing has been considered under part 3 of the RBNZ remit only since March of 2021. Even then the RBNZ is limited in what it can do given its inflation and maximum employment remits.

The current state of Housing is the government's responsibility.

True it is up to the govt to do away with inflation targeting or at least bring it back to 0-2%.

[JBmurc]

Remember the last time house prices crashed 40%?
https://www.greaterauckland.org.nz/2016/07/11/remember-the-last-time-house-prices-crashed-40/

reading this old 2016 article in the present market just shows how crazy its got now going into 2022 .... when we though it was expensive back then ....

We sold our home in Qtn for what I thought was good money 1.1mill+ and purchased another family home in Cromwell paid $550k which was the going price early 2016

Now we are thinking about listing it ... going off the local marketplace ... tempted to put $1.3mill asking going off recent sales ... how nuts is that !! ...$2mill in another few years ???

[Aaron]

The RBNZ only acts within its remit from the government. The government's policy of trying to dampen investor demand for housing has been considered under part 3 of the RBNZ remit only since March of 2021. Even then the RBNZ is limited in what it can do given its inflation and maximum employment remits.

The current state of Housing is the government's responsibility.

The tide might be turning for new home buyers.

https://www.stuff.co.nz/life-style/homed/real-estate/127201554/could-we-be-building-too-many-houses

Adrian says the RBNZ only played a "bit part" in housing unaffordability. Bascand says it was a supply issue nothing to do with the RBNZ. Bjauck defends them saying they are only working within their remit of 1-3% inflation and some vague unemployment figure. Lucky housing is not part of the CPI, by the way, what is the CPI currently? Why do we need to import labour? How well is the RBNZ doing its job?

Economist Tony Alexander cautions against putting too much emphasis on the role of supply in the house price equation.

“This is a red herring. Extra supply of a thing will constrain prices, but that’s not the same as saying there are not enough houses for people to occupy. Prices have not soared 39 per cent since March 2020 because population growth has boomed.”Record low interest rates and the temporary removal of loan-to-value ratios were the reason, he said.

I wonder who is right.

[Aaron]

Here is a "news" article to provide hope to first home buyers.

https://www.nzherald.co.nz/business/melbourne-six-year-old-and-her-siblings-buy-house-with-pocket-money/SBSEWKLJ2TKSEC4NZVVJ35KVJU/

All you have to do is save up $6,000 and have a rich Dad. What is all this angst about.

Sounds more like a story of a property investor trying to allocate some income to his kids to lower his tax bill.

One interesting bit in the article is the last couple of paragraphs. Jonny the builder doesn't even know who f**ked him over.

Every leader of every major party and the older generation that voted them in and especially the good folks at the RBNZ.

[TeslaGod]

Here is a "news" article to provide hope to first home buyers.

https://www.nzherald.co.nz/business/melbourne-six-year-old-and-her-siblings-buy-house-with-pocket-money/SBSEWKLJ2TKSEC4NZVVJ35KVJU/

All you have to do is save up $6,000 and have a rich Dad. What is all this angst about.

Sounds more like a story of a property investor trying to allocate some income to his kids to lower his tax bill.

One interesting bit in the article is the last couple of paragraphs. Jonny the builder doesn't even know who f**ked him over.

Every leader of every major party and the older generation that voted them in and especially the good folks at the RBNZ.
https://youtu.be/uF7TsMDMyRM

[Aaron]

You sure your not a baby boomer?

[Aaron]

Might be a stretch drawing a link but maybe Auckland wants to be more like Lisbon.

https://www.stuff.co.nz/business/127330504/new-zealand-reopens-door-to-wealthy-foreign-investors-promising-to-drop-millions

https://www.theguardian.com/world/2021/dec/22/luxury-homes-short-lets-and-shacks-inside-lisbons-housing-crisis

[SBQ]

Here is a "news" article to provide hope to first home buyers.

https://www.nzherald.co.nz/business/melbourne-six-year-old-and-her-siblings-buy-house-with-pocket-money/SBSEWKLJ2TKSEC4NZVVJ35KVJU/

All you have to do is save up $6,000 and have a rich Dad. What is all this angst about.

Sounds more like a story of a property investor trying to allocate some income to his kids to lower his tax bill.

One interesting bit in the article is the last couple of paragraphs. Jonny the builder doesn't even know who f**ked him over.

Every leader of every major party and the older generation that voted them in and especially the good folks at the RBNZ.

Melbourne still a lot less than Auckland and the reason is due to better policies. Australia has CGT, which directs investments into more productive areas like their share market. This is nothing new as others like Canada and the US use taxation to take away the heat from investing in 1 specific asset. NZ is clueless about demand controls so the come up with silly excuses like "not enough supply...". It's a lot more to that than just a supply problem. Also Australia has land tax. The smart investors don't buy houses in Australia, they do it in a business or on the share markets. But in NZ, we have tax policies that go the opposite way. We reward the rich people that own houses with no CGT, no supplementary land tax, no sur-charge on rates when held in a trust or in a company or by persons owning more than 1 house. We punish the productive part of society, the middle class, by giving them a Kiwi Saver which it's annual gains are taxed.

But seriously, from an aggregate point of view in society. How does a nation benefit from having excessive rising house prices? The only winners i'm seeing in NZ is the banks, for which most are foreign owned (as the profits are sent abroad to pay the share holders). It splits society between "the haves" and "the have nots". Guys like him selling is property investment book have the $ and their children would most likely end up in private schooling, for which their children will not understand or see the divide between the very wealthy and the commoners. I see this happening in NZ everyday volunteering in a public school. Little things like tissue paper boxes are requested as the school has no budget. Private schools don't have this problem. So as society carries on, what is left is a social divide which can almost be rooted between those that have houses and those that don't.

[ynot]

Melbourne still a lot less than Auckland and the reason is due to better policies. Australia has CGT, which directs investments into more productive areas like their share market. This is nothing new as others like Canada and the US use taxation to take away the heat from investing in 1 specific asset. NZ is clueless about demand controls so the come up with silly excuses like "not enough supply...". It's a lot more to that than just a supply problem. Also Australia has land tax. The smart investors don't buy houses in Australia, they do it in a business or on the share markets. But in NZ, we have tax policies that go the opposite way. We reward the rich people that own houses with no CGT, no supplementary land tax, no sur-charge on rates when held in a trust or in a company or by persons owning more than 1 house. We punish the productive part of society, the middle class, by giving them a Kiwi Saver which it's annual gains are taxed.

But seriously, from an aggregate point of view in society. How does a nation benefit from having excessive rising house prices? The only winners i'm seeing in NZ is the banks, for which most are foreign owned (as the profits are sent abroad to pay the share holders). It splits society between "the haves" and "the have nots". Guys like him selling is property investment book have the $ and their children would most likely end up in private schooling, for which their children will not understand or see the divide between the very wealthy and the commoners. I see this happening in NZ everyday volunteering in a public school. Little things like tissue paper boxes are requested as the school has no budget. Private schools don't have this problem. So as society carries on, what is left is a social divide which can almost be rooted between those that have houses and those that don't.

Sad but true. Consecutive government's have let NZ citizens down terribly.
Where was the foresight? Unbelievable !
I would have thought a competent Labour government would have addressed some of these issues but this lot have absolutely NO IDEA.

[TeslaGod]

How is MuskRat getting on with his 'transitory inflation'? US inflation is running at 7% and the oil price is on the move - upwards btw. The cost of global shipping continues to go through the roof while commodity prices go nuts. US equity markets have started 2022 down, down, down while Powell, Biden, and Yellen have all been talking about fighting inflation; this means tapering & interest rate rises.

It's all very interesting for people like MuskRat who was telling us that inflation was just 'transitory'.

The point is inflation doesn't affect me just poor people like you.

P.S inflation will reverse by Q4.

[ynot]

Recently came across this.

Credit Contracts and Consumer Finance Act (CCCFA).

Govt recently brought this in.
Apparently it's wide sweeping and effects any borrower. not just first home buyers.
It explains why a couple of individuals I know who usually have no bother raising bank mortgage have hit a brick wall when wanting to raise funds against their property.
Could it be one way govt is attempting to stop increasing property prices ?

[stoploss]

Recently came across this.

Credit Contracts and Consumer Finance Act (CCCFA).

Govt recently brought this in.
Apparently it's wide sweeping and effects any borrower. not just first home buyers.
It explains why a couple of individuals I know who usually have no bother raising bank mortgage have hit a brick wall when wanting to raise funds against their property.
Could it be one way govt is attempting to stop increasing property prices ?
It has had that effect but it's another "unintended consequence " from this Govt . they wanted to crackdown on payday lenders, food and clothing trucks etc. They were warned that if they implemented it as they suggested it would hurt good borrowers,first home buyers etc . They didn't listen.

[Aaron]

Hope for First home buyers?

https://www.nzherald.co.nz/business/meaningful-drop-conditions-in-housing-market-could-be-ripe-for-prices-to-fall/4ECWQZCLW72I5NN3S2YV2BPA6A/

Despite ex deputy reserve bank governor Geoff Bascand and our own Fungus Pudding declaring house prices are just a supply issue, it would appear demand and more importantly monetary policy settings also play a part.

It is a testament to the decency and civility of the young people of today that globally no reserve bank governor has been dragged into the street and hung drawn and quartered, while a chance at social mobility has been denied them due to central bank policies.

Not only will the next generation have to pay off huge loans, they will have their student loan deductions to consider (unlike previous generations), kiwisaver deductions (saving for retirement something the previous generation was not required to do) and I expect a rise in tax rates as national superannuation in its current form becomes a huge weight on the govt budget.

The younger generation have been very good about things perhaps the older generation could stop shi**ing on them. Let house prices fall (or maybe allow a capital gains tax if you want to keep all the wealth at least then you are contributing to society not just taking), make national superannuation like any other benefit, available only to those who need it. Scrap inflation targeting or at least reduce it to 0-2%.

P.S. this post does not recognise the great things that the older generation has done for NZ and for the following generations. Voted the least corrupt country in the world once again and also one of the wealthiest. My attacks are out of proportion to the issues that concern me. Much like the news media and social media I try sensationalism to get a bite but was overcome with guilt immediately after posting.

[fungus pudding]

Hope for First home buyers?

https://www.nzherald.co.nz/business/meaningful-drop-conditions-in-housing-market-could-be-ripe-for-prices-to-fall/4ECWQZCLW72I5NN3S2YV2BPA6A/

Despite ex deputy reserve bank governor Geoff Bascand and our own Fungus Pudding declaring house prices are just a supply issue, it would appear demand and more importantly monetary policy settings also play a part.


Fungus is a man of few words, so when he speaks of a supply problem, he has taken for granted that the average reader of s.t acknowledges he is referring to a supply shortage (i.e. not meeting demand) or an over-supply; a situation where prices are weak. Demand is a necessary factor if you are going to describe supply as an 'issue'. i.e. It can never be 'just' the supply.

[Logen Ninefingers]

Hope for First home buyers?

https://www.nzherald.co.nz/business/meaningful-drop-conditions-in-housing-market-could-be-ripe-for-prices-to-fall/4ECWQZCLW72I5NN3S2YV2BPA6A/

Despite ex deputy reserve bank governor Geoff Bascand and our own Fungus Pudding declaring house prices are just a supply issue, it would appear demand and more importantly monetary policy settings also play a part.

It is a testament to the decency and civility of the young people of today that globally no reserve bank governor has been dragged into the street and hung drawn and quartered, while a chance at social mobility has been denied them due to central bank policies.

Not only will the next generation have to pay off huge loans, they will have their student loan deductions to consider (unlike previous generations), kiwisaver deductions (saving for retirement something the previous generation was not required to do) and I expect a rise in tax rates as national superannuation in its current form becomes a huge weight on the govt budget.

The younger generation have been very good about things perhaps the older generation could stop shi**ing on them. Let house prices fall (or maybe allow a capital gains tax if you want to keep all the wealth at least then you are contributing to society not just taking), make national superannuation like any other benefit, available only to those who need it. Scrap inflation targeting or at least reduce it to 0-2%.

P.S. this post does not recognise the great things that the older generation has done for NZ and for the following generations. Voted the least corrupt country in the world once again and also one of the wealthiest. My attacks are out of proportion to the issues that concern me. Much like the news media and social media I try sensationalism to get a bite but was overcome with guilt immediately after posting.

According to the older generation who have reaped astronomical gains solely due to central bank policies since the GFC, all young people have to do is not spend so much on coffees and smashed avocado on toast and they will easily be able to buy a house.

The arrogance of the older generation in this regard is unbelievable. Yes, they did work hard. No, this does not mean that they should have been entitled by right to enormous windfall gains which have come about due to a bizarre historical event: the action of central bankers to deliberately inflate asset bubbles as a response to a global financial crisis. Then as a response to a pandemic, they have defended the bubbles they created with more of the extraordinary stimulus and interest rate suppression.

The end result of what has happened in New Zealand is that the egalitarianism that we once prided ourselves on has probably been swept away. A class divide will become even more stark.

We have major problems ahead of us. Inflation has taken hold. Our addiction to cheap money and constant borrowing will be something that it will be difficult to go cold turkey from. Already we hear the outcry from the mortgage brokers and property industry at the first signs of the coming credit crunch. Inflation and higher interest rates coupled with the massive debt burden are going to put real strain on our society. The adage is that after every credit fuelled boom there is a bust. The good times are over, the party is ending. The fantasies about a doubling of house prices over the next ten years will be proven to be a fools daydream. I guess the winners will be those who have cemented their gains, but at what price? What kind of country will they be living in 5 years from now?

[ynot]

According to the older generation who have reaped astronomical gains solely due to central bank policies since the GFC, all young people have to do is not spend so much on coffees and smashed avocado on toast and they will easily be able to buy a house.

The arrogance of the older generation in this regard is unbelievable. Yes, they did work hard. No, this does not mean that they should have been entitled by right to enormous windfall gains which have come about due to a bizarre historical event: the action of central bankers to deliberately inflate asset bubbles as a response to a global financial crisis. Then as a response to a pandemic, they have defended the bubbles they created with more of the extraordinary stimulus and interest rate suppression.

The end result of what has happened in New Zealand is that the egalitarianism that we once prided ourselves on has probably been swept away. A class divide will become even more stark.

We have major problems ahead of us. Inflation has taken hold. Our addiction to cheap money and constant borrowing will be something that it will be difficult to go cold turkey from. Already we hear the outcry from the mortgage brokers and property industry at the first signs of the coming credit crunch. Inflation and higher interest rates coupled with the massive debt burden are going to put real strain on our society. The adage is that after every credit fuelled boom there is a bust. The good times are over, the party is ending. The fantasies about a doubling of house prices over the next ten years will be proven to be a fools daydream. I guess the winners will be those who have cemented their gains, but at what price? What kind of country will they be living in 5 years from now?
NZ housing situation is so screwed its beyond repair.
Only the potential crash that I suspect Labour is trying to engineer will bring prices back to affordable levels.

[Aaron]

There is an unbelievable amount of rubbish talked about housing. An undersupply is hard on purchasers. An over-supply is hard on vendors. There is nothing else to know.

Weasel words from our venerable property investor.

Immigration played no part? Outrageous monetary policy has played no part?

Targeted inflation has played no part?

Just got to build enough houses according to FP.

[fungus pudding]

Weasel words from our venerable property investor.

Immigration played no part? Outrageous monetary policy has played no part?

Targeted inflation has played no part?

Just got to build enough houses according to FP.

Spare me! - do you not realise demand is affected by immigration and monetary policy/interest rates/targeted inflation? It is common to speak of supply and demand without writing a book or making a three hour speech on the factors driving these things. And yes if shortage or under supply is the problem then building or increasing supply is a necessary part of the cure.

[Logen Ninefingers]

Weasel words from our venerable property investor.

Immigration played no part? Outrageous monetary policy has played no part?

Targeted inflation has played no part?

Just got to build enough houses according to FP.

Why the demand for housing though? He says 'not enough houses being built' so there must be a reason for a demand for all these houses. The NZ birth rate is not shooting off the scale - it's the reverse actually, we have an ageing population. So the demand must be coming from somewhere to provoke this outcry for more supply and of course you are right: it is due to the huge influx of immigrants, it is due to the tax advantages that come from owning property, it is due to the extraordinary low interest rates and ultra-loose monetary policy of central banks, it is due to the deficit spending of the government that is pumping cash into the economy. Every factor has lead to extreme demand, to that I would think under the prevailing circumstances no amount of supply would ever be enough.

Up until recently, no property owner or property industry advocate was really prepared to suggest that the issue was anything other than a supply problem. If you go into print admitting that ultra-low interest rates and accomodative monetary policy are the most influential part of the picture - as become starkly evident during 2020 - then that is an admission that raising interest rates will cool the market. And what property owner wants higher interest rates? What real estate agent wants to see a cooling market? These people are shaping their official views according to their own self interest. No turkey is going to vote for Xmas.

But now it has been taken out of their hands. Rising inflation means that interest rates have to go up. And government has to ensure that borrowers are sufficiently financially robust to weather the coming storm. But of course you will see push back from the industry and vested interests. They will fight the incoming tide with all their might.

[Sideshow Bob]

Recently came across this.

Credit Contracts and Consumer Finance Act (CCCFA).

Govt recently brought this in.
Apparently it's wide sweeping and effects any borrower. not just first home buyers.
It explains why a couple of individuals I know who usually have no bother raising bank mortgage have hit a brick wall when wanting to raise funds against their property.
Could it be one way govt is attempting to stop increasing property prices ?

Good article explaining about this, and some of the problems on both sides.....


The Impact of the CCCFA on Business Lending | Business Finance Solutions | Finance New Zealand (financenz.co.nz) (https://www.financenz.co.nz/news/impact-cccfa-business-lending)

[Aaron]

Spare me! - do you not realise demand is affected by immigration and monetary policy/interest rates/targeted inflation? It is common to speak of supply and demand without writing a book or making a three hour speech on the factors driving these things. And yes if shortage or under supply is the problem then building or increasing supply is a necessary part of the cure.

Please forgive me, from your original post I thought you were saying we just need to build more houses, a simple supply issue not worthy of further thought.

Obviously I have to read between the lines more.

[Logen Ninefingers]

- Auckland property prices rose by $6,700 a week last year.
- According to the latest Knight Frank global house price index, NZ house prices posted the fastest increase globally over the last five years.
- As of January New Zealand’s median house price is now higher than $1 million, a first for the nation, according to CoreLogic.
- House prices nationally were now 12.4 times the average wage as at 1 July 2021 Massey University analysis revealed.

Given the extraordinary house price rises - far outstripping average wages - and the pressure of rising interest rates, the government would be negligent if they did not ensure that a 'sub prime' situation was not developing in NZ. Of course, it may already be too late. It may be that the CCCFA implementation and subsequent outcry are highlighting that mortgage brokers and banks have been far too cavalier with their standards and that a great deal of dangerous lending has been going on. After all, with the comissions being earned and the need to compete for market share, the property industry is reliant on a constant supply of new buyers coming forward. There must be a great temptation to have this continue, no matter what.

There also seems to be an assumption that fewer first-home buyers and investors are 'coming forward for a mortgage' due to CCCFA changes, when I would have thought that extreme prices and higher interest rates were the logical reason.

Are the mortgage brokers worried for first home buyers out of the goodness of their hearts, or are they now losing income from the decline in the pool of buyers?

If the CCCFA is actually dampening demand from both first home buyers and investors, why isn't that a good thing? I thought we had a housing crisis and moreover a housing affordability crisis? So why isn't an easing of demand a good thing?!

https://www.newshub.co.nz/home/money/2022/01/banks-less-willing-to-lend-following-cccfa-changes-mortgage-adviser-survey.html

Over half of the survey respondents report seeing fewer first-home buyers and investors coming forward for a mortgage, at a net 52 percent and 57 percent respectively.
Independent economist Tony Alexander told Newshub while loan-to value ratio restrictions, debt-to-income ratios (applied by certain banks), and interest rate rises, are affecting borrowers, the CCCFA changes are having the biggest impact.
"Largely, it's the CCCFA changes that are preventing home buying by a great number of people," Alexander said.
In the survey results, one adviser said the CCCFA changes were having a bigger impact than the LVR restrictions and the removal of interest deductibility for investors.
"Banks are now taking a forensic look at client's expenses: trust has been eroded between the bank and client around how they should live their lives," the comment reads.

[fungus pudding]

Please forgive me, from your original post I thought you were saying we just need to build more houses, a simple supply issue not worthy of further thought.

Obviously I have to read between the lines more.

Ask and thou shall receive. Thou art forgiven.

[Logen Ninefingers]

NZ housing situation is so screwed its beyond repair.
Only the potential crash that I suspect Labour is trying to engineer will bring prices back to affordable levels.

Only the potential crash that I suspect Labour is trying to engineer will bring prices back to affordable levels.

They are definitely not trying to engineer a crash. Jacinda has already acknowledged that Kiwi's expect to see their house gain in value. She knows the will of the electorate. She has talked about manageable house price increases, rather than the large rises we have seen - or words to that effect.

What we have seen to date from the government and central bank has been a passive bail-out of the housing market. Back in 2020 when house price falls were predicted they went into overdrive to support the market. Of course the measures were intended to prop it up (orbail it out in other words) rather than over-heat it. Of course your average Kiwi see's interest rates being slashed to the bone and doesn't think "hmmm...they are propping up the market", they think "corrrr....look at interest rates; I better get e another house!" or "I better get me a better house". So you got the unintended consequence: massive price rises.

You see a lot of comments on line about 'ha ha ha ha...the experts were predicting house price falls - instead they went up massively. Those idiots don't know what they are talking about".
These comments are dumb. Prices would probably have fallen without the heavy handed intervention of the government and the central bank.

It's a bit like observing a burning house, without intervention it will burn to the ground.
Is that observation wrong? No, of course it isn't.
But here comes the fire brigade. They put out the fire.
The circumstances changed. And the original observation was still correct.

[Logen Ninefingers]

https://www.stuff.co.nz/life-style/homed/housing-affordability/127592694/nz-home-loan-borrowers-face-doubled-interest-as-60pc-of-mortgages-up-for-renewal

Roughly 60 per cent of home loans will need to be refinanced in the next year and for many borrowers, that will mean their interest rates doubling, according to CoreLogic’s latest Property Market & Economic Update.

CoreLogic chief property economist Kelvin Davidson said during the middle of last year, fixed-term interest rates were between 2 per cent and 2.5 per cent, and by mid-2022 they would probably be between 4 per cent and 5 per cent.

With fixed-term periods generally evenly spread throughout the year, Davidson said as much as 20 per cent of fixed-term borrowers could be hit by that doubling as well as those on floating rates.

Davidson said the change in interest rates could have a “significant impact on household budgets” and this would be another factor reining in house prices, or even contributing to house price falls.

[Logen Ninefingers]

Probably people will look back and say "so people on average incomes were buying an ordinary house in an ordinary neighbourhood for $1.2 million?! What were they thinking??"

Total speculative mania and a national delusion.

Poeple paying for ordinary bog-standard houses what would be paid for a farm not so long ago.

[Logen Ninefingers]

https://www.stuff.co.nz/life-style/homed/housing-affordability/127592694/nz-home-loan-borrowers-face-doubled-interest-as-60pc-of-mortgages-up-for-renewal

Roughly 60 per cent of home loans will need to be refinanced in the next year and for many borrowers, that will mean their interest rates doubling, according to CoreLogic’s latest Property Market & Economic Update.

CoreLogic chief property economist Kelvin Davidson said during the middle of last year, fixed-term interest rates were between 2 per cent and 2.5 per cent, and by mid-2022 they would probably be between 4 per cent and 5 per cent.

With fixed-term periods generally evenly spread throughout the year, Davidson said as much as 20 per cent of fixed-term borrowers could be hit by that doubling as well as those on floating rates.

Davidson said the change in interest rates could have a “significant impact on household budgets” and this would be another factor reining in house prices, or even contributing to house price falls.

405 comments on this article and many of them are blaming the banks or successive governments. Typical. The people who actually did the buying and put themselves in the position where they took on huge debt won't blame themselves. Human madness.

[Bjauck]

405 comments on this article and many of them are blaming the banks or successive governments. Typical. The people who actually did the buying and put themselves in the position where they took on huge debt won't blame themselves. Human madness.Monetary and fiscal policy corral the sheeple then funnel them onto the freezing works trucks?

Those who leveraged themselves into property in the past and are now debt free, are in clover, thanks to this past monetary and fiscal government policy. Boomer heaven?

[Logen Ninefingers]

Monetary and fiscal policy corral the sheeple then funnel them onto the freezing works trucks?

Those who leveraged themselves into property in the past and are now debt free, are in clover, thanks to this past monetary and fiscal government policy. Boomer heaven?

Someone has to be left holding the bag. Vis a vis inflation and interest rate settings, I see comments from people saying "why is the happening?" - the ignorance of people who are prepared to borrow maybe a million dollars and yet they don't understand what is going on in the world, the don't know about QE and other unconventional central bank policies, they don't know how important US inflation and the Federal Reserve are to NZ and what happens in our market....it is both sad and disappointing.

[fungus pudding]

Monetary and fiscal policy corral the sheeple then funnel them onto the freezing works trucks?

Those who leveraged themselves into property in the past and are now debt free, are in clover, thanks to this past monetary and fiscal government policy. Boomer heaven?

Yep - good eh!

[Logen Ninefingers]

Yep - good eh!

I guess on the one hand many young people have been left holding the bag, but have a long life to look forward to.

And the boomers have cashed out their central bank given gains but are at the end of their lives and have the old folks home, dementia et al to look forward to.

So it must be a sort of bitter-sweet moment for the boomers. They get an amazing windfall but it comes in the last part of their lives.
Many of them won't have a clue about QE, ZIRP, helicopter money, 'the wealth effect' and all the rest of it. They just have the narrative of "we worked hard & deserve this" and no-one can convince them otherwise. Good luck to them and they will certainly be able to live in style at the retirement home.

[artemis]

As property (and other asset) owners age and fall off the perch, the offspring will inherit not a trickle but a veritable waterfall. Unearned.

[fungus pudding]

As property (and other asset) owners age and fall off the perch, the offspring will inherit not a trickle but a veritable waterfall. Unearned.

....which they thoroughly deserve - for having chosen their parents wisely.

[Logen Ninefingers]

....which they thoroughly deserve - for having chosen their parents wisely.

Haha....nice trolling. Well done sir. Up the blue bloods!

[dobby41]

Monetary and fiscal policy corral the sheeple then funnel them onto the freezing works trucks?

Those who leveraged themselves into property in the past and are now debt free, are in clover, thanks to this past monetary and fiscal government policy. Boomer heaven?

More than Boomer heaven - there are a lot of younger (than Boomer criteria) people who leveraged into property and are mortgage-free or very well capitalised.

[fungus pudding]

More than Boomer heaven - there are a lot of younger (than Boomer criteria) people who leveraged into property and are mortgage-free or very well capitalised.

It's good to see those enterprising younger bods being well rewarded.

[Logen Ninefingers]

Bit of a CJ going on here. Meanwhile inflation has hit 5.9% and the RBNZ is expected to hike the OCR in February.

[SBQ]

Bit of a CJ going on here. Meanwhile inflation has hit 5.9% and the RBNZ is expected to hike the OCR in February.

Great comments Logen. House next door has the for sale sign going up for auction Feb 18th. When we moved to this new neighbourhood sub-division here in Chch 2010, the price of the section was $185K and to put a house on of average size 210m2 was around $240K so $425K. House down the street of similar size and land sold for $1M last year. My neighbour, he's aiming to get $1.3M

How sustainable are these price rises? in 11 years a 3 fold gain? You hinted a windfall to the boomers. But if these families are not roughed up, most downsize and give the remaining proceeds to their adult children as they move away. No more are the days where a school grad could earn enough $ to pay for the mortgages required to buy a house. That pool is only for the top 1% crowed. Typically the ones that have gone to private school and whom their parents have been able to fund their whole education and training to ensure they reach top level. It's a social divide the way I see it, mixed in with using houses as a commodity asset of achieving financial wealth.

As I mentioned before, 2/3rds of NZ's wealth is tied in real estate. Over in N. America, it's 2/3rds of their wealth that is tied into businesses and in their stock markets that create new businesses. It's not hard to see this distinction when you compare NZ's GDP/capita figures with US or Canada's GDP/capital. We ARE a low productivity nation because we pool most of our wealth in houses. It's a key reason when the UN rapporteur visits NZ, she complains on NZ's lack of progress in making housing affordable (as per UN's belief, housing is a "human right") - and NZ has done poorly by look at the long list of social housing claimants. This social divide, I point to the top 1% of the wealthy neglecting the rest of society as more of the middle class gets shoved down to lower income class. To be able to start from nothing, to being able to own a home is a monumental step for the middle class, and as time carries on, you will find that more and more people will be left behind, without a chance to get into a home. I call it a cane-ing.

[Bjauck]

As property (and other asset) owners age and fall off the perch, the offspring will inherit not a trickle but a veritable waterfall. Unearned.
Thanks to NZ's highly regressive tax system, true - for the kids of wealthy parents. I wonder for how much longer NZ will be able to avoid multiple home stamp duties, CGT, Inheritance & transfer tax.

[Logen Ninefingers]

Thanks to NZ's highly regressive tax system, true - for the kids of wealthy parents. I wonder for how much longer NZ will be able to avoid multiple home stamp duties, CGT, Inheritance & transfer tax.

You talk about CGT at a time when interest rates are on the rise, inflation is mounting, new supply is in train, and the bubble is at top.

What I am saying is that the horse has bolted and is up the road and over the hill, while the powers that be are still looking at the stable door and mulling things over. If anyone buying now and over the next few years can make a capital gain, then good luck to them. I think it's more likely they will be holding a bag marker 'negative equity'. To be clear, the cavalry that always rode to the rescue of the property market is not coming to the rescue anymore. We have an inflation problem now and that means things will change. It's all well and good when it's a house ("we're all gonna be rich!"), but it hits them in the gut when everything else is now going up. You can already see the political heat that Labour is copping over inflation: people don't like it when they see prices increasing at the rate they are. It doesn't get any more visceral than the basic need to feed your family or pay your energy bill (keep the lights on so to speak).

[fungus pudding]

I wonder for how much longer NZ will be able to avoid multiple home stamp duties, CGT, Inheritance & transfer tax.

Yeah. Sort of thing that worries me too.

[Logen Ninefingers]

Yeah. Sort of thing that worries me too.

Chloe Swarbrick is talking about wealth taxes but I wouldn't worry about it if I were you. The governing parties know that no-one from the middle class above is going to vote for tax increases, so it's a non starter. "Just borrow whatever you need Robbo maaate".

[Bjauck]

If these investors did not intend to be landlords earning taxable rental income, what was the intention behind their purchase of an investment property?

“We never planned to be landlords,” Mike Bennett said of the couple's decision to sell their Forbury property before Christmas.
Bennett and his wife, Claire, had planned to use some of the $300,000 profit, after the mortgage had been settled, to renovate the home they lived in“
https://www.stuff.co.nz/business/127650304/couple-stunned-as-bank-takes-half-of-home-sale-profit-without-consultation

[fungus pudding]

If these investors did not intend to be landlords earning taxable rental income, what was the intention behind their purchase of an investment property?


Who cares - it's their business.

[Bjauck]

Who cares - it's their business.
Isn’t Intent important with investments for tax purposes? And net profit is taxable? Whether or not a profit on an investment property is taxable affects investor demand for houses.

[artemis]

If these investors did not intend to be landlords earning taxable rental income, what was the intention behind their purchase of an investment property?

....

Plenty of accidental landlords out there. Like inheritance, or buying a new owner occupied home and renting out the old one. Who knows.

What we do know is that in the last 4 years the costs and rules around rental properties have changed dramatically. Regardless of how and why rentals started out no surprise if owners make decisions based on the current rules.

Maybe some of those decisions will be to sell, maybe repurpose. There does seem to be a shortage of rentals in many locations, and as borders reopen what is available will be under more and more pressure. There is always the social housing waiting list. For the extremely patient.

[Bjauck]

Plenty of accidental landlords out there. Like inheritance, or buying a new owner occupied home and renting out the old one. Who knows.

What we do know is that in the last 4 years the costs and rules around rental properties have changed dramatically. Regardless of how and why rentals started out no surprise if owners make decisions based on the current rules.

Maybe some of those decisions will be to sell, maybe repurpose. There does seem to be a shortage of rentals in many locations, and as borders reopen what is available will be under more and more pressure. There is always the social housing waiting list. For the extremely patient.

Sure - but these people bought the property and said they did not have the intent to become landlords. They were not accidental owners of the property.

[artemis]

Sure - but these people bought the property and said they did not have the intent to become landlords. They were not accidental owners of the property.

How do you know that?

[fungus pudding]

Isn’t Intent important with investments for tax purposes? And net profit is taxable? Whether or not a profit on an investment property is taxable affects investor demand for houses.

They seemed to want to use the whole of their profit to renovate the home they lived in.

Yes. Intent is the deciding factor as far as tax goes. Maybe they had lived in this home prior to living in their current home. Or maybe one of them did before shacking up as a couple. From time to time the market can be quite flat leaving owners who have bought elsewhere facing big bridging finance costs - so it can make sense to pop a tenant in waiting for the market to pick up. Looking at the figures in that article, and knowing the Dunedin market over the last few years, it looks to me like that is what happened. Anyway - good luck to them.

[Bjauck]

Plenty of accidental landlords out there. Like inheritance, or buying a new owner occupied home and renting out the old one. Who knows.
They had mortgages on both their properties. Obtaining a mortgage is not accidental. If you buy a second house live in, then retaining the other one is not an accidental decision. What is the purpose of retaining the other one if the intent is not to become a landlord?


What we do know is that in the last 4 years the costs and rules around rental properties have changed dramatically. Regardless of how and why rentals started out no surprise if owners make decisions based on the current rules.

Maybe some of those decisions will be to sell, maybe repurpose. There does seem to be a shortage of rentals in many locations, and as borders reopen what is available will be under more and more pressure. There is always the social housing waiting list. For the extremely patient. Sure. Which still beggars the question why was a property originally purchased - or retained if inherited or became surplus to requirements. These Dunedin owners said they had made a $300k "profit". So even if their ownership was "accidental" they may have held on to for some time, even in today's market, to make such a "profit". Plus going to the trouble of becoming accidental landlords indicates a more than short term period of ownership. What was the intent behind owning it, if there was no intent on becoming landlords?

[fungus pudding]

They had mortgages on both their properties. Obtaining a mortgage is not accidental. If you buy a second house live in, then retaining the other one is not an accidental decision. What is the purpose of retaining the other one if the intent is not to become a landlord?

Sure. Which still beggars the question why was a property originally purchased - or retained if inherited or became surplus to requirements. These Dunedin owners said they had made a $300k "profit". So even if their ownership was "accidental" they may have held on to for some time, even in today's market, to make such a "profit". Plus going to the trouble of becoming accidental landlords indicates a more than short term period of ownership. What was the intent behind owning it, if there was no intent on becoming landlords?

To make you turn green with envy.

[Bjauck]

To make you turn green with envy. Just trying to understand the tax rules behind NZ households’ biggest investment class. So if the intent on buying or keeping an “accidental” surplus house is not to become landlords in a tenancy situation, then presumably the intent is not to earn taxable rent from it. How is the gain from the owners’ equity on sale treated for tax purposes in such circumstances?

[artemis]

They had mortgages on both their properties. Obtaining a mortgage is not accidental. If you buy a second house live in, then retaining the other one is not an accidental decision. What is the purpose of retaining the other one if the intent is not to become a landlord? ......

Fact is we don't know from the article what their actions mean and what their intentions were. You have made assumptions, fair enough but they are just assumptions.

Many property owners have seen values rise by multiple hundreds of thousands in the last year or two. Smart owners seeing values rise might well hold on to a property for a while.

[fungus pudding]

Just trying to understand the tax rules behind NZ households’ biggest investment class. So if the intent on buying or keeping an “accidental” surplus house is not to become landlords in a tenancy situation, then presumably the intent is not to earn taxable rent from it. How is the gain from the owners’ equity on sale treated for tax purposes in such circumstances?

The vast majority of home purchasers buy instead of renting because of fomo. So let's apply the same rules to all property owners, then it''s fair

[Bjauck]

The vast majority of home purchasers buy instead of renting because of fomo. So let's apply the same rules to all property owners, then it''s fair
I agree with you. I also think there should be imputed rent from owner occupied housing along with a living expenses tax-free threshold. However I was trying to get a handle on how the current actual rules may apply.

[fungus pudding]

I agree with you. I also think there should be imputed rent from owner occupied housing along with a living expenses tax-free threshold.

And a flat tax over and above that threshold.

[Bjauck]

And a flat tax over and above that threshold. Only if capital gains (yes a more general CGT including owner occupied housing) are taxable. Otherwise I don't think it would be good for the country to make the tax system even more regressive than it already is.

[fungus pudding]

Only if capital gains (yes a more general CGT including owner occupied housing) are taxable. Otherwise I don't think it would be good for the country to make the tax system even more regressive than it already is.

It would reduce the income gap. e.g. to attract skill there's little point in offering another 5k a year when that is taxed at 39% - so more must be paid by the employer which indirectly means the employers' customers.

[Bjauck]

It would reduce the income gap. e.g. to attract skill there's little point in offering another 5k a year when that is taxed at 39% - so more must be paid by the employer which indirectly means the employers' customers.
Even better: Reduce the burden on income (reduce the income tax rate to zero as happened when the estate duty was reduced to zero), and place the burden on capital gains and wealth and away from services, goods, income and profit?

[Baa_Baa]

Even better: Reduce the burden on income (reduce the income tax rate to zero as happened when the estate duty was reduced to zero), and place the burden on capital gains and wealth and away from services, goods, income and profit?

How does this relate to first home buyers, or have you hijacked another thread with your incessant fixation on taxes?

[Bjauck]

How does this relate to first home buyers, or have you hijacked another thread with your incessant fixation on taxes? My apologies for keeping you from commenting on this thread. Feel free to add a comment relevant to first home buyers being scr*d. Place me on your ignore list.

Sure I got sidetracked into whatiffery and flat tax. However I imagine you may acknowledge the relevance of tax environment on housing investors with respect to house prices and demand for housing and whether first homebuyers are being scr*d or not by being squeezed out?

A couple of links:

The tax battle: Property Investor vs. First-Home Buyer?


https://www.cooperaitken.co.nz/the-tax-battle-property-investor-vs-first-home-buyer/


While first home buyers will benefit from the new tax amendments, investors are doubly disadvantaged by the removal of interest deductibility for residential investment from 1 October 2021

https://www.saunders.co.nz/news/property-investors-hit-hard-by-tax-reforms/

“Berlin’s wall crumbled
We taxed savings, not houses Locking out the young.”
HOUSING, THE ‘GREAT INCOME TAX
EXPERIMENT’, & THE INTERGENERATIONAL
CONSEQUENCES OF THE LEASE
PDF link
https://www.motu.nz/assets/Documents/our-work/wellbeing-and-macroeconomics/fiscal-issues/Housing-Taxes-and-Consequences-Executive-Summary.pdf

[SBQ]

Sure - but these people bought the property and said they did not have the intent to become landlords. They were not accidental owners of the property.

Well i'm sure glad IRD requires at anytime when a house purchase is made, the solicitor is required to have the buyer fill out a 2 page form that is lodged into IRD. One of the key questions on the form asks, "What is the INTENT of buying this property?" and in the tick mark box there lies "For Investment Purposes" or "A principal residence".

We all know computers don't forget so maybe, just maybe, one day the NZ gov't can easily impose some rule to impose CGT on "Property Investment" category.

BTW, for as long as I lived in Canada, the term "accidental landlord" does not apply and CGT is applied to properties in a very close manner. Even the change of use on a portion of your house (ie renting the basement out) will change the tax free CG structure of a principal residence. Likewise in any inheritance, estate probate kicks in to ensure no unpaid taxes on the decease owner's properties does not slip through (deemed disposition applies at time of death).

[Bjauck]

Latest stats show House price increased 6.1% in just three months; 27.6% increase in the last year. It is a measure of how inflated the housing market has been that this slight decrease in the rate of increase is called "an easing" in the market. With other assets, that would be a fantastic increase in prices for existing owners. The NZ sharemarket is down about 5% in the past year...

https://www.stuff.co.nz/life-style/homed/real-estate/127738258/there-are-strong-signs-the-housing-market-is-easing--qv

[Bjauck]

Latest stats show House price increased 6.1% in just three months; 27.6% increase in the last year. It is a measure of how inflated the housing market has been that this slight decrease in the rate of increase is called "an easing" in the market. With other assets, that would be a fantastic increase in prices for existing owners. The NZ sharemarket is down about 5% in the past year...

https://www.stuff.co.nz/life-style/homed/real-estate/127738258/there-are-strong-signs-the-housing-market-is-easing--qv


A previous labour government introduced the fair dividend rate to tax (overseas) investments that had low income yields, but still had capital gains. An easier target for reform with fewer votes to lose?

[Logen Ninefingers]

US inflation now at 7.5%, increasing the pressure on the Fed to raise interest rates. The NZ property market is a sitting duck.

[SBQ]

A previous labour government introduced the fair dividend rate to tax (overseas) investments that had low income yields, but still had capital gains. An easier target for reform with fewer votes to lose?

House price rise? This is the same narrative for the past several decades in NZ. This morning on talk radio there was a person on RNZ talking about Finance and investing in the sharemarket. She had some words how the NZ FMA made it easier for people to invest in overseas shares through the many online portals (Hatch, Sharesies etc.). My thoughts were, what a complete bunch of BS. Her angle was the assumption that Kiwis find shares "complicated and confusing.." as she is trying to sell her book. I was disgusted. NOT A SINGLE word mentioned about the FIF taxation. Not a single word about why investment in NZ houses rarely pay any capital gains tax while the small investor (and there were calls on RNZ in this situation), when they invest into Kiwi Saver THAT INVESTS into overseas shares, have to pay tax on the annual paper gains. There is absolutely a loss in translation between how houses get the tax free benefit, while those trying to save for a house (by method of KS or by directly investing abroad), are hit with taxation on all their returns. You have financial advisors in NZ pride on saying "future compound returns", but never say that those compound returns are seriously eroded through FIF taxation.

It's a real shame how the investment community (in industry in NZ) has done a poor job in educating people both sides of the game (house vs owning shares) and instead, your average Kiwi assumes that owning share investments is 'confusing, complex, etc'. This is the thing i've brought about when attending past NZ Shareholders Assn meetings (pre covid). Financial investments in NZ is a downright fail, there are no afternoon TV talk on how to invest smarter, no talks about taxation, no talks about anything that is primarily relevant to investing for retirement. Because when I hear people say they got KS and think they are doing well, the sad story is they really are not. The neighbour down the road that buys his 4th or 5th home 2 years ago is always going to win.

[Logen Ninefingers]

In September 2014 the OCR was 3.5 and it stayed at that level until 11 June 2015 when it dropped by .25

From then on until 7 August 2019 it dropped steadily, and at that point was at 1.5
On 7 August 2019 it was cut by .50 and therefore was at 1 well before anyone had ever heard of COVID-19

Why did the Reserve Bank cut interest rates over this extended period of roughly 5 years? It can only have been as a response to economic weakness and flat-lining inflation. You only provide monetary stimulus if it is judged that the economy requires further monetary stimulus to remain above stall speed. So the cuts tell a very clear story.

We like to think that the New Zealand economy is fundamentally strong and that abnormally low interest rates are something that are a COVID-19 induced phenomenon. The truth of the matter is that interest rates were abnormally low before COVID-19 raised its head, and the New Zealand economy was sputtering along and required these historically low interest rates to continue to move forward at a level that was seen as acceptable to achieve inflation goals and full employment.

COVID-19 allowed for a further massive yet temporary sugar hit to mainline into the New Zealand economy. If we look at GDP growth and house prices - which seem to be the measures by which we judge economic success and health - then the sugar hit of a .75 cut to the OCR plus massive government spending has provided a veneer of health.....GDP and house price growth have been strong to say the least. But because GDP growth includes government spending and the activity in the housing market, we have found a way to trick the data into giving a false picture of economic health. Its like an athlete taking steroids and winning races, when we know that the steroids are a form of cheating and that they will do long term damage to the athelete in question.

We have pre-existing problems in the NZ economy that pre-date the appearance of COVID-19. We can kid ourselves that the economic framework is strong and healthy, yet the plain truth is that the economy was running on steroids prior to COVID-19 and then the pandemic just exacerbated existing bad trends and further entrenched them. We have become fundamentally over-reliant on government spending and house price growth to 'juice' our GDP figures. We look at some indictators and we think that the economy is healthy, and we may even think it is getting stronger. But look past what these indicators are showing and there is a frail substructure that existed prior to the pandemic & it will have only got weaker while we have gone through this latest 'sugar hit' phase.

[ynot]

Good post on the fragile state of NZ Logen. Something's got to give.

[Valuegrowth]

https://www.stuff.co.nz/business/127886682/putins-war-on-ukraine-could-raise-inflation-but-slow-global-interest-rate-hikes
Putin's war on Ukraine could raise inflation but slow global interest rate hikes


https://www.housingwire.com/articles/ukraine-conflict-could-lead-to-lower-mortgage-rates-in-short-term/
Ukraine conflict could lead to lower mortgage rates in short-term

[Crypto Crude]

Oh well I finally did it... It took me 15 years but I'm accepting the offer on a house next week...exactly how I said I would do it no loan 100% freehold...
I can only afford to buy on the West Coast...
I'm looking forward to it.. fishing, boating camping hiking...

It's been one hell of a ride...
The highs and lows and have incredible... from the depths of disappear to Valhalla and back...
I've made so many mistakes...
But doing crypto has been one of the best decisions I ever made...
5 years ago everybody said crypto was a waste of time... now crypto is the bees knees...
I've managed to make decades of returns in little time...
Thank you crypto...
:cool:cc

[ynot]

Oh well I finally did it... It took me 15 years but I'm accepting the offer on a house next week...exactly how I said I would do it no loan 100% freehold...
I can only afford to buy on the West Coast...
I'm looking forward to it.. fishing, boating camping hiking...

It's been one hell of a ride...
The highs and lows and have incredible... from the depths of disappear to Valhalla and back...
I've made so many mistakes...
But doing crypto has been one of the best decisions I ever made...
5 years ago everybody said crypto was a waste of time... now crypto is the bees knees...
I've managed to make decades of returns in little time...
Thank you crypto...
:cool:cc
Congratulations CC.

[Bjauck]

Oh well I finally did it... It took me 15 years but I'm accepting the offer on a house next week...exactly how I said I would do it no loan 100% freehold...
I can only afford to buy on the West Coast...
I'm looking forward to it.. fishing, boating camping hiking...

It's been one hell of a ride...
The highs and lows and have incredible... from the depths of disappear to Valhalla and back...
I've made so many mistakes...
But doing crypto has been one of the best decisions I ever made...
5 years ago everybody said crypto was a waste of time... now crypto is the bees knees...
I've managed to make decades of returns in little time...
Thank you crypto...
:cool:cc
Will it be a big change of lifestyle from a town or big city? It sounds like a slice of paradise.

[fungus pudding]

Oh well I finally did it... It took me 15 years but I'm accepting the offer on a house next week...exactly how I said I would do it no loan 100% freehold...
I can only afford to buy on the West Coast...
I'm looking forward to it.. fishing, boating camping hiking...

It's been one hell of a ride...
The highs and lows and have incredible... from the depths of disappear to Valhalla and back...
I've made so many mistakes...
But doing crypto has been one of the best decisions I ever made...
5 years ago everybody said crypto was a waste of time... now crypto is the bees knees...
I've managed to make decades of returns in little time...
Thank you crypto...
:cool:cc

It's hard work finding a property in NZ that isn't freehold. In simple terms, freehold means not leasehold. IOW the owner of the improvements also owns the land rather than renting it. A high percentage of freehold properties are mortgaged. The correct term for these is encumbered or just mortgaged. Calling an unencumbered property ' freehold' is a common misnomer, but it has no place in a forum that deals in financial matters.

[Crypto Crude]

Will it be a big change of lifestyle from a town or big city? It sounds like a slice of paradise.

Yeah man ...
Lol buying a house stressful much?
Just seen one 20k more but its pushing my finances.. .... but offers me more...way more....gona now have to try call in a favor to get me over the line...
Have Hella locked up in crypto... lol...


Thanks fungus I won't make that mistake again ....
:cool:cc

[Aaron]

https://www.stuff.co.nz/business/128214688/a-third-of-homeowners-were-outearned-by-their-houses-last-year

Apart from the ridiculous situation where owning a home and staying in bed earns you more (untaxed) than a 9-5 job (taxed), it appears homeowners are concerned but not concerned enough to do anything about it at the next election.

Can you blame them?

Policy change required at RBNZ, scrap inflation targeting and trickle down economics.

[fungus pudding]

https://www.stuff.co.nz/business/128214688/a-third-of-homeowners-were-outearned-by-their-houses-last-year

Apart from the ridiculous situation where owning a home and staying in bed earns you more (untaxed) than a 9-5 job (taxed), it appears homeowners are concerned but not concerned enough to do anything about it at the next election.

Can you blame them?


Don't overlook the fact houses depreciate, or fall below their replacement cost as time goes by: i.e. the value reduces. Simpletons get confused by the nominal increase caused by inflation. The owner does nothing at all to cause this, so it would be particularly harsh to tax them on this gain when the poor blighter has done nothing at all to cause this situation.

[Aaron]

Don't overlook the fact houses depreciate, or fall below their replacement cost as time goes by: i.e. the value reduces. Simpletons get confused by the nominal increase caused by inflation. The owner does nothing at all to cause this, so it would be particularly harsh to tax them on this gain when the poor blighter has done nothing at all to cause this situation.

I think simpletons also pay tax on their nominal wage increases last time I looked. Some of them enter a higher tax bracket through bracket creep as well but as you say owners of capital should not have to pay tax but labour should. So very sensible now that you have explained it to a simpleton like me.

To say the poor blighter has done nothing at all to cause house price inflation is not exactly true. Of course he has, he has voted national or labour on the basis they don't rock the boat on monetary policy and house prices and lose the boomer vote.

[fungus pudding]

I think simpletons also pay tax on their nominal wage increases last time I looked. Some of them enter a higher tax bracket through bracket creep as well but as you say owners of capital should not have to pay tax but labour should. So very sensible now that you have explained it to a simpleton like me.

To say the poor blighter has done nothing at all to cause house price inflation is not exactly true. Of course he has, he has voted national or labour on the basis they don't rock the boat on monetary policy and house prices and lose the boomer vote.

They should certainly solve the problem of bracket creep - easily achieved by introducing a flat tax.
Wage earners receive real increases, whereas the hard done by property owner has to suffer the falling value of a depreciating assett which the dopey govt. recently decided to no longer allow depreciation for. So the poor investor now pays tax on his losses.
No wonder they need to regularly increase rents! Imagine how much it would cost to fly if the airlines couldn't depreciate their planes!
At least you should have some sympathy for the poor landlords!

[Aaron]

They should certainly solve the problem of bracket creep -easily achieved by introducing a flat tax.

A flat tax and no capital gains tax. You may have all the solutions for a better NZ FP. Although if I recall you were unable to answer a simple quiz relating to progressive tax so it may be you prefer something SIMPLE you can understand.

Better talk to ACT re the flat tax, but Labour and National are already onboard with not taxing the wealthy. Both major parties have their lips firmly attached to boomer arseholes (double entendre intended)

No point voting for any of these parties if you are genuinely concerned about 1st home owners.

[fungus pudding]

A flat tax and no capital gains tax. You may have all the solutions for a better NZ FP. Although if I recall you were unable to answer a simple quiz relating to progressive tax so it may be you prefer something SIMPLE you can understand.

Better talk to ACT re the flat tax, but Labour and National are already onboard with not taxing the wealthy. Both major parties have their lips firmly attached to boomer arseholes (double entendre intended)

No point voting for any of these parties if you are genuinely concerned about 1st home owners.

When was I unable to answer a quiz on progressive tax?

[Aaron]

When was I unable to answer a quiz on progressive tax?

"ACTs David Seymour I like his style thread". Post number 87.

Seems we are still arguing about the same thing and you are still wrong.

Some things never change.

[fungus pudding]

"ACTs David Seymour I like his style thread". Post number 87.

Seems we are still arguing about the same thing and you are still wrong.

Some things never change.

I don't know what question you mean. I looked at that post - but can't see a direct question. Anyay, I'm sure you're happy with your opinion, and that's fine and dandy.

[Bjauck]

I posted on the wrong thread

[SBQ]

Meanwhile in Vancouver, Canada:

https://dailyhive.com/vancouver/bc-government-bill-transit-oriented-development


A new bill tabled by BC minister of transportation and infrastructure Rob Fleming today will provide BC Transportation Financing Authority with the legal ability to acquire land next to public transit hubs — SkyTrain stations and bus exchanges — to build more housing and community benefits.

“Public transit isn’t just about getting people from A to B, it’s also about building greener and more liveable communities,” said Fleming. “We will increase the level of affordable housing and services that are integrated into our significant investments in transit.”


I know Auckland does not have a rapid public transit system like Vancouver, but it's also important that our gov't does not sit around and do nothing. Dream up ideas like building a fancy cycle bridge across a harbour, while social housing queues grow to record levels year after year. I'm disgraced of all the pandering to the rich and wealthy in NZ as they've scooped up ownership in houses and land.

[Panda-NZ-]

I know Auckland does not have a rapid public transit system like Vancouver, but it's also important that our gov't does not sit around and do nothing. Dream up ideas like building a fancy cycle bridge across a harbour, while social housing queues grow to record levels year after year. I'm disgraced of all the pandering to the rich and wealthy in NZ as they've scooped up ownership in houses and land.

There's roadworks everywhere too. Its sad that there will never be a time when there isn't.

I wish I was colourblind to orange.

[SBQ]

There's roadworks everywhere too. Its sad that there will never be a time when there isn't.

I wish I was colourblind to orange.

Same here in Christchurch. Today I ended up in a detour that took me over 30 mins extra to get to my destination (right around 5pm rush hour time).

One thing I can't get use to driving around NZ is when going from 1 residential suburb to another, it always seems like i'm "driving residential". A strong contrast to in Canada where streets and avenues are gridded with major 4 lane road ways that separate the suburbs. Houses have back alley access which facilitates very well to future planning of sub-dividing / 'Lane House' development. We certainly use land in NZ in an inefficient way when it comes to subdividing lots. Cumulative if you add up every titled lot that has a dedicated driveway to access the back section, this would amount more land coverage than to have an alley way.

In 4 months time the Resource Mgt Act will be updated to allow higher density building on exiting titled lots. This is long overdue but NIMBY fear that such houses will be over cramped and ugly in appearance.

[SBQ]

Trudeau has updated Canada's 2022 Budget:

https://budget.gc.ca/2022/home-accueil-en.html

Under Savings, the new scheme that attracted my attention is:




Budget 2022 proposes to introduce the Tax-Free First Home Savings Account that would give prospective first-time home buyers the ability to save up to $40,000. Like an RRSP, contributions would be tax-deductible, and withdrawals to purchase a first home—including investment income—would be non-taxable, like a TFSA. Tax-free in, tax-free out.



Unlike NZ, if a person earns $50K / year but pays $15K in that in income taxes, they can choose to allocate say $10K of that towards the TFFHS scheme and only pay $5K in income taxes. Furthermore, ALL of the gains in that portfolio grows 100% tax free. Upon time of withdrawal, those funds will go towards the purchase of the individual's 1st home. We have nothing like this in NZ.




Budget 2022 proposes to double the First-Time Home Buyers’ Tax Credit amount to $10,000, providing up to $1,500 in direct support to home buyers, applying to homes purchased on or after January 1, 2022.



The FTHBTC would be comparable to NZ scheme below:

http://kaingaora.govt.nz/home-ownership/first-home-grant/

However the Kiangaora has some hitches. You HAVE TO BE paying into Kiwi Saver for at least 3 years and the amounts you get towards the purchase is capped based on how many years in the KS scheme. This is different to Canada's FTHBTC where the Cdn Gov't GIVES you $10,000 of tax benefit (because it's only natural a person working, would be paying taxes, and no bank is going to lend $ to someone that doesn't have a job) - so effectively, they are getting the full $10,000 being paid towards the house purchase. In addition to the $1,500 freebee grant which normally pays the conveyance fees. So in comparison, NZ's kaingaora is a joke.

[Panda-NZ-]

Foreign buyer ban in canada:

https://www.bbc.com/news/business-61027374.amp

Looks like they're serious about fixing the housing issue.

[unhuman]

Yup, it worked for us aye.

[Bjauck]

Yup, it worked for us aye. Yep there needs to be major reforms in several spheres for NZ to cool down over-investment in land and housing.

[Walter]

ANZ is forecasting a 10% drop in house prices, add inflation and you are looking at an 18% real drop. 30% of fixed mortgages renew this year, many will pay thousands of dollars more than they have been. Even the Government is projecting a 50,000 flight of youth to greener pastures. Many that have sucking on the Government teat of the accommodation supplement will have some tough choices to make. It comes at a time when many tax deductions for property "investors" are under attack. The blood on the floor could be deep, but ultimately it may lower the rungs of the property ownership ladder for younger generation. If that happens the country will be better off.

[Aaron]

I guess in real terms you might have a significant drop, but Ashley Church knows how the system works.

https://www.oneroof.co.nz/news/41212

4 Reasons The Housing market won't crash.

1. The Reserve Bank won’t kill inflation at any price

and three other reasons which aren't as relevant.

[SBQ]

Yep there needs to be major reforms in several spheres for NZ to cool down over-investment in land and housing.

Foreign buyers ban is only 2 years so only temporary. The key difference between owning houses in Canada vs NZ is Canada has CGT on the sale of houses (principle resident is exempt). Canada for years welcomed foreign ownership of real estate but they would be subjected to paying the highest income tax rate, in addition to 20% tax on the purchase price. I see no problem taxing those that do have the $ to launder their assets through owning houses.

@ Walter: economists get it wrong all the time. They should be fired if they don't forecast correctly.

[Bjauck]

Foreign buyers ban is only 2 years so only temporary. The key difference between owning houses in Canada vs NZ is Canada has CGT on the sale of houses (principle resident is exempt). Canada for years welcomed foreign ownership of real estate but they would be subjected to paying the highest income tax rate, in addition to 20% tax on the purchase price. I see no problem taxing those that do have the $ to launder their assets through owning houses.

@ Walter: economists get it wrong all the time. They should be fired if they don't forecast correctly.

I think Canada also has a progressive land transfer tax levied on the sale price (with exemptions for first home buyers.) Australia and the UK also have duties levied on residential real estate transfers.

[SBQ]

I think Canada also has a progressive land transfer tax levied on the sale price (with exemptions for first home buyers.) Australia and the UK also have duties levied on residential real estate transfers.

Such a 'titled land transfer tax' are not real deterrents to those investing into houses. You need to hit them hard so it makes investing in houses into a no profit game. Like paying 20% surcharge tax on the house price. Like where I grew up in Canada, local city council rates have 3 categories. The basic category (middle rate) which applies to most home owners, a rebate category (for seniors that receive like a 10% discount), and lastly a surcharge category. Yes if the house is owned by a person that already owns a house in their name, or if it's owned under a company name or trust, then they pay like a 20% surcharge on the rates. And it doesn't stop there, insurance companies have caught on to this by full disclosure. If you rent the house out, insurance premiums could be 40% more than the typical insured home. IMO Justin Trudeau has done a lot in terms extracting most taxes out of those investing into multiple houses. He takes those taxes, and offsets the 1st home buyer by giving them tax free status on their share investments. In NZ, no such scheme exists and it's not likely it will ever as our IRD tax setup is not gear to provide 'tax credit' in a meaningful way (for starters, most people in NZ don't file yearly tax returns). In Canada, you must file every year even if it's a $0 income return.

[Aaron]

Just thought it was an interesting article on NZ house prices.

https://www.stuff.co.nz/business/128396590/world-watching-nz-housing-market-as-auckland-labelled-canary-in-coal-mine

On the way up it is a supply issue and the natural reaction of the markets in a "free" market economy with the RBNZ only playing a "bit part".

On the way down per quotes from this article.

The main risk to prices in Macquarie’s view were higher interest rates.

Fabo suggested a reason for the rise in New Zealand house prices during the pandemic was the Reserve Bank’s temporary relaxation of high loan to value ration restrictions for investor borrowing.

and to provide a fair view after attacking poor old Adrian Orr for being a spineless jellyfish lacking leadership in his role as head of the RBNZ.

Macquarie senior economist Justin Fabo​said investors were also keeping an eye on New Zealand because the Reserve Bank had been the “most aggressive advanced economy central bank to date” in jacking up interest rates to fight inflation.

Not sure what that says about central bankers in general, but looking at the housing index chart NZ housing more nuts than other western countries.

USA may be further down the path to a feudal system than NZ.

https://www.zerohedge.com/economics/american-dream-dead-first-time-less-half-americans-believe-theyll-ever-own-home

[Aaron]

The home owning half of NZ happy to keep things rolling, National and Labour on board not wanting to rock the boat.

https://www.theguardian.com/world/2022/apr/28/its-like-a-ponzi-scheme-new-zealand-first-homebuyers-lean-on-bank-of-mum-and-dad

[SBQ]

The home owning half of NZ happy to keep things rolling, National and Labour on board not wanting to rock the boat.

https://www.theguardian.com/world/2022/apr/28/its-like-a-ponzi-scheme-new-zealand-first-homebuyers-lean-on-bank-of-mum-and-dad

NZ's housing market has become an exclusive game only for the 'ideal' families who over many generations, managed their finances well. The by-standers are what many generations ago use to be - where a decent working job was all you required to support the family and pay for the mortgage (you know, single income 50s 60s era where the mother was expected to stay home).

Nothing good what we have now as our housing market continues to drive down social mobility (the disadvantaged will never get to own a house without a bank of mom & dad) ; this day of age or rising divorces, inflation, etc.

Take note in the https://static3.stuff.co.nz/growth-in-house-prices-in-nz-vs-d96bea42.jpg which shows how bad we have it. Good to see in Canada is much lower.

[Aaron]

You won't catch Jacinda or Chris discussing this article. Maybe time for a radical political party to start gaining support. It is what has happened in the past.

https://www.stuff.co.nz/national/explained/128492002/you-might-not-have-heard-of-dynastic-wealth-its-hurting-a-lot-of-younger-kiwis

Without gift duties, death and estate taxes, capital gains tax how is wealth redistributed or are we working towards a feudal society, no social mobility for those born to the "wrong" families.

[clearasmud]

You won't catch Jacinda or Chris discussing this article. Maybe time for a radical political party to start gaining support. It is what has happened in the past.

https://www.stuff.co.nz/national/explained/128492002/you-might-not-have-heard-of-dynastic-wealth-its-hurting-a-lot-of-younger-kiwis

Without gift duties, death and estate taxes, capital gains tax how is wealth redistributed or are we working towards a feudal society, no social mobility for those born to the "wrong" families.

We need a land tax to stop this horrible property inflation cycle and we need a flat(ish) tax to encourage effort from especially the young.
Weak non business-headed government just doesn't work either.

[RTM]

You won't catch Jacinda or Chris discussing this article. Maybe time for a radical political party to start gaining support. It is what has happened in the past.

https://www.stuff.co.nz/national/explained/128492002/you-might-not-have-heard-of-dynastic-wealth-its-hurting-a-lot-of-younger-kiwis

Without gift duties, death and estate taxes, capital gains tax how is wealth redistributed or are we working towards a feudal society, no social mobility for those born to the "wrong" families.

Thanks for posting the link.

[winner69]

About 20,000 more people left NZ than arrived ..... most in a month for 2 years

If they never come back that should help out housing demand

[Aaron]

About 20,000 more people left NZ than arrived ..... most in a month for 2 years

If they never come back that should help out housing demand

Don't panic about your house price winner, labour has got you covered.

https://www.nzherald.co.nz/nz/covid-19-omicron-immigration-nz-unsure-of-how-many-migrants-could-be-approved-under-2021-one-off-residency/PZX7SALHELYNG2TKJBQPPRFXFU/

Numbers are pretty big 165,000 new NZers in the next little while. Should be enough to exceed departures and new house construction by a long way and keep wage inflation down.

Brilliant suppress wage inflation and boost asset prices all at the same time.

Although Ardern using weasel words to open the door to bring in a capital gains(wealth) tax after the election. A departure from John Key's promises of a better NZ I wonder.

https://www.msn.com/en-nz/news/national/ardern-says-parts-of-nz-s-tax-system-are-unfair-refuses-to-rule-out-wealth-tax/ar-AAWOgyv?ocid=msedgntp&cvid=7453b1e6c0a34bcdaa7a75ca01168647

[Aaron]

Thinking about it further isn't a wealth tax just stealing The Opportunities Party old equity tax idea.

[Bjauck]

Thinking about it further isn't a wealth tax just stealing The Opportunities Party old equity tax idea. It was not electorally popular. So the electorate has got what it voted for - expensive housing with many young people (especially those without wealthier parents) needing to move overseas to be able to buy a house. Major reform is too difficult and too unpopular for the major parties?

[Sideshow Bob]

It was not electorally popular. So the electorate has got what it voted for - expensive housing with many young people (especially those without wealthier parents) needing to move overseas to be able to buy a house. Major reform is too difficult and too unpopular for the major parties?

A good chunk of people would have their house as their major store of value/personal welath. While many can see the need for various reforms, there won't be many that vote to be demonstratedly worse off.

There will start to be a intergenerational wealth transfer from boomers in the coming years.

[Bjauck]

A good chunk of people would have their house as their major store of value/personal welath. While many can see the need for various reforms, there won't be many that vote to be demonstratedly worse off.

There will start to be a intergenerational wealth transfer from boomers in the coming years. Undoubtedly the NZ fiscal and investment framework has meant the home (for those that can afford to buy one) - and investment real estate - has become by far the major store of household wealth. This will end up under the current NZ system with dynastic wealth and an inherited landed gentry.

The next generation need it now so that can afford a family size home for their young families. Yet compared to previous generations, the grandparents these days have more of the wealth and the family sized houses!

[Panda-NZ-]

Gift duty was abolished in 2011.

One has to wonder why.

[SBQ]

We need a land tax to stop this horrible property inflation cycle and we need a flat(ish) tax to encourage effort from especially the young.
Weak non business-headed government just doesn't work either.

Journalist - Economist Bernard Hickey wrote a very well thought out article on the housing problem in NZ over a year ago. His summary was that a 'land tax' would definitely help NZ out. He criticised Jacinda on the lack of CGT (or any form of taxation against those that own multiple houses).

To be clear, a "Wealth Tax" is not the same as "Capital Gains Tax". The former pertains total asset value over a threshold while the latter is purely based on rising value (threshold or not).

@Panda:

Gift Duty was removed because it was not working. No one was paying it because lawyers and accountants would setup trusts for their clients (they plan well ahead - so Gift Duty does not apply). If you look at my previous post, other countries with much lower housing prices have some form of taxation on ownership of more than one house and ownership by foreign nationals (ie. vacancy tax, sur-charge rates, one-time sales tax at non-residents on top of the purchase house price). FYI, in Canada this non-residency tax is at a whopping 20% or $1M tax on a $5M value house; instead NZ just banned foreign buyers. NZ has no demand controls whatsoever, but all the incentives as I listen on the radio ads 'Propeller Properties' asking people to invest into houses with the angle that house prices double every 10 years and you can get rich or pay off your existing mortgage kind of deal. Yep still the best game in town.

[SBQ]

Don't panic about your house price winner, labour has got you covered.

https://www.nzherald.co.nz/nz/covid-19-omicron-immigration-nz-unsure-of-how-many-migrants-could-be-approved-under-2021-one-off-residency/PZX7SALHELYNG2TKJBQPPRFXFU/

Numbers are pretty big 165,000 new NZers in the next little while. Should be enough to exceed departures and new house construction by a long way and keep wage inflation down.

Brilliant suppress wage inflation and boost asset prices all at the same time.

Although Ardern using weasel words to open the door to bring in a capital gains(wealth) tax after the election. A departure from John Key's promises of a better NZ I wonder.

https://www.msn.com/en-nz/news/national/ardern-says-parts-of-nz-s-tax-system-are-unfair-refuses-to-rule-out-wealth-tax/ar-AAWOgyv?ocid=msedgntp&cvid=7453b1e6c0a34bcdaa7a75ca01168647

I would support Luxton's 'scaling' of the income tax brackets. Canada has been doing this for as long as I can remember called "Indexed to Inflation". It not only applies to income tax brackets, but also applies to gov't superannuation, disability payments, contribution limits on investment portfolio plans (TFSA, RRSPs, RDSPs, etc etc etc...).

[clearasmud]

Journalist - Economist Bernard Hickey wrote a very well thought out article on the housing problem in NZ over a year ago. His summary was that a 'land tax' would definitely help NZ out. He criticised Jacinda on the lack of CGT (or any form of taxation against those that own multiple houses).

To be clear, a "Wealth Tax" is not the same as "Capital Gains Tax". The former pertains total asset value over a threshold while the latter is purely based on rising value (threshold or not).

@Panda:

Gift Duty was removed because it was not working. No one was paying it because lawyers and accountants would setup trusts for their clients (they plan well ahead - so Gift Duty does not apply). If you look at my previous post, other countries with much lower housing prices have some form of taxation on ownership of more than one house and ownership by foreign nationals (ie. vacancy tax, sur-charge rates, one-time sales tax at non-residents on top of the purchase house price). FYI, in Canada this non-residency tax is at a whopping 20% or $1M tax on a $5M value house; instead NZ just banned foreign buyers. NZ has no demand controls whatsoever, but all the incentives as I listen on the radio ads 'Propeller Properties' asking people to invest into houses with the angle that house prices double every 10 years and you can get rich or pay off your existing mortgage kind of deal. Yep still the best game in town.
Yes lots of things one could do.
The councils have conspired to create this mess.
The govt needs to legislate that subdivision costs (roads, parks etc) are socialized to the ratepayers, (like Germany) and new land is required to be opened up in a timely way.

[SBQ]

Yes lots of things one could do.
The councils have conspired to create this mess.
The govt needs to legislate that subdivision costs (roads, parks etc) are socialized to the ratepayers, (like Germany) and new land is required to be opened up in a timely way.

Unlike NZ, in Canada major building projects such as a new subdivision, have it's infrastructure build out PAID FOR by the gov't (partially funded). Our section prices are so high because of high 'developmental contribution' fees and all the infrastructure is put on to the developer to pay. Agree, the way the local council gov'ts operate has fuelled this mess and I think the '3 Waters' deal is a way to get more water infrastructure development (as many councils sat and did nothing).

Even if we get lots of land zoned and developed into sections, we still have a problem of building costs. NZ needs to start recognising overseas testing standards for building products because it's way too costly for foreign products to come to NZ and having to go through the same testing rigmarole (ie Branz) which adds to the cost of the product. This is a great barrier to existing companies like Fletcher that see little competition.

[peetter]

I haven't been here for months and still last post is SBQ babbling on about Canada and post before it is SBQ praising Bernard Hickey... it must be like 100 pages worth of SBQ regurgitating these 2 points now.

[SBQ]

I haven't been here for months and still last post is SBQ babbling on about Canada and post before it is SBQ praising Bernard Hickey... it must be like 100 pages worth of SBQ regurgitating these 2 points now.

We've tried the NZ way or ingenuity for how many decades? Let's not kid ourselves that past successive gov'ts have failed. They're simply not interested in fixing our housing problem as we've only seen lots of talk but no substance. Listening to Megan Woods in past talk radio conversations prove that you can't get a straight answer. Nothing but excuses. So what recourse do we have??? We SHOULD consider how OTHER countries have addressed such problems. We should NOT be so ignorant in "this is NZ and that's how we do things".

BTW my last post is specifically different and never mentioned before. We have a high cost structure for infrastructure development (don't blame the lack of houses on vast farmland), the developers know to bring affordable sections to market is impossible because they're footing the bill for everything.

[Aaron]

NZ 1st home owners are screwed.

No incentive for those in power to change things.

https://www.stuff.co.nz/business/128628207/only-five-mps-do-not-own-a-home-which-could-impede-efforts-to-help-renters

Mind you when suggesting first home buyers might be a bit thick voting for Labour or National I could compare us to the Philippines for thick voters they just voted in the son of the last dictator who has the same name as his Dad. Ferdinand Marcos was ousted by an uprising of the people now his son has been voted in.

Obviously I am an outsider and have no idea why they would have voted this way but on the face of it, it seems bats*it crazy as he won in a landslide.

[Bjauck]

NZ 1st home owners are screwed.

No incentive for those in power to change things.

https://www.stuff.co.nz/business/128628207/only-five-mps-do-not-own-a-home-which-could-impede-efforts-to-help-renters

Mind you when suggesting first home buyers might be a bit thick voting for Labour or National I could compare us to the Philippines for thick voters they just voted in the son of the last dictator who has the same name as his Dad. Ferdinand Marcos was ousted by an uprising of the people now his son has been voted in.

Obviously I am an outsider and have no idea why they would have voted this way but on the face of it, it seems bats*it crazy as he won in a landslide.Hopeful first home buyers want to get in on the Labour and National residential real estate gravy train too. So it is only those who realise they have no chance on buying into the housing market who want meaningful reform?

[fungus pudding]

Hopeful first home buyers want to get in on the Labour and National residential real estate gravy train too. So it is only those who realise they have no chance on buying into the housing market who want meaningful reform?

That's interesting. Here's silly ol' me thinking there must be hundtreds of things that interest or motivate voters.

[Bjauck]

Does NZ need to introduce policy changes to shift more of the tax burden from incomes to housing and other wealth. Hopefully this would encourage productive investment with well paid employees, and stop more workers from leaving because of the high cost housing and high cost of living.

Thousands head overseas, partly because of economic conditions, with departures accelerating and labour shortage feared
https://www.theguardian.com/world/2022/may/18/more-people-leaving-new-zealand-than-entering-as-young-flee-high-cost-of-living

[Logen Ninefingers]

Does NZ need to introduce policy changes to shift more of the tax burden from incomes to housing and other wealth. Hopefully this would encourage productive investment with well paid employees, and stop more workers from leaving because of the high cost housing and high cost of living.

Thousands head overseas, partly because of economic conditions, with departures accelerating and labour shortage feared
https://www.theguardian.com/world/2022/may/18/more-people-leaving-new-zealand-than-entering-as-young-flee-high-cost-of-living

Yes, people are heading overseas in droves. Inflation is hitting hard with people having less disposable income. Interest rates are rising and rising, up another 50 bps today. We are going through a construction boom. US equities are going through a slow motion crash, KiwiSaver balances are down. And sentiment is turning negative rapidly.

The government won’t be able to collect a cent from ‘property wealth’, even if they introduce a comprehensive CGT tomorrow. The party is over.

[Crypto Crude]

NZ 1st home owners are screwed.

No incentive for those in power to change things.

https://www.stuff.co.nz/business/128628207/only-five-mps-do-not-own-a-home-which-could-impede-efforts-to-help-renters

Mind you when suggesting first home buyers might be a bit thick voting for Labour or National I could compare us to the Philippines for thick voters they just voted in the son of the last dictator who has the same name as his Dad. Ferdinand Marcos was ousted by an uprising of the people now his son has been voted in.

Obviously I am an outsider and have no idea why they would have voted this way but on the face of it, it seems bats*it crazy as he won in a landslide.

You don't have to win elections to be voted in anymore...
It's happening worldwide...

[Logen Ninefingers]

Recession is guaranteed. Lock it in. And here is NZ with the worlds biggest housing bubble and a deluded population that were at one stage paying any old ridiculous price for a bog standard 3 bedroom house built decades ago. When will the penny drop for the hold out fantasists who believe this is just a temporary blip that will last weeks? Countless trillions are currently being erased in equity markets and crypto.

[SBQ]

Recession is guaranteed. Lock it in. And here is NZ with the worlds biggest housing bubble and a deluded population that were at one stage paying any old ridiculous price for a bog standard 3 bedroom house built decades ago. When will the penny drop for the hold out fantasists who believe this is just a temporary blip that will last weeks? Countless trillions are currently being erased in equity markets and crypto.

As i've eluded many posts aga in this thread, the key problem isn't macro economics. The key problem is somewhere, some time, the rich (the haves), need to put their wealth into something. I'm afraid in NZ, that is none other than owning houses (plural). Our tax laws favour it and when I sat through every major stock market crash (dot com, 2008 GFC, etc), NZ house prices have done thing but go UP.

Recessions won't kill it. I will even say it's not even a housing bubble because NZ operates on a different world. Like the Japan bond market, NZ houses are insulated to global changes. When our gov't has created a mix where they're too scared to do the right thing in squashing housing prices, they put all the cards in houses and make damn sure that it stays protected.

So what if interest rates go up. It just means people won't sell their houses and wait. I've seen that rising interest rates in NZ do not affect housing prices much compared to abroad. If that was a concerning model, then we would not see so many foreign banks operating in NZ to get their fingers into the NZ housing market pie.

[Logen Ninefingers]

As i've eluded many posts aga in this thread, the key problem isn't macro economics. The key problem is somewhere, some time, the rich (the haves), need to put their wealth into something. I'm afraid in NZ, that is none other than owning houses (plural). Our tax laws favour it and when I sat through every major stock market crash (dot com, 2008 GFC, etc), NZ house prices have done thing but go UP.

Recessions won't kill it. I will even say it's not even a housing bubble because NZ operates on a different world. Like the Japan bond market, NZ houses are insulated to global changes. When our gov't has created a mix where they're too scared to do the right thing in squashing housing prices, they put all the cards in houses and make damn sure that it stays protected.

So what if interest rates go up. It just means people won't sell their houses and wait. I've seen that rising interest rates in NZ do not affect housing prices much compared to abroad. If that was a concerning model, then we would not see so many foreign banks operating in NZ to get their fingers into the NZ housing market pie.

You can elude to whatever you like: the bottom line is that prices are going down & that immediately gives the lie to your assertion that ‘NZ house prices have done nothing but go UP’.

it’s not ‘the rich’ that dictate a market, it is every other Joe Bloggs on a modest income that has borrowed an eye-popping amount and it now under the pump staring at surging inflation and interest rates. You take any market anywhere: once distressed sellers start to sell they dictate the market prices. You can be perfectly happy to ride out a storm, your house will still be valued according to what other houses are changing hands for.

It’s kind of an amazing attitude to say ‘so what’ about rising interest rates as if that applies to the population in general. All good if you are ‘rich’, but how many of these borrowers are genuinely rich and financially untouchable when it comes to rising costs? The issue is that there is currently a veneer of wealth which was created by rising house prices, but when those house prices are going in the other direction that veneer of wealth quickly disappears.

It’s brave of you to stay this optimistic (I won’t say deluded) in the face of a gathering storm. As I mentioned previously, a global recession seems likely and that will see job losses and a battening down of hatches. And you may well say ‘so what’ in regards to that as well, but will highly leveraged people on moderate incomes be saying ‘so what’ along with you?

You seem convinced that government (or maybe divine) intervention will swoop in and save everyone’s bacon. It’s an interesting idea (‘moral hazard’) but hard to know where the firepower could come from at this late stage of the game in an inflationary environment and with a plethora of global issues confronting us.

[kiora]

Which all points to the government/reserve bank will not be wanting interest rates to go any higher. Mud on their faces if the new owners can't afford their mortgages ?

[Logen Ninefingers]

Which all points to the government/reserve bank will not be wanting interest rates to go any higher. Mud on their faces if the new owners can't afford their mortgages ?

We move in lock step with the Federal Reserve. It happened on the way down and it was all good, if it doesn’t happen on the way back up then the NZD will tank and it’s purchasing power will evaporate, and we could see hyperinflation. We can’t set monetary policy in order to give these hand-outs and bail-outs to property market participants, and that is the way it should be. If people are happy to take a risk and borrow eye-popping sums of money then they can’t really whinge about it when economic circumstances change.

[Bjauck]

Which all points to the government/reserve bank will not be wanting interest rates to go any higher. Mud on their faces if the new owners can't afford their mortgages ?
Yep. It was madness to allow risky high LTV loans when interest rates fell in a pandemic with uncertain outcomes.

[Logen Ninefingers]

Ireland has a DTI limit of 3.5 times income. They learnt from their housing market crash, we didn’t learn from theirs or the one in the US.

[Crypto Crude]

Just an update...
My real estate deal fell through and I haven't been looking... for now im ok about it i'm just going to enjoy the bear market on the sidelines and make some decisions later in the year.......... I got fairly well prepared for the bearmarket...

[kiora]

Just an update...
My real estate deal fell through and I haven't been looking... for now im ok about it i'm just going to enjoy the bear market on the sidelines and make some decisions later in the year.......... I got fairly well prepared for the bearmarket...

Thanks for the update CC
Better luck for the house buying soon :)

[JBmurc]

Just an update...
My real estate deal fell through and I haven't been looking... for now im ok about it i'm just going to enjoy the bear market on the sidelines and make some decisions later in the year.......... I got fairly well prepared for the bearmarket...

Not a silly Idea to sit on the sidelines .. NZ Property could well continue down ...might even pick-up a deal at a Morg sale..

[clearasmud]

Don't do mortgagee sales, you're possibly getting involved in another's misery.

[SBQ]

Ireland has a DTI limit of 3.5 times income. They learnt from their housing market crash, we didn’t learn from theirs or the one in the US.

Let me ask you the most basic question. When has NZ house prices crashed to the levels we've seen in the US or abroad??? During the GFC in 2008 where house prices were being wiped out and record # of banks going bankrupt, NZ house prices barely dropped over that same period and we've only see 2 casualties (Hanover Finance and Southern Canterbury Finance?).

NZ has never seen a bubble burst to epic proportions like America has seen. In fact, NZ reals estate is one of the key pillar's of our gov't to keep it afloat regardless of the outcome. Like most things, our gov't tends to regulate everything so; I stand strong that NZ houses will lose half of it's value like i've seen in the GFC. Remember, the reason for housing property being the key pillar to our NZ gov't concern is because over 2/3rds of NZ's wealth is tied into real estate. This is a similar model to in China, but a very different model to in N. America where 2/3rds of the wealth is invested in their stock market or businesses. Countries that invest into economic productivity into business and equities have a higher economic output GDP/capita than countries like NZ that invest in hard assets like houses and land. This is a proven fact and why the NZD always trades weaker to the USD. This is exemplified in NZ's lower standard of living when compared to countries that invest away from real estate. Anotherwords, the NZ gov't knows that we can't afford a massacre in our real estate market because it's all what we have.

[stoploss]

Let me ask you the most basic question. When has NZ house prices crashed to the levels we've seen in the US or abroad??? During the GFC in 2008 where house prices were being wiped out and record # of banks going bankrupt, NZ house prices barely dropped over that same period and we've only see 2 casualties (Hanover Finance and Southern Canterbury Finance?).

NZ has never seen a bubble burst to epic proportions like America has seen. In fact, NZ reals estate is one of the key pillar's of our gov't to keep it afloat regardless of the outcome. Like most things, our gov't tends to regulate everything so; I stand strong that NZ houses will lose half of it's value like i've seen in the GFC. Remember, the reason for housing property being the key pillar to our NZ gov't concern is because over 2/3rds of NZ's wealth is tied into real estate. This is a similar model to in China, but a very different model to in N. America where 2/3rds of the wealth is invested in their stock market or businesses. Countries that invest into economic productivity into business and equities have a higher economic output GDP/capita than countries like NZ that invest in hard assets like houses and land. This is a proven fact and why the NZD always trades weaker to the USD. This is exemplified in NZ's lower standard of living when compared to countries that invest away from real estate. Anotherwords, the NZ gov't knows that we can't afford a massacre in our real estate market because it's all what we have.
SBQ you are making sweeping statements as fact which are not true .
There were probably close to 20 finance companies that went under after the GFC not just 2 .
The NZD pre 1980 was stronger than the USD so it is not correct to say “it’s a proven fact it always trades stronger than the NZD” when making general statements about the USD.
https://www.fma.govt.nz/news-and-resources/finance-company-collapses/

[SBQ]

SBQ you are making sweeping statements as fact which are not true .
There were probably close to 20 finance companies that went under after the GFC not just 2 .
The NZD pre 1980 was stronger than the USD so it is not correct to say “it’s a proven fact it always trades stronger than the NZD” when making general statements about the USD.
https://www.fma.govt.nz/news-and-resources/finance-company-collapses/

You and the FMA are leading a false narrative. How many of them are directly involved into lending mortages? Many or most of these finance companies were involved in other deceptive lending practices that were not tied to houses (ie. commercial lending to business, leveraged equity lending, etc). The banks that went bust during the GFC in the US went under solely because house prices crashed. We are talking many areas where house prices went into 'negative equity leading to short sales' which is a term that banks went bust in the US because their asset holding was worth less than the liability. Imagine lending $500K on a home when after 1 or 2 years, it only had a market value of less than $50K (ie. Detroit). There were no controls in place to the practice of 'sub-prime' lending. People don't understand what sub-prime means which is the lending of $ at LOWER than prime rates, most went to those that lied on their mortgage application. Let me add in NZ, we never had a system where banks could lend under such scenarios. This is shown but the low # of mortgagee sales during that period in NZ and if you ask any economist critic during that time, they said "On most part, NZ had been insulated from the GFC banking insolvencies in the US". Likewise in Canada, during that period the Canadian banks were rock solid and because of their strict regulations and lending requirements, house prices didn't crash anywhere near next door. I can assure again, these are not sweeping statements.

Regarding to currencies. You're making a far fetch reference period pre 1980s. In fact I would say gong back +40 years is not even relevant. The reason why the USD has maintained it's strength is due to the Bretton Woods Agreement where countries went off the gold standard. The US was able to unlock wealth by not being tied to gold and instead, tie values based on fiat currency and capitalistic expansion. No longer countries would depend on their currency based on the amount of gold reserve held at the central bank. The free flow of investments wealth went to the USD every decade after. This is the model we are working today and i'm afraid, because of NZ's limited visions with lack of diversification (having 2/3rds of the wealth tied in real estate), this can only translate into a lower standard of living and a continue weaker currency than the benchmark USD. Small countries like Switzerland and Singapore, have maintain their currency strong to the USD... because they don't have a culture that puts investments into houses as a higher priority. The UN has made it clear to NZ many times, we don't have a program to address our housing problem. Decade after decade, we've failed to keep housing affordable, we have tax laws (as Bernard Hickey had constantly wrote) that prefers investments into houses over investment into business or into the stock market. There was a link I posted pages ago on this thread from Bernard showing the UN report that countries that have more social mobility have great GDP/capita output. If the riches in NZ own most of their assets in houses, then that is exactly that - creates an environment of low social equity.

[Logen Ninefingers]

Let me ask you the most basic question. When has NZ house prices crashed to the levels we've seen in the US or abroad??? During the GFC in 2008 where house prices were being wiped out and record # of banks going bankrupt, NZ house prices barely dropped over that same period and we've only see 2 casualties (Hanover Finance and Southern Canterbury Finance?).

NZ has never seen a bubble burst to epic proportions like America has seen. In fact, NZ reals estate is one of the key pillar's of our gov't to keep it afloat regardless of the outcome. Like most things, our gov't tends to regulate everything so; I stand strong that NZ houses will lose half of it's value like i've seen in the GFC. Remember, the reason for housing property being the key pillar to our NZ gov't concern is because over 2/3rds of NZ's wealth is tied into real estate. This is a similar model to in China, but a very different model to in N. America where 2/3rds of the wealth is invested in their stock market or businesses. Countries that invest into economic productivity into business and equities have a higher economic output GDP/capita than countries like NZ that invest in hard assets like houses and land. This is a proven fact and why the NZD always trades weaker to the USD. This is exemplified in NZ's lower standard of living when compared to countries that invest away from real estate. Anotherwords, the NZ gov't knows that we can't afford a massacre in our real estate market because it's all what we have.

You can ask me ‘a basic question’, but really everything in my post just goes to my points that - 1/ NZ learnt nothing from the housing market crashes that have occurred in other countries 2/ People will not believe that something can happen until it happens.

‘When has New Zealand’…..it wasn’t believed that a property market crash could happen in the US, until it happened. Up until the point that their property market crashed, it had never crashed. Same thing in Ireland.

If a country the size of the US - with the worlds most powerful economy - could not prevent a crash, what makes you think NZ can?

‘The government will not allow’…..the government is not some all-powerful god-like entity that can hold up all markets and do all things for all people. If it was then there would be no poverty, no mental health crisis, no hospital waiting lists, no gang problem etc etc etc.

Saying that our housing market won’t crash because it never crashed before, and that the government is able to prevent crashes….these are just tropes and myths of the NZ mass delusion when it comes to property.

[SBQ]

You can ask me ‘a basic question’, but really everything in my post just goes to my points that - 1/ NZ learnt nothing from the housing market crashes that have occurred in other countries 2/ People will not believe that something can happen until it happens.

‘When has New Zealand’…..it wasn’t believed that a property market crash could happen in the US, until it happened. Up until the point that their property market crashed, it had never crashed. Same thing in Ireland.

If a country the size of the US - with the worlds most powerful economy - could not prevent a crash, what makes you think NZ can?

‘The government will not allow’…..the government is not some all-powerful god-like entity that can hold up all markets and do all things for all people. If it was then there would be no poverty, no mental health crisis, no hospital waiting lists, no gang problem etc etc etc.

Saying that our housing market won’t crash because it never crashed before, and that the government is able to prevent crashes….these are just tropes and myths of the NZ mass delusion when it comes to property.

The OECD and UN has said from a taxation perspective, the NZ country present a 'special' unique situation when compared to other OECD nations. Why? Because we're one of few or perhaps the only one, that does not have a comprehensive capital gains tax. That alone on it's merit is enough to make bold claims that our housing market is unique to the rest of the world. Enough to show a graph to show how much NZ home prices have grown over the past 20 or 30 years in terms of affordability. Previous pages in this thread has shown this that in real terms, NZ houses are in a camp of it's own.

You ask, can a housing market crash of epic proportions happen in NZ? I doubt so. The only way I could see this happening is in the early 70s when record # of Kiwis did an exodus to Australia (as my uncle explained to me). But NZ is never going to be in that situation. Our gov't has all the controls greased up and we've seen the John Key gov't do this. At any kind of housing distress where the asset price could crash, they just open up the immigration valve and let more migrants move in. This is not a myth, this is how things are done in NZ and therefore housing is one of the key pillar's of the NZ gov't in keeping it stable. They will prevent a crash as they've successfully done in the past global events.

The UN and various major global accounting firms have tweeted to the NZ gov't in the past that we need some comprehensive taxation on our houses. Speculation and landordism has grown way off the scales. But our gov't does nothing. Instead, it prefers to ram other policies like 3 Waters without proper consultation.

[Logen Ninefingers]

The OECD and UN has said from a taxation perspective, the NZ country present a 'special' unique situation when compared to other OECD nations. Why? Because we're one of few or perhaps the only one, that does not have a comprehensive capital gains tax. That alone on it's merit is enough to make bold claims that our housing market is unique to the rest of the world. Enough to show a graph to show how much NZ home prices have grown over the past 20 or 30 years in terms of affordability. Previous pages in this thread has shown this that in real terms, NZ houses are in a camp of it's own.

You ask, can a housing market crash of epic proportions happen in NZ? I doubt so. The only way I could see this happening is in the early 70s when record # of Kiwis did an exodus to Australia (as my uncle explained to me). But NZ is never going to be in that situation. Our gov't has all the controls greased up and we've seen the John Key gov't do this. At any kind of housing distress where the asset price could crash, they just open up the immigration valve and let more migrants move in. This is not a myth, this is how things are done in NZ and therefore housing is one of the key pillar's of the NZ gov't in keeping it stable. They will prevent a crash as they've successfully done in the past global events.

The UN and various major global accounting firms have tweeted to the NZ gov't in the past that we need some comprehensive taxation on our houses. Speculation and landordism has grown way off the scales. But our gov't does nothing. Instead, it prefers to ram other policies like 3 Waters without proper consultation.

Your entire post just goes to prove my points again. You just doubled down on what you’’d originally said. Prior to the large price falls we have seen, you would have said large price falls were impossible!
The Federal Reserve just raised interest rates by 75 pbs, and we will have to keep raising as well in order to maintain the purchasing power of the NZD. I would say that a recession is now likely. How do you open the taps on immigration - to save the property market - in a recessionary environment when people would be losing their jobs(?) Your thinking is bizarre and is rooted in the pre-COVID / pre-inflation world that we no longer live in.
Again, if governments had the power to stave off recessions then we would never have recessions! The belief that ‘the government will always bail me out’ is utterly misguided.

[SBQ]

Your entire post just goes to prove my points again. You just doubled down on what you’’d originally said. Prior to the large price falls we have seen, you would have said large price falls were impossible!
The Federal Reserve just raised interest rates by 75 pbs, and we will have to keep raising as well in order to maintain the purchasing power of the NZD. I would say that a recession is now likely. How do you open the taps on immigration - to save the property market - in a recessionary environment when people would be losing their jobs(?) Your thinking is bizarre and is rooted in the pre-COVID / pre-inflation world that we no longer live in.
Again, if governments had the power to stave off recessions then we would never have recessions! The belief that ‘the government will always bail me out’ is utterly misguided.

Have you not recalled the actions during Helen Clark & John Key's reign over immigration? Recessions creates opportunities for people to move. For eg. they lose their job in the UK or in China and pick NZ to immigrate (and i'm speaking specifically the people that have the skills and meet the criteria to immigrate to NZ). Having a cousin that works in NZ Immigration, every tweak in the immigration policies comes from a reaction from gov't. When houses were depressed in price or appeared to during the GFC, NZ immigration opened up new categories to attract "wealthy buy your way into NZ" programs.

You seemed to have missed the historic fact of NZ houses. Again, look at the real returns on house prices in NZ compared to abroad. Over a 30 year period it's placed NZ at the top of most unaffordable in terms of avg incomes. If there was any significant house bubble crash, then it would reset prices... but it has not and we have not seen any burst in housing prices. My hats off for the NZ gov't for all those decades for maintaining that status.

Don't take my word on why houses gone out of control in NZ. Critics like Bernard Hickey has been talking about this over the decades. It's inaction by our gov't and if you look over the other thread here (https://www.sharetrader.co.nz/showthread.php?11274-ADRIAN-ORR-our-NEW-RBNZ-GOVERNOR&p=963213&viewfull=1#post963213) and you will see the same thing. None of the NZ gov't is serious about addressing affordable housing. They are only interested in keeping 'sustainable' housing which means, let's keep the gravy train rolling while the poor and needy are kicked off the tracks. Why? Because Jacinda Ardern said, "Majority of NZ retiree and investors hold their assets in houses... it would not be prudent to tax them". That was her excuse for not bringing in CGT on houses. So she did the next worse thing by implementing a 'bright line test' which she's extended it to 10 years ; which exacerbates the intent for buying houses as a vehicle for retirement as an investment fund. Like Kiwi Saver, it's investing for the long term. So any person that locks in a plan using houses will be difficult to exit if they sell before the 10 year threshold.

Show me where are the large price falls on NZ housing? We are still far far higher than pre-pandemic prices.

[Bjauck]

...
Show me where are the large price falls on NZ housing? We are still far far higher than pre-pandemic prices.
Yep. For the NZ government, no matter the colour, the housing market value has the priority for protection; the stock market is more expendable. So today NZ has a small stock market and a large & expensive residential property market, with riskier mortgage lending compared with many "peer" countries.

Has NZ just set itself up for a bigger residential housing price crash though? Will NZers continue to be happy to allow immigration to support the real estate market as opposed to government policy change in other areas?

[Logen Ninefingers]

Yep. For the NZ government, no matter the colour, the housing market value has the priority for protection; the stock market is more expendable. So today NZ has a small stock market and a large & expensive residential property market, with riskier mortgage lending compared with many "peer" countries.

Has NZ just set itself up for a bigger residential housing price crash though? Will NZers continue to be happy to allow immigration to support the real estate market as opposed to government policy change in other areas?

The bloke still hasn’t answered the fundamental question around how you could have immigrants pouring in in a recessionary environment where people are losing their jobs.

Some people believe in the tooth fairy, others believe that ‘the government can stop the property market from crashing’.

[Bjauck]

Immigration during increasing unemployment has been previously justified on the basis that immigrants came with skills for which there was still a shortage and/or brought wealth that could be invested to provide employment.

However did this just mean that NZ governments avoided the difficult and major reforms needed to train - and keep - people with appropriate skills, and to encourage more investment into productive areas as opposed to inflating the cost of land? What’s more did the immigrants with wealth end up doing the Kiwi thing and boost the demand for the purchase of houses and land, rather than invest in businesses with well paid employees, as investments with the greatest capital gains rather than maximum income productivity were sought? NZ has been towards the rear of the OECD for labour productivity gains.

Interesting NZ review on well-being effect and immigration.
https://www.productivity.govt.nz/assets/Documents/The-wider-wellbeing-effects-of-immigration.pdf

[JBmurc]

Banks continue to spike rates higher I see Westpac now within weeks gone to 5.9% short term Fixed lending ... for those with less than 20% DEP ...

[kiora]

And 6 months deposit rates still around 2-3 %
https://www.interest.co.nz/saving/term-deposits-1-to-9-months

Margins are ........?

[Logen Ninefingers]

Big recession coming. If you are willing to take on a huge mortgage and pay a boomer $1.2 million for a bog standard house in Auckland then you must be absolutely barking mad. The young (typically renters) are now leaving for Australia in droves. Who will help the retiring boomers and deluded speculators cash out all their gains?

[Aaron]

Big recession coming. If you are willing to take on a huge mortgage and pay a boomer $1.2 million for a bog standard house in Auckland then you must be absolutely barking mad. The young (typically renters) are now leaving for Australia in droves. Who will help the retiring boomers and deluded speculators cash out all their gains?

Immigrants.

[fungus pudding]

Immigrants.

What colour?

[Aaron]

What colour?

Does it matter.

Personally I think 5million is just right for a country NZs size. Lets try something other than the constant growth model for the economy. Maybe something sustainable.

Even if they are white and speak english they can all stay in their own countries imho.

[Azz]

Immigrants.

"Work from anywhere" will replace immigrants into NZ. And replace NZ jobs too; services (finance, I.T., etc) workers are lining up to be slaughtered in their stupid acted-upon desire to never go into the office again.

[Bjauck]

"Work from anywhere" will replace immigrants into NZ. And replace NZ jobs too; services (finance, I.T., etc) workers are lining up to be slaughtered in their stupid acted-upon desire to never go into the office again. If only NZ had introduced policies to keep more of its successful companies based in NZ instead of directing investment into high priced residential housing and land...

Face-to-face meetings are still important. I think two or three office days a week are becoming a thing in conjunction with working from home. Better for carbon management and the environment?

[Valuegrowth]

Will NZ follow the USA?

The rapid rise in mortgage rates has finally paused in the USA. The USA mortgage rates were dragged down this week. Some analysts are forecasting interest rates cut in 2023.The 10-Year US Treasury yield hit a low of 2.80% on Friday.

https://www.pressreader.com/usa/houston-chronicle/20220701/2818787120675

https://markets.businessinsider.com/news/bonds/us-recession-economy-inflation-federal-reserve-2023-interest-rates-cuts-2022-6

[snigmac]

As a first home buyer, I couldn't afford a place in Auckland... so instead I bought my first property in Christchurch. Fast forward 3 years, i have around 4 properties here. Christchurch is still a great market for first home buyers.

[fungus pudding]

As a first home buyer, I couldn't afford a place in Auckland... so instead I bought my first property in Christchurch. Fast forward 3 years, i have around 4 properties here. Christchurch is still a great market for first home buyers.

What does 'around four properties' mean?

[JBmurc]

What does 'around four. Properties' mean?

Maybe one is half built ? or not settled on yet ? ....

I certainly wish I purchased in CHCH back after the earthquake period when they ended up building to many homes for the expected buyers that didn't turn up ... a few cracking good buys for brand news homes

[snigmac]

One is half owned with my GF. This property was a first property purchase for her.

Christchurch has been awesome for gains in equity for me. I think I have around $200k + in equity gained from my first property and around $600k equity gained from the 2nd and 3rd properties.

Its probably one of the only cities that is still 'undervalued' compared to the other cities :) (e.g. Wellington and Auckland).

[stoploss]

One is half owned with my GF. This property was a first property purchase for her.

Christchurch has been awesome for gains in equity for me. I think I have around $200k + in equity gained from my first property and around $600k equity gained from the 2nd and 3rd properties.

Its probably one of the only cities that is still 'undervalued' compared to the other cities :) (e.g. Wellington and Auckland).
That “undervaluation” might be coming back into line rapidly .

[Aaron]

As a first home buyer, I couldn't afford a place in Auckland... so instead I bought my first property in Christchurch. Fast forward 3 years, i have around 4 properties here. Christchurch is still a great market for first home buyers.

So you can still buy a house in NZ and in snigmac's case one every year. Good to hear.

I obviously sit and moan too much.

That is a pretty quick accumulation of properties. Out of interest and being nosey what sort of gross and net yields did you purchase the rentals on?

[kiora]

"Bernard Hickey peels through the layers of the Reserve Bank's hopes that this time the 'one-way bet' for housing is about to turn"
https://www.interest.co.nz/property/116592/bernard-hickey-peels-through-layers-reserve-banks-hopes-time-one-way-bet-housing?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Monday+4+Ju ly+2022

[Aaron]

"Bernard Hickey peels through the layers of the Reserve Bank's hopes that this time the 'one-way bet' for housing is about to turn"
https://www.interest.co.nz/property/116592/bernard-hickey-peels-through-layers-reserve-banks-hopes-time-one-way-bet-housing?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Monday+4+Ju ly+2022

I like Bernard Hickey, probably because I mostly agree with him. Sad that Labour said the RBNZs job re housing was "sustainability" and not "affordability". The RBNZ was sustaining high house prices before the wording change, it just highlighted what a bunch of two faced liars Labour are when they talk about being concerned about poverty and inequality. National are no different so it will be interesting to see if there is an alternative to both of them by the next election.

[snigmac]

So you can still buy a house in NZ and in snigmac's case one every year. Good to hear.

I obviously sit and moan too much.

That is a pretty quick accumulation of properties. Out of interest and being nosey what sort of gross and net yields did you purchase the rentals on?

I purchased my first property with over 7.76% gross yield in 2019. The 2nd and 3rd properties had around 7% gross yield but dropped to around 4.74% after I realized I couldn't rent one proportion of the property out. Property 3.5 has a 4.7% ish gross yield. Properties 2,3 and 3.5 are all around 600m2 and can be developed on. Property 3.5 is in a 4/6 storey high density zone. Properties 2 and 3 have resource consents to develop into 3 new stand alone houses but i'm holding off as it is a a high density zone and residential heritage zone (i'm waiting until August to see if rules change). All yield calculations are based off purchase price.

Christchurch is a great market to look into :)

[Aaron]

I purchased my first property with over 7.76% gross yield in 2019. The 2nd and 3rd properties had around 7% gross yield but dropped to around 4.74% after I realized I couldn't rent one proportion of the property out. Property 3.5 has a 4.7% ish gross yield. Properties 2,3 and 3.5 are all around 600m2 and can be developed on. Property 3.5 is in a 4/6 storey high density zone. Properties 2 and 3 have resource consents to develop into 3 new stand alone houses but i'm holding off as it is a a high density zone and residential heritage zone (i'm waiting until August to see if rules change). All yield calculations are based off purchase price.

Christchurch is a great market to look into :)

Thanks for that.

For a first home buyer you must have had a bit of savings or finance behind you or was it funded through equity increases in a rising Christchurch market. Sounds like you have done a fair bit of research as well, well done.

[snigmac]

Even if you go onto Trademe now, u can pick up a 3-7 bedroom house (oldish) in Linwood, Christchurch from 550k which is in my opinion a up and coming area (it could be the next Ponsonby of Chrsitchurch in 15 years time. The property is also likely to have 500m2 of land approximately.

I save alot... most of the funds have come from intense saving and equity gains. I did get some guarantee type help from family (but without any funds contributed).

[JBmurc]

Great to here your doing well .. risks are worth taking .. I use to do some residential property investing.. not really interested these days .. I like really high net returns gross can sound good but once you take off all the costs and maintenance $$ hoping for Capital gain in little old bubble NZ with one of the highest property values to income in the world .. I just don’t believe we will see the growth in value like we did over the last 30yrs

[Crypto Crude]

Great to here your doing well .. risks are worth taking .. I use to do some residential property investing.. not really interested these days .. I like really high net returns gross can sound good but once you take off all the costs and maintenance $$ hoping for Capital gain in little old bubble NZ with one of the highest property values to income in the world .. I just don’t believe we will see the growth in value like we did over the last 30yrs

LOL jbmurc likes really high net returns LOL....

He likes high return but he doesn't invest in high return...

[snigmac]

Property is a very long term investment. It's just not as liquid as shares, especially with bright line and development tax rules. However, if u structure things right, u can get 150/200k of passive annual income and can retire early (/this is the plan).

[JBmurc]

Property is a very long term investment. It's just not as liquid as shares, especially with bright line and development tax rules. However, if u structure things right, u can get 150/200k of passive annual income and can retire early (/this is the plan).

Yes I hope it does for you I've known of a few guys that have done very well in Res Property and live of the now sizeable net income after AISC.... but of course they were buying back when you could get 8-10%+ yields ... on low rents to NZ incomes ..(unlike today where many renters are tapped out just paying the sky-high rents)

.. the only RES home rental I ever held I was getting $300pw from renting out the rooms ...paid $143k ..that wasn't too bad ..but was an old 1940's brick roughcast Invercargill home... that soaked up 20k pretty quick on some minor refurb in the first year..I was happy to walk with 50k profit for the year hold .. I really couldn't be assed dealing with tenants anymore ..

Did buy couple HUGE wooden blocks of 8x RES flats when I was young n dumb ...14% return ... but I could see the massive refurb costs coming down the road in the not too distant future so SOLD ASAP>>>

I like commercial ... got one 10.5% net yield .. really nice cashflows, great long term tenant ... like being able to send the rates/insurance bills to the tenant to pay ..as they aren't getting cheaper..

---Yes Crude ... I like high returns ..is How from 18yrs focused on trading/investing I've been able to grow wealth from pretty much nothing to being able to hand my notice in to become a full time trader / investor earlier this year..... no more Boss, no more Home Mortgage ... only just turned 44

Anyone can do it .. I don't have any Qualifications(I think I only passed metal tech from high school) no special teaching ..no handouts ... good timing for sure ..HEAPS of research ..school of hard knocks

If someone can do that with RES NZ Property Brilliant ... or Crypto (and keep it !!) I'll be the first to shout you a drink in congratulations of your success to be your own BOSS>>>

[Bjauck]

As a first home buyer, I couldn't afford a place in Auckland... so instead I bought my first property in Christchurch. Fast forward 3 years, i have around 4 properties here. Christchurch is still a great market for first home buyers. Do you still live in Auckland but invest in ChCh properties? Or, did you have to move down to ChCh? You are no longer a first time buyer, so your last three purchases in your portfolio were as an investor.

First home buyers (as per the title of the thread) and buyers of their first investment residential property investment probably have different requirements and ability to pick the cheapest town in which to make their purchase. There are differences in buying a home in which to live and/or to raise a family and buying a house as an investment.

[kiora]

"To be fair, it isn't clear where all these changes are about to settle. But the very recent trend is sharply lower from two weeks ago"
https://www.interest.co.nz/personal-finance/116620/volatile-wholesale-interest-rates-have-induced-anz-cut-its-key-2-year-home?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Wednesday+6 +July+2022

[snigmac]

I live in Christchurch :). I'm just saying, if I'm a first home buyer.. i would be looking around New Zealand... possibly in Christchurch

[Bjauck]

I live in Christchurch :). I'm just saying, if I'm a first home buyer.. i would be looking around New Zealand... possibly in Christchurch Sometimes is not as easy as that. I guess it depends on the circumstances of the First home buyer, especially as the average age of a FHB increases. Many may have family, community and career commitments and the affordable towns at the opposite end of the country may not offer the career opportunity, family support, facilities etc.

[ynot]

I live in Christchurch :). I'm just saying, if I'm a first home buyer.. i would be looking around New Zealand... possibly in Christchurch

Slightly off topic but considering Christchurch winters, what heating do you (and your tenants) prefer down there ?

[snigmac]

Heating can be problematic. For a household of 5, a $4-500 monthly power bill in June, July, August is not uncommon.

I use Powershop. My boarders have normal heaters during the night. During the day its not that cold, even in winter. It does get very cold in the morning and at night.

[Aaron]

According to this article 1st home buyers are sort of screwed.

https://www.interest.co.nz/personal-finance/116631/latest-research-series-rbnz-highlights-just-how-urgent-it-we-avoid-toxic

-Too much immigration

-Too few houses built

-Too much easy money and low interest rates to ramp it all up.

Already whingers in the news complaining about labour shortages, rising mortgage costs etc.

Not likely these factors will reverse for any significant period.

[Valuegrowth]

Other banks are following ANZ Bank's rate cut move.

https://www.stuff.co.nz/business/300630371/bnz-westpac-follow-anz-with-rate-cut-move

It seems NZ is following the USA.

https://www.bizjournals.com/losangeles/c/u-s-mortgage-rates-dip-following-historic-rise.html

[Logen Ninefingers]

Other banks are following ANZ Bank's rate cut move.

https://www.stuff.co.nz/business/300630371/bnz-westpac-follow-anz-with-rate-cut-move

It seems NZ is following the USA.

https://www.bizjournals.com/losangeles/c/u-s-mortgage-rates-dip-following-historic-rise.html

It was only on certain rates, to try and create some ‘warm fuzzies’ around a property market in free fall no doubt. NZ just posted 7.3% annual inflation, probably another 75 bps rise to the OCR coming up, so the property market spruikers will need to put down the hopium and get back on the copium.

[Bjauck]

It was only on certain rates, to try and create some ‘warm fuzzies’ around a property market in free fall no doubt. NZ just posted 7.3% annual inflation, probably another 75 bps rise to the OCR coming up, so the property market spruikers will need to put down the hopium and get back on the copium.
The latest figures reveal that House prices increased over the last year. Auckland asking prices are up 8%. The market is currently removing the hyper-inflated rises that occurred as a result of the over-stimulation put in place during Covid. NZ media get worked up when annual increases are less than 10%.

https://www.newshub.co.nz/home/money/2022/07/new-zealand-sees-largest-drop-in-property-prices-on-record-trade-me-figures-show.html

[Logen Ninefingers]

The latest figures reveal that House prices increased over the last year. Auckland asking prices are up 8%. The market is currently removing the hyper-inflated rises that occurred as a result of the over-stimulation put in place during Covid. NZ media get worked up when annual increases are less than 10%.

https://www.newshub.co.nz/home/money/2022/07/new-zealand-sees-largest-drop-in-property-prices-on-record-trade-me-figures-show.html

Sounds like a green light for Reserve Bank to keep raising rates. They won’t be bothered by a ‘media beat-up’ alleging high inflation and declining economic activity.

[JBmurc]

Sounds like a green light for Reserve Bank to keep raising rates. They won’t be bothered by a ‘media beat-up’ alleging high inflation and declining economic activity.

Yes I think we will see peak rates hit 7-8% for the lowest fixed term RES home loans and hold these levels till the breaks the over leveraged and see unemployment starts to move north and Morg sales start to rise

[Logen Ninefingers]

Meanwhile, in Australia....

Australia’s central bank chief Philip Lowe signaled a steady series of interest rate increases as he highlighted the difficult road to a soft landing for the economy.

[Logen Ninefingers]

https://www.nzherald.co.nz/nz/auckland-council-rates-hikes-shock-city-residents/UI4CC73ZJTJ5CRFSU42FTZ3I6E/

‘One Auckland single mum says she had a "panic attack" when opening her new council rates bill this month, while another ratepayer says she plans to leave the city because of its "poor" services.

Other ratepayers have described receiving new bills up to 30 per cent higher than last year at a time when Auckland's creaking infrastructure is battling to keep up with new housing developments.

The single mum, who works as a high school teacher while also picking up a second job after hours to make ends meet, told the Herald her bill had not only jumped about $200 a quarter, but that she was also hit with two bills back-to-back totalling almost $1400.

"I had a panic attack looking at the email from Auckland Council," she told the Herald.

"I called them and cried, they put me through the credit control team and asked me to pay it monthly."

The rate hikes come at a time when homeowners are also facing other cost of living pressures and interest rate rises facing homeowners.’

[SBQ]

@Logen Ninefingers:

Only just the tip of an ice berg. Wait for those mortgage foreclosures to come

[Aaron]

Although only a brief article. A young man willing to take some risks has done very well for himself.

https://www.nzherald.co.nz/nz/aucklander-jonathan-brownlee-owns-51-properties-by-the-age-of-26/UP7WZQFXEF3EYJNIOG5ONB24BM/

He started in 2015.

Portfolio current market value 20mill
Debt 9 mill
Gross rental $1million

Overall, Brownlee equates 60 per cent of his success to smart structuring of his finances and mortgages, and 40 per cent to buying the right property.

Makes me look foolish with all my complaining. I remember looking at a property 7 years ago with a 5% gross yield which was well less than 5% net after rates etc and declined to make an offer on that basis. Really regretting that decision now. it would have been significant for me financially. Maybe that is why I am so bitter and angry at the RBNZ.

He is young but I also wonder how he goes if inflation hangs around. Every 1% increase is $90,000 more interest annually.

Does he have an implicit guarantee from central banks or is that an explicit gaurantee now that Japan and the US govts will be bankrupt if interest rates rise. That interest rates will not rise too far and Adrian has prepared the financial system for negative rates if needs be. In fact Adrian was appointed head of the RBNZ in 2017 and young Jonathan has never looked back.

Is that really the central banks job though??

[JBmurc]

Although only a brief article. A young man willing to take some risks has done very well for himself.

https://www.nzherald.co.nz/nz/aucklander-jonathan-brownlee-owns-51-properties-by-the-age-of-26/UP7WZQFXEF3EYJNIOG5ONB24BM/

He started in 2015.

Portfolio current market value 20mill
Debt 9 mill
Gross rental $1million

Overall, Brownlee equates 60 per cent of his success to smart structuring of his finances and mortgages, and 40 per cent to buying the right property.

Makes me look foolish with all my complaining. I remember looking at a property 7 years ago with a 5% gross yield which was well less than 5% net after rates etc and declined to make an offer on that basis. Really regretting that decision now. it would have been significant for me financially. Maybe that is why I am so bitter and angry at the RBNZ.

He is young but I also wonder how he goes if inflation hangs around. Every 1% increase is $90,000 more interest annually.

Does he have an implicit guarantee from central banks or is that an explicit gaurantee now that Japan and the US govts will be bankrupt if interest rates rise. That interest rates will not rise too far and Adrian has prepared the financial system for negative rates if needs be. In fact Adrian was appointed head of the RBNZ in 2017 and young Jonathan has never looked back.

Is that really the central banks job though??

I find it hard to comprehend how this young guy secured so much support DEBT from the bank .(anyone with some smarts can become rich if the bank supports you)

. I've found it a complete grind to get funds after my first couple years spec building where it was very easy to get 70-80% LVR back in the early 2000's... seems like the banks give you way more slack in your 20's but once your much more experienced and have a decent asset base they become very age adverse .. 40yrs+ see you later

The banks I've dealt with always give me limits I can go, and have strange rules around income supporting ...even now worth much more $$$$ they still give me roughly the same limit I got when I had sub 200k asset base ...big reason I got into the sharemarket

.. I must be black listed have limit the banks set ... , living in the south ? ... my present LVR less than 20% ... yet no way I could even to 40% LVR ...!!! has always pissed me off all these get rich from banks lending into buying many RES properties ... they seem to have the banks as lapdogs

[stoploss]

I find it hard to comprehend how this young guy secured so much support DEBT from the bank .(anyone with some smarts can become rich if the bank supports you)

. I've found it a complete grind to get funds after my first couple years spec building where it was very easy to get 70-80% LVR back in the early 2000's... seems like the banks give you way more slack in your 20's but once your much more experienced and have a decent asset base they become very age adverse .. 40yrs+ see you later

The banks I've dealt with always give me limits I can go, and have strange rules around income supporting ...even now worth much more $$$$ they still give me roughly the same limit I got when I had sub 200k asset base ...big reason I got into the sharemarket

.. I must be black listed have limit the banks set ... , living in the south ? ... my present LVR less than 20% ... yet no way I could even to 40% LVR ...!!! has always pissed me off all these get rich from banks lending into buying many RES properties ... they seem to have the banks as lapdogs

JB unless its second tier they don't asset lend.
So amount they will lend comes down to your serviceability and how you present this to the bank.

[Bjauck]

I find it hard to comprehend how this young guy secured so much support DEBT from the bank .(anyone with some smarts can become rich if the bank supports you)

. I've found it a complete grind to get funds after my first couple years spec building where it was very easy to get 70-80% LVR back in the early 2000's... seems like the banks give you way more slack in your 20's but once your much more experienced and have a decent asset base they become very age adverse .. 40yrs+ see you later

The banks I've dealt with always give me limits I can go, and have strange rules around income supporting ...even now worth much more $$$$ they still give me roughly the same limit I got when I had sub 200k asset base ...big reason I got into the sharemarket

.. I must be black listed have limit the banks set ... , living in the south ? ... my present LVR less than 20% ... yet no way I could even to 40% LVR ...!!! has always pissed me off all these get rich from banks lending into buying many RES properties ... they seem to have the banks as lapdogs His parents are both accountants and guaranteed his debt when he first started out. (Plus lent him money.) They may have had a very good record with the lender too. Maybe he has an eye for a bargain and appeared as a white knight for distressed vendors too.

[JBmurc]

JB unless its second tier they don't asset lend.
So amount they will lend comes down to your serviceability and how you present this to the bank.

Yes and to for fill this serviceability I found the banks won't include income from commercial property ,My companies income (share trading + business income) or the actually income from the commercial property I wanted to buy ..then they even though my personal income could cover the loan + all outgoings they still would only give me a very small limit to lend which for decades has been around 600-700k ..

I do look forward to seeing if their is a point in time where my overall pa income gets to a point I might get some lending respect maybe $500k to 750k+ pa ??

I know as most of my wealth is in commercial property+companies(+shares) with only are own home as RES bankable value the banks don't give much value .. they don't even value their own bank giving only 5% value to shares in their company aka Westpac(yet I'm sure if one had Mega millions invested in their bank they might think differently ..

I guess hindsight I should have followed the young J.Brownlee and tried to purchase on average seven RES properties per year !! I recall talking with bank managers about following the path he took of the buy cheap RES revalue higher take the free equity buy again do the same over and over and they always put across the idea the bank would demand higher LVR 50% deposit to buy + higher lending rates ..

Parents must certainly have good friends within the bank he gets lending from ..I see he was able to borrow an extra $3m ?? from the banks by getting in early to restructure his mortgages before new tighter loan-to-value restrictions came into effect.... (In talking with my recent business bank manager he stated the bank will allow a percent to be lend to the higher risk investors per month ... I guess who these are depends on contacts and not personal history)

I do wonder how he would go with a 20-30% reduction in Capital values + 7-8% interest rates ... rentals have ongoing ever inflating costs insurance ,rates ,wear n tear...

he owes the bank $11mill @ 7% paying off the present debt over 30yrs he would need to be making payments of $73,183 per month

his gross rental income is 1mill pa - $878k I&P ?? maybe the bank lets him do interest only ? as he states he pays 100k in rental mgmt costs ...his rates /insurance/admin costs would least be another 100-200k !! 51x properties ... thats a lot of rate bills

he does have 9mill in free equity ... reduction from the bubble valuations say 20% back to 2020 values etc he would have only have around 5mill in free equity ....I'm sure the banks might not be so keen on his debt limits if that happened ....

[JBmurc]

His parents are both accountants and guaranteed his debt when he first started out. (Plus lent him money.) They may have had a very good record with the lender too. Maybe he has an eye for a bargain and appeared as a white knight for distressed vendors too.

Yes for sure but he overall debt loads Vs age --- asset base looks stretched if rates continue higher ..I guess the bank thinks he will be able to just pass on any inflation in costs to hold these 51x Res Properties ..with ever higher rents .. I do wonder how the ever higher costs to rent will lend to some pretty pissed off tenants in time ...you see plenty of angry posts on FB rentals... 2 bed flat Invercargill $480pw etc

[Baa_Baa]

@JBMurc, I think you've answered most of your own questions. Borrow enough to buy, tenant that, architect designs the improvements and extensions, borrow more on that, build it and tenant it, borrow on the equity, pay only interest, rinse and repeat. Thing is, you're not just a property developer/landlord, you have other things going on that banks don't like and won't lend while you do. Don't take it personally, just ask them what you're doing that they don't like, they'll tell you and you can decide to become a property magnate or continue doing what you do without them.

[JBmurc]

@JBMurc, I think you've answered most of your own questions. Borrow enough to buy, tenant that, architect designs the improvements and extensions, borrow more on that, build it and tenant it, borrow on the equity, pay only interest, rinse and repeat. Thing is, you're not just a property developer/landlord, you have other things going on that banks don't like and won't lend while you do. Don't take it personally, just ask them what you're doing that they don't like, they'll tell you and you can decide to become a property magnate or continue doing what you do without them.

Trading the sharemarket LOL >>> that and I'm no longer in my 20's ... couple kids wife etc ....I have tried to dig into the whole loan capacity issue with different banks .. but the managers are very hard to pin down what I need to do to impress them to increase my lending book ..its always on a case to case basis and depends on the banks book etc ..

SBS 12yrs+ ago I sat down with the main office business manager and he told me if my company could put in three solid years of profits they could use up to 50% on the profitable income into the ability to service debt ...

At present they can use are debt free family home as equity ,,and as I'm now a full time trader(through my company) I'm looking at my fourth year of sizeable profits ... will be interesting to see how the banks are to deal with next year .. I would like to remove our personal home as security for the company loan and have the companies own income take up the loan..

[kiora]

"I would like to remove our personal home as security for the company loan and have the companies own income take up the loan.."

Will always be charged a significantly higher IR without that security

[JBmurc]

"I would like to remove our personal home as security for the company loan and have the companies own income take up the loan.."

Will always be charged a significantly higher IR without that security

Yes will be interesting ... will have a debt free commercial property early next year I will get revalued(maybe use this ? LVR would be 30%) ...plus the companies assets will see LVR less than 20%...

End of the day if we are going to OCR 4-4.5% end of the year thats 7%+ RES rates .... maybe peer to peer loan ? even if its couple percent higher least it can be interest only ... as the bank force me to make my Company loan P&I after 10yrs+ of I.O .... new banking reg BS!

[JBmurc]

Although only a brief article. A young man willing to take some risks has done very well for himself.

https://www.nzherald.co.nz/nz/aucklander-jonathan-brownlee-owns-51-properties-by-the-age-of-26/UP7WZQFXEF3EYJNIOG5ONB24BM/

He started in 2015.

Portfolio current market value 20mill
Debt 9 mill
Gross rental $1million

Overall, Brownlee equates 60 per cent of his success to smart structuring of his finances and mortgages, and 40 per cent to buying the right property.

Makes me look foolish with all my complaining. I remember looking at a property 7 years ago with a 5% gross yield which was well less than 5% net after rates etc and declined to make an offer on that basis. Really regretting that decision now. it would have been significant for me financially. Maybe that is why I am so bitter and angry at the RBNZ.

He is young but I also wonder how he goes if inflation hangs around. Every 1% increase is $90,000 more interest annually.

Does he have an implicit guarantee from central banks or is that an explicit gaurantee now that Japan and the US govts will be bankrupt if interest rates rise. That interest rates will not rise too far and Adrian has prepared the financial system for negative rates if needs be. In fact Adrian was appointed head of the RBNZ in 2017 and young Jonathan has never looked back.

Is that really the central banks job though??

No his DEBT is $11mill Vs $9mill in (reducing) free equality

https://www.interest.co.nz/property/117151/more-years-worth-capital-gains-have-evaporated-reinz-house-price-index-shows ...

he must surely have most of his loans as I.O as looking towards the end of the year if he is rolling over fixed terms he will be looking at much higher rates than last 4yrs+
And his margins would be very tight if paying P&I over 30yrs + hundreds thousands in costs pa holding 51x RES/COM properties...(rates bill alone would have to be well over 100k pa, it states his Property mgmt costs $100k pa , insurance another 80-100k ?)
As it states his present gross income is 1mill pa

[Aaron]

No his DEBT is $11mill Vs $9mill in (reducing) free equality

https://www.interest.co.nz/property/117151/more-years-worth-capital-gains-have-evaporated-reinz-house-price-index-shows ...


I had better be more careful that means $110,000 interest for every 1% rise. It sounds like he travelled far and wide to secure good deals so built up equity quickly.

As far as your lending woes, on this site you come across as a risk taker rather than a conservative investor. I thought your commercial property was in a small town on a high yield, this might frighten banks a bit and then if you tell them you are a fulltime share trader, even if you have a good track record the bank managers would run for the hills, I would imagine. Age also starts to become a problem I guess.

Wait for the property market to get a bit worse, it may be bankers will be falling over themselves to lend money in the future.

[JBmurc]

I had better be more careful that means $110,000 interest for every 1% rise. It sounds like he travelled far and wide to secure good deals so built up equity quickly.

As far as your lending woes, on this site you come across as a risk taker rather than a conservative investor. I thought your commercial property was in a small town on a high yield, this might frighten banks a bit and then if you tell them you are a fulltime share trader, even if you have a good track record the bank managers would run for the hills, I would imagine. Age also starts to become a problem I guess.

Wait for the property market to get a bit worse, it may be bankers will be falling over themselves to lend money in the future.

Yes Commercial property is in a small rural town surrounded by some of NZ's best farming land(Fonterra plant few Kms down the road) ... PGG Wrightson's as tenant ROR till 2033 replacement cost 3x times that of purchase price ... even insurance policy value is double what I paid for it... personal I think its a safer investment than say a HIGH cost - low yield tourism commercial property where I live>>>

Yes for sure the bank would see me as a riskier profile ..but surely the numbers must rule .. over 20x+ loans all paid back never missed a payment , credit rating over 850 ...YOY very profitable trading history recent times going back to 2016 ... RES family home easy cover all lending I'd want to do to 70%-80% LVR .

.I think the banks have boxes they like to put the people into and if you don't fit the boxes of the masses you are different your classed as high risk ...pretty much seen as valueless client and given the same lending as 20yr with 50k income 50k deposit

like a teacher or lawyer, builder, road worker could never go bankrupt ..

[clown]

Hi Guys, I'm a first home buyer and I had a meeting with a MA yesterday.
I've been advised that in order to to get a first home loan, I would need to sell all my shares and use it towards the deposit, this is because the bank won't like it if I didn't disclose my shares.
My shares are for long-term plans, selling them now would probably trigger some tax as well.

Has anyone had to do this? or heard of something like this before?

[stoploss]

Hi Guys, I'm a first home buyer and I had a meeting with a MA yesterday.
I've been advised that in order to to get a first home loan, I would need to sell all my shares and use it towards the deposit, this is because the bank won't like it if I didn't disclose my shares.
My shares are for long-term plans, selling them now would probably trigger some tax as well.

Has anyone had to do this? or heard of something like this before?
I work as a mortgage adviser . This doesn’t sound correct to me . The fact you have some assets you can sell is a good thing .
Do you have a 20 % deposit without the sale of the shares ?
Its possible the MA was trying to save you low equity fees , or a premium on the interest rate by getting your deposit above 20%.

[clown]

I work as a mortgage adviser . This doesn’t sound correct to me . The fact you have some assets you can sell is a good thing .
Do you have a 20 % deposit without the sale of the shares ?
Its possible the MA was trying to save you low equity fees , or a premium on the interest rate by getting your deposit above 20%.

I don't have 20%. Yes, the MA was trying to get us through with a 10% deposit, and Kainga Ora through Westpac.
Said that we're only allowed to have $5k in the bank if we use this method. Everything else needs to go towards the deposit.

[Logen Ninefingers]

‘People who went ‘all-in’ on property are screwed’.

Change the thread title, the ‘Great New Zealand Property Ponzi Scheme’ is heading towards a crash.

[JBmurc]

And not only RES Property but Commercial property ... talk about a Good beating first COVID shutdowns killing businesses ability to pay leases and now Interest rates spiking 7%+ floating RES rates ...Commercial add another couple percent .. I seen many Commercial properties selling on 4-5% yields ....

[Aaron]

SUCCESS!!!!!

https://www.interest.co.nz/public-policy/121005/another-migration-fuelled-housing-boom-had-seemed-it-might-be-story-three-five

Another migration fuelled housing boom not far away.

Should do wonders for the cost of living (inflation) crisis as well.

Not only that but Adrian might be able to pivot and drop rates due to the large numbers of unemployed when the recession makes itself felt.

Then it is off to the races for asset prices again. A great time to be an asset owner, provided we don't want to broaden the tax base with a capital gains tax.

[Bjauck]

SUCCESS!!!!!

https://www.interest.co.nz/public-policy/121005/another-migration-fuelled-housing-boom-had-seemed-it-might-be-story-three-five

Another migration fuelled housing boom not far away.

Should do wonders for the cost of living (inflation) crisis as well.

Not only that but Adrian might be able to pivot and drop rates due to the large numbers of unemployed when the recession makes itself felt.

Then it is off to the races for asset prices again. A great time to be an asset owner, provided we don't want to broaden the tax base with a capital gains tax.

Phew! No need to Invest to increase productivity, everybody can continue to pile into housing.

[Logen Ninefingers]

If a property owner faces rising costs as the result of rising interest rates, is it the governments job to supplement their incomes?
Discuss.

[SBQ]

If a property owner faces rising costs as the result of rising interest rates, is it the governments job to supplement their incomes?
Discuss.

That's the whole stupidity of the situation. All this talk about 'cost of living' being so high that all of a sudden, it's the government's job to fix this problem buy ... handing out more $. If people were irresponsible in their borrowing when at a time you only needed 5% down for a 2% pa mortgage, to now where you would need more than 1 income to support the same mortgage, then this is moral suasion. As a tax payer, i'm quickly losing incentive to do any more work and pay little tax as I please.

[Logen Ninefingers]

That's the whole stupidity of the situation. All this talk about 'cost of living' being so high that all of a sudden, it's the government's job to fix this problem buy ... handing out more $. If people were irresponsible in their borrowing when at a time you only needed 5% down for a 2% pa mortgage, to now where you would need more than 1 income to support the same mortgage, then this is moral suasion. As a tax payer, i'm quickly losing incentive to do any more work and pay little tax as I please.

The whole nation is bleating for more money from the government, and they dutifully follow through. If prices rise, the government is supposed to top up your bank account so you don’t notice any effect - this is the ridiculous mentality that the nation seems to have adopted en masse. I talked for years about the fact that by blowing up asset bubbles the central banks were making entire populations ‘too big to fail’, and now we are seeing the result. Very, very scary and dangerous and we simply will not get on top of inflation with this mindset because the Reserve Bank has not moved the OCR above the rate of inflation & the government is engaged in a massive societal bail-out and borrowing $1 billion a week to do so - money that is petrol on the inflation bonfire. If the government is going to pump money at the population like this then there is zero incentive for anyone to curb their spending habits or save.

[Aaron]

If a property owner faces rising costs as the result of rising interest rates, is it the governments job to supplement their incomes?
Discuss.

Was it the RBNZs job to ensure house prices did not drop 10% prior to the pandemic over reaction. To quote Bill Bonner, you need to replace "wall street" with "house prices" for NZ

As it is, the Fed faces a grim choice. Inflate or Die. Either it backs off and allows the bubble economy to die…with a crash on Wall Street, recession, bankruptcies, unemployment, and all of the other nasty things needed to correct its own policy mistakes. Or it protects the gains of the rich and the powerful by continuing to inflate the economy.

The inflation option postpones the reckoning…but it increases the pain. And it destroys the middle class. The poor get inflation-adjusted handouts. The rich have their assets, their hedges, and their hustles. But the middle classes sell their time by the hour. Prices go up. Real wages go down. Jobs disappear. And houses, where the middle classes keep their savings, become debt traps. As prices rise, families borrow heavily to buy them.


Not sure how it ends, but you can be sure inflation will remain part of the solution. I quote Bill again and it applies to America but the Western world is pretty much following the same path.

Remarkably, the Fed’s key lending rate remained under the inflation rate for the whole period 2008–23 to today (excepting a few months in 2019).

You only need to read the latest discussion on the Argosy property thread to see how most "investors" are thinking about interest rates, and they have been right for the last 30 odd years and there is nothing to indicate this will change. Current real negative interest rates will remain and go more negative as soon as it is possible to do so.

[Logen Ninefingers]

Was it the RBNZs job to ensure house prices did not drop 10% prior to the pandemic over reaction. To quote Bill Bonner, you need to replace "wall street" with "house prices" for NZ

As it is, the Fed faces a grim choice. Inflate or Die. Either it backs off and allows the bubble economy to die…with a crash on Wall Street, recession, bankruptcies, unemployment, and all of the other nasty things needed to correct its own policy mistakes. Or it protects the gains of the rich and the powerful by continuing to inflate the economy.

The inflation option postpones the reckoning…but it increases the pain. And it destroys the middle class. The poor get inflation-adjusted handouts. The rich have their assets, their hedges, and their hustles. But the middle classes sell their time by the hour. Prices go up. Real wages go down. Jobs disappear. And houses, where the middle classes keep their savings, become debt traps. As prices rise, families borrow heavily to buy them.


Not sure how it ends, but you can be sure inflation will remain part of the solution. I quote Bill again and it applies to America but the Western world is pretty much following the same path.

Remarkably, the Fed’s key lending rate remained under the inflation rate for the whole period 2008–23 to today (excepting a few months in 2019).

You only need to read the latest discussion on the Argosy property thread to see how most "investors" are thinking about interest rates, and they have been right for the last 30 odd years and there is nothing to indicate this will change. Current real negative interest rates will remain and go more negative as soon as it is possible to do so.


‘Current real negative interest rates will remain and go more negative as soon it is possible to do so.’

————

The crux of the issue is: when will the OCR ‘turn around’ occur that the property ‘experts’ (spruikers) and bank ‘economists’ (paid propagandists) are clamouring for?

I don’t think any store should be placed in any of their ‘predictions’ or ‘forecasts’. From the calls that property prices would double every few years to inflation being only ‘transitory’ to the OCR peaking at 3.5%, they have been totally wrong and should be just as totally discredited by now. But because of the hold that the property industry and retail banks have over our media, the views of these so-called ‘experts’ and ‘economists’ are still eagerly reported.

The government is currently countering everything that the Reserve Bank is trying to do. We just hit 6th gear with the borrowing and spending binge & may now avoid a recession. To me that signals that inflation will remain sticky and the OCR will stay higher for longer. I’ll back my view over the views of people who are essentially paid to trumpet the propaganda of the banks and the property industry. They are trying to shape public opinion, trying to shape the future - and many people are in negative equally and financially under-the-pump as a consequence.

[Bjauck]

Decades of policies that inflate the valuation of the housing market, while forcing companies off-shore to find sufficient capital have created an inflated lop-sided scenario in NZ. So now, interest rates cannot be increased as keenly as they were reduced in the past when inflation showed the faintest signs of falling to the bottom of the target range. Otherwise the collapse of real estate valuations would rapidly put the balance of NZ's investment valuations between productive and non-productive investments to a more internationally comparable ratio.

[Logen Ninefingers]

Decades of policies that inflate the valuation of the housing market, while forcing companies off-shore to find sufficient capital have created an inflated lop-sided scenario in NZ. So now, interest rates cannot be increased as keenly as they were reduced in the past when inflation showed the faintest signs of falling to the bottom of the target range. Otherwise the collapse of real estate valuations would rapidly put the balance of NZ's investment valuations between productive and non-productive investments to a more internationally comparable ratio.

A crazy situation brought about by central banks and governments. The disease of QE and ultra-low interest rates started in the US with the Fed after the GFC, and we’ve just followed them as all nations must do since the USD is the global reserve currency. And now all the chickens are coming home to roost.