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winner69
02-05-2014, 09:20 AM
I have a lot of time for Rodney Dickens and his views (not just because I tend to agree)

How will NZX stand up in another recession?

http://www.sra.co.nz/pdf/RecessionMay14.pdf

Abstract
This flaw and the way successive governors have gone about achieving the target of low inflation have made recessions by-products of monetary policy. This Raving explains the fundamental flaw with the inflation target and shows that Governor Wheeler plans to some extent to follow in the footsteps of his predecessors which means another recession is likely if not inevitable.

nextbigthing
02-05-2014, 09:46 AM
Of course Winner.

The big question is when?

Balance
02-05-2014, 09:54 AM
RBNZ governors use the rear wind mirror to set monetary policies.

Enough said.

winner69
02-05-2014, 10:21 AM
I cant understand the latest increase's in the OCR inflation is well under control and has been for a long time.
Doe's not effect me personally but it will put a damper on consumer spending.

Its a matter of being ahead of the game to avoid unnecessary reactionary decisions that will inevitably lead to a recession.

Better to 'smooth. things out and avoid shocks

Non-tradable inflation already over 3% and heading higher

Schrodinger
02-05-2014, 10:49 AM
I cant understand the latest increase's in the OCR inflation is well under control and has been for a long time.
Doe's not effect me personally but it will put a damper on consumer spending.

They are worried about housing and want to stop the bubble. They are going away from their inflation mandate and technically in breach of their mandate.

The continual rise in interest rates will most likely cause big future problems for exporters via a high currency. Currently the US and japan are proactively devaluing their currencies to kick start their economies. NZ has decided to go with the high currecny option at the expense of exporters due to housing.

see weed
02-05-2014, 01:15 PM
thanks schrodinger I think your post is highly accurate.
It is mainly housing in Auckland and Christ churh going up in value

I know of three existing houses around my place that have sold to rich overseas people and have been rented back to to Kiwi people. May be do what they do in Australia , and make rich over seas people build new houses in Auckland, it might help the shortage and make it a bit easier for the Kiwi person to get into a home.

kiora
02-05-2014, 01:43 PM
Unemployment is just as important as inflation when setting the OCR
http://www.interest.co.nz/opinion/63048/we-look-where-ocr-may-be-going-using-model-closely-mimics-policy-setting-activity-some

winner69
12-05-2014, 07:05 AM
RBNZ seem to be leaning towards not making as many OCR hikes as previously intimated

And under pressure(?) changing tack on the LVR thing

A few months ago they seemed to at least a plan - good.

But now they seem to be indecisive and dare I say it getting into reactionary mode - not good

winner69
12-05-2014, 04:02 PM
Well if he set out to "cool" the housing market he done a fantastic job in completely stuffing it

http://www.stuff.co.nz/life-style/home-property/10035958/House-sale-slump-blamed-on-mortgage-braking

Quote - The figures showed a deepening of the trend of weaker sales volumes

And worse still

The volume of sales has now moved back to 2012 levels, and was the seventh-lowest recorded by REINZ in 23 years.

skid
12-05-2014, 04:21 PM
I can explain it--Home owners(in Auckland at least) are realizing that it is just to dang expensive to sell and buy another house ,with real estate fees and moving costs etc.--Instead they are staying put and renovating.
When I look around Auckland there are houses getting renovated everywhere.
The numbers may have cooled but I have'nt seen a major drop in price to suggest they have stuffed the housing market.

winner69
13-05-2014, 11:08 AM
Sorry, it seems there was speculation within the mediaand I misread it as a certainty! Sorry all!

Moosie - You don't seem to be the only one who 'misread' it


http://www.interest.co.nz/opinion/69841/opinion-reserve-bank-might-have-just-passed-its-best-opportunity-remove-restrictions-l

winner69
20-05-2014, 08:03 PM
PPI (Producers Price Index) out yesterday

From Stats NZ -

Annual change
In the March 2014 quarter, compared with the March 2013 quarter:
The output PPI increased 4.0 percent.
The input PPI increased 3.1 percent.

CPI generally follows the PPI

No further commenting

winner69
22-05-2014, 04:34 PM
Looks like we will be OK ......64% of 118 who replied to the Expectations Survey
http://www.rbnz.govt.nz/statistics/tables/m14/

Extract -


Both one and two-year-ahead expectations of annual Consumers Price Index (CPI) inflation are little moved since last quarter. The one-year series increased from 2.03 to 2.08 percent on a mean basis. The median is unchanged at 2.00 percent.

Likewise, the two-year series barely moved this quarter, increasing from 2.33 percent to 2.36 percent. However, the median increased from 2.30 to 2.35 percent.

Respondents are also asked what they believe quarterly CPI inflation will be for the current and next quarters. A quarterly percentage increase of 0.47 percent is expected for the June 2014 quarter (0.54 percent last survey), and 0.59 percent for the September 2014 quarter. These expected quarterly increases imply annual inflation rates of 1.9 and 1.5 percent for the years to June 2014 and September 2014 respectively.

Also GDP expectations not that of a rock star economy, labour costs to go up, unemployment to fall, higher interest rates and a lower NZD. Can't be all that bad

warthog
22-05-2014, 04:45 PM
I can't believe they U-turned on the LVR.

Yeah so much for the RB's "It's been really effective," PR line.

So somebody has been in the RB's ear and told Wheeler that the LVR speed limit is just hurting everywhere in NZ outside of the hot property markets.

The UK is discussing LVR right now (or equivalents) and have already concluded it was a stupid idea as it made it very difficult indeed for people to get mortgages even outside London.

warthog
23-05-2014, 04:25 PM
What data is this based on?

Check the first paragraph of the PDF you linked.

Also, if it is so effective, why is everybody, including the RB, signalling hikes in the OCR to cool the housing market?

warthog
23-05-2014, 04:29 PM
warthog, FYI - the UK banks enforce LVR ratios themselves and have done for years.

In NZ/AU yes. For now! If left to their own devices, as elsewhere, they will blow themselves up.


E.g. When I applied for a 95% mortgage the normalised rate offered (i.e. with mortgage indemnity insurance capitalised into the loan amount) was huge - circa 2.5% above what I'd have got with a 25% deposit. And this was with only 20% of our combined incomes servicing the debt which I could have serviced on my own income alone at less than 50%. ... The UK and Europe (and the US for that matter) are very different to NZ and Oz.

Yes indeed. The hog was once offered a 120% mortgage with some thousands in cash as an incentive by a large anglo-saxon bank.

warthog
23-05-2014, 07:02 PM
Different policy tools different objectives mate. Suggest you have a read up of the details of both and why they are employed.

As for the first paragraph it says nothing in regards to your very bold statement let alone provides any data. Can I assume that your statement is simply your opinion? If so, duly noted. If not, Im interested in the source of data that substantiates your claim.

If it is so effective, why is it likely to be canned?

The RB does not have a particularly robust track-record for managing interest rates, inflation and the housing market.

warthog
24-05-2014, 07:19 AM
We have been over this before, there is some info in this thread that will clear things up for you.

What specifically are you referring to?

warthog
27-05-2014, 04:47 PM
Sorry mate, didn't see your post.

So just to clarify, you were saying the LVRs haven't been effective

No, never said that. They are effective, but the impact blows out to areas where maybe increased house ownership may be preferable.


you say the LVRs are likely going to be canned - where are you getting this information from?

http://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=11252242
http://auckland.scoop.co.nz/2014/05/harcourts-applauds-news-lvr-restrictions-may-go/
http://www.landlords.co.nz/article/5063/harcourts-applauds-lvr-move
http://www.nbr.co.nz/article/reserve-bank-keep-lvr-limits-until-late-year-spencer-says-bd-155881
http://assuredproperty.co.nz/lvr-rules-may-go-by-year-end/

Of course, this could all be hot air.

winner69
28-05-2014, 03:05 PM
The place I do agree with you on is the regional aspect of the LVRs. The RBNZ have outlined the basis for their decision in this respect on one of the documents I posted.

What I will say though is that the housing issue needs to be tackled effectively jointly by central and local governments. Im pretty happy that the RBNZ has done about as much as they can to help NZs housing problem. Central and local governments are the ones who have been slacking,the supply issue is a massive one and some traction should have been made on this long ago. Its not like it was an issue that came out of no-where. Housing supply in AUCK for example has been an issue for some time now.

There is NO supply issue in Auckland
http://www.sharechat.co.nz/article/de6e22f4/auckland-s-housing-crisis-is-investor-driven-not-shortage-nzier.html?utm_medium=email&utm_campaign=Aucklands+housing+crisis+is+investor-driven+not+shortage+NZIER&utm_content=Aucklands+housing+crisis+is+investor-driven+not+shortage+NZIER+CID_c594dcf86f883c2bcbb8 41db3cb21c57&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticlede6e22f4auckla nd-s-housing-crisis-is-investor-driven-not-shortage-nzierhtml

Westpac report 'Where Should We Build Now' sugests that Wellington andvTasman aren't building enough houses

Canterbury is a story in its own right

winner69
28-05-2014, 04:33 PM
http://nzier.org.nz/media/better-growth-rising-risks-quarterly-predictions-june-2014-media-release

If nothing else the heat map of regional property prices is interesting

winner69
04-06-2014, 08:28 AM
Do you still belive this mate?

http://tvnz.co.nz/national-news/confusion-over-housing-nz-s-inability-build-homes-5990838

"Official documents given to ONE News yesterday shows that Housing NZ needs 3000 more homes in Auckland to meet requirements."

Also remember when I said that it was the government not the RBNZ that needed to pick up its game?

"As part of Housing NZ's plan 2000 new homes were to be built in Auckland by late next year, but come February only 81 had been finished. "

Supply is a problem, the government is failing, and now as a result "Housing NZ has resorted to buying homes on the open market in an effort to try and meet urgent demand for state housing."

Absolutely hopeless - so we have a problem with house price inflation, but now after failing to sort the problem on the supply side, the government is now adding to the demand side problem. And you guys think the RBNZ is "not that decisive"?? Get your heads out of the sand people!!


http://tvnz.co.nz/breakfast-news/confusion-over-housing-nz-s-inability-build-homes-video-5990843

Jeez you turn a different problem into an argument to support your own views. Even the headline to the story said 'confused'

Nothing to do with a shortage of houses - all about the inept workings of Housing (prob only doing what the govt tells them anyway) in not keeping up with demand for houses for the so called needy.

Last census figures reported 509k dwellings in Auckland (of which 33k were unoccupied by the way) sort of suggests that even through their own failings they are 3000 short doesn't cry out and say there is an overall supply problem

winner69
04-06-2014, 09:33 AM
you grumpy today turmeric

Have you considered that maybe, just maybe, the government (HNZ) has purposely not really put much effort into building these 3000 houses.

Hoop
04-06-2014, 12:16 PM
What happens in Auckland affects NZ..unfortunately,we had to fund my daughter's extra deposit to get a mortgage recently thanks to the ongoing greedy shenanigans in Auckland...

I'm more inclined with Winners argument .. the stats show there isn't that big of a shortage in Auckland..
To add to that.....I recently had a chat with some 40 somethings.. they were Hamiltonians who left their jobs and were making serious money by House flipping in Auckland..... buy up property, doing "cosmetic" renovation, keep that property for about 6 months then sell it for a quick capital gain ....during this time the house remains empty...stops Tenancy Act hassells in trying to get the tenants in and out quickly + no tenant property damage risk...These buggers are sure that house flipping is happening a lot in Auckland at the moment..

As this is a shadow economy activity there is no actual data as to how many unoccupied pre-flipped houses there are in Auckland...by the sounds of it from them it wouldn't surprise me if there were hundreds if not thousands ...

winner69
04-06-2014, 07:41 PM
Pretty pictures in this report from ANZ.

http://www.interest.co.nz/sites/default/files/ANZ%20Property%20Focus%20-%20May%202014.pdf

Page 7 has an updated report on housing supply demand. Summary

The demand and supply for housing in New Zealand is broadly in balance. However, there are clear regional differences. Auckland, Christchurch, Wellington and the Bay of Plenty have a shortage of stock; conversely the rest of New Zealand has a surfeit of supply. While Auckland has a clear housing shortage, updated estimates using last year’s Census figures are not as dire as previously thought and help explain, in part, why the rental market has not followed general house price trends and gone ballistic.

stoploss
05-06-2014, 08:35 AM
From the Herald today.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11267685

winner69
08-06-2014, 04:15 PM
Seems like Auckland just like Dublin

http://www.davidmcwilliams.ie/2014/06/05/is-housing-too-important-to-be-left-to-estate-agents

Interesting concept about only lending against the average house price for the last 20 years instead of the latest -

Abstract: The way to stop house prices rising dramatically from here is to stop credit going to housing, because ultimately credit drives asset prices. This can be achieved by preventing banks from lending excessively against property. If we were to lend against the average house price over the past 20 years, rather than the last price rise, it would prevent the inbuilt dynamic which links banks to credit to house prices kicking off again.

Schrodinger
09-06-2014, 06:49 AM
Still interested in your take on this Schrodinger.

In the mean time RBNZ looking at possible intervention in NZD

http://www.sharechat.co.nz/article/15a4fe24/nz-dollar-drops-after-wheeler-says-rbnz-may-intervene-to-sell-currency.html?utm_medium=email&utm_campaign=NZ+dollar+drops+after+Wheeler+says+RB NZ+may+intervene+to+sell+currency&utm_content=NZ+dollar+drops+after+Wheeler+says+RBN Z+may+intervene+to+sell+currency+CID_57a6c40eacd7e 42e043689ac68b5c043&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle15a4fe24nz-dollar-drops-after-wheeler-says-rbnz-may-intervene-to-sell-currencyhtml

Back in the day when I was studying Economics inflation was their key concern primarily due to NZ high levels during the 80s. When this was brought under control they decided to recently add unemployment to their box of tricks. In reference to their breach mandate I was indicating that they are keeping an close eye on the housing market but use inflation as the excuse. Since housing makes up a component of inflation (25%?) and is rampant in Auckland etc there are indications that hikes in the OCR are driven by housing and nothing else. This being the case they have failed to build long term wealth in NZ by killing the export sector and domestic invesment. This is not only their fault as the governments inaction to have sensible housing policy for all NZ. This failure in policy makes the RBNZ task harder.

Not sure how they balance both long term and short term but raising the OCR to kill exporters and business which wont help the country in the long term. Also hearing about NZ's "Rock star economy" makes me smile. With growth around 2.5% it is equal to US/UK. Singapore has a Rock star economy but we just accept whatever is told to us.

In summary the recent hikes are about housing and nothing else. As I am aware it is Aucklands housing and not businesses that are the governments/RBNZ concern. We should be governed by smarter people and not muppets.

winner69
09-06-2014, 08:42 AM
Aussie GDP apparently 3.5%

Not too bad when stories say country in the ****

winner69
09-06-2014, 12:32 PM
Should quote other relevant stuff from that article for completeness sake, in that the bottom end of he market is doing OK

Abstract:
Mr Ingerson found that more houses, flats and apartments priced in the bottom 10 per cent of sales values were being sold in Auckland than at the same time last year.

In the first three months of the year, 11.7 per cent of sales in greater Auckland were from properties in the bottom 10 per cent of the price ladder.

A year ago, that was 10.1 per cent.

"Rather than the bottom end of the market plummeting since the LVR speed limits came on, activity has stayed stronger than the long-term average and above the same time last year," he said.
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=11270157

robbo24
12-06-2014, 10:01 AM
I remember it wasn't that long ago when the likes of Campbell Live used to do stories about vendors being unable to find buyers for houses. Mortgagee sales going without a single bid.

The God-awful moaning and crying from people got very annoying.

Now people are moaning about auctions having too many bids and prices being too high.

Can't wait for the empty Mortgagee sales to come back actually.

Don't live beyond your means.

robbo24
12-06-2014, 10:17 AM
Think you and I should buy up all the housing at mortgagee sales during the next crash eh Robbo? Can call it "The RoboMoose Fund: Terminating the market at every turn with antlers of steel" ;)

Sure, I have a plan to get us some cheap money for it too.

winner69
13-06-2014, 07:17 AM
The world following Wheeler's methods

http://www.theguardian.com/business/2014/jun/12/osborne-regulators-power-cap-mortgage-loans

In a dramatic move, the chancellor plans to allow the Bank of England to limit loans that could undermine the financial stability of the UK housing market.

In a bid to show he is taking action to boost the supply of homes, Osborne will also say he is making changes to the planning regime that could see a further 200,000 homes built.

The new rules will allow the Bank of England to set a maximum multiple of income that homebuyers can borrow and prevent mortgage lenders from offering first-time buyers high loan-to-value mortgages

And praise from the Aussies
http://www.theage.com.au/business/comment-and-analysis/kiwis-show-way-in-handling-a-boom-20140612-3a0k2.html

Beagle
13-06-2014, 09:39 AM
Life in the rear view mirror. Auckland housing market is already slowing, farmers are already reacting to the drop in Fontera's projected payout but the Reserve Bank slam the brake pedal to the floor anyway, real visionary stuff. What's wrong with a bit of inflation anyway...and then they complain about the high dollar and wonder why...it almost beggars belief. Pleased I don't have a mortage so I'm insulated from what these rocket scientists at the Reserve Bank do.

fungus pudding
13-06-2014, 10:39 AM
Life in the rear view mirror. Auckland housing market is already slowing, farmers are already reacting to the drop in Fontera's projected payout but the Reserve Bank slam the brake pedal to the floor anyway, real visionary stuff. What's wrong with a bit of inflation anyway...and then they complain about the high dollar and wonder why...it almost beggars belief. Pleased I don't have a mortage so I'm insulated from what these rocket scientists at the Reserve Bank do.


What matters to the RSB is keeping inflation inside a predetermined band. Whether or not inflation is good or bad is not the point.

Billy Boy
13-06-2014, 10:57 AM
What matters to the RSB is keeping inflation inside a predetermined band. Whether or not inflation is good or bad is not the point.
Sounds very like ... Politician 101.
"My arse in parliament regardless of any negative impacts on the Country,
Economy, Society, or Whatever else."
BB:mad ;:

bmrm
13-06-2014, 11:24 AM
New Zealand has one of the lowest population densities in the world. The fact that house prices are even a worry would seem hilarious if it wasn't so sad. The RBNZ is trying to fix a crisis that was created by councils populated with NIMBYs.
http://en.wikipedia.org/wiki/Director's_law

winner69
13-06-2014, 04:06 PM
What matters is the Key & Co have an unholy set of fingers in the pie. The RB of NZ is being unduly influenced by Key & co! Key & Co are becoming a "great octopus" ....

Whose behind key one may ask?

Bjauck
16-06-2014, 08:38 AM
New Zealand has one of the lowest population densities in the world. The fact that house prices are even a worry would seem hilarious if it wasn't so sad. The RBNZ is trying to fix a crisis that was created by councils populated with NIMBYs.
http://en.wikipedia.org/wiki/Director's_law

Councils and Resource consenting is part of the problem. The other issues are to do with the tax advantages that have been associated with investing in residential real estate. The lack of a stamp duty on ownership of more than one residential property, lack of restrictions on absentee foreign ownership of NZ homes play a part. As does the history of NZ equity and capital markets. The 1987 crash looms large as does the 2008 financial cull. Both crises saw greater depletion in investor wealth here compared with most other industrialised countries.

Owning a balanced diversified portfolio of fixed interest stock and equity, international and NZ, requires a lot of financial and tax planning. NZ tax laws concerning "financial arrangements", PIE tax rules, Foreign Investment Funds are full of a myriad regulations and traps and can result in realised and even unrealised capital gains tax and double taxation. It is often much easier to put all your money in a residential property despite potential problems with some tenants!

Kiwisaver notwithstanding, unlike other countries, a meaningful (non-pension) scheme to encourage financial investing over real estate investment does not exist.

artemis
16-06-2014, 08:55 AM
........ It is often much easier to put all your money in a residential property despite potential problems with some tenants! Kiwisaver notwithstanding, unlike other countries, a meaningful (non-pension) scheme to encourage financial investing over real estate investment does not exist.

IRD says there are no tax advantages for residential property investing. In fact there is a big disadvantage now that residential building depreciation has been removed.

IMO it is not easier to invest in residential property rather than in, say, the sharemarket. It may, however, be harder to borrow to buy shares though of course plenty of people do. One reason people buy rentals rather than shares is because they have some understanding of property. (So they think, anyway, until things turn to custard.) Plus most people are concrete rather than abstract thinkers, so would rather see the bricks and mortar.

Disc - I have $ in both. Shares are waaaay less time consuming than rentals.

Bjauck
16-06-2014, 10:30 AM
IRD says there are no tax advantages for residential property investing. In fact there is a big disadvantage now that residential building depreciation has been removed.

IMO it is not easier to invest in residential property rather than in, say, the sharemarket. It may, however, be harder to borrow to buy shares though of course plenty of people do. One reason people buy rentals rather than shares is because they have some understanding of property. (So they think, anyway, until things turn to custard.) Plus most people are concrete rather than abstract thinkers, so would rather see the bricks and mortar.

Disc - I have $ in both. Shares are waaaay less time consuming than rentals.

Depreciation was never available for financial investors and owner-occupiers of residential housing still enjoy untaxed imputed rental income return from their equity.

If instead of having (say) $500,000 equity in a rental house in Auckland, you had $500,000 in only NZ shares, I would agree with you. However you would increase greatly the risk of your investment imo...the returns from NZ shares being much more variable (historically) than returns from housing. That also ignores the fact that many residential real estate investors do borrow to leverage themselves into rental property, so on average the $500,000 equity would equate to owning significantly more assets. So (on average) each $500,000 owner's equity in rental housing reduces the government's tax-take much more that the equivalent invested in financial assets.

If you diversify away from NZ shares alone that is when you could encounter complex financial arrangement and FIF rules...taxation of capital appreciation (NZ bonds, overseas shares if worth more than $50,000) and then there is also the possibility of unrelieved double taxation (Australian shares etc.).

winner69
16-06-2014, 10:33 AM
Housing market surely is slowing down, in decline really. The bottom end seems to be thecreason

https://www.reinz.co.nz/shadomx/apps/fms/fmsdownload.cfm?file_uuid=A0D716B2-A683-4398-92E6-64C3C4769260&siteName=reinz

Even if there were heaps of 'cheap' houses in Auckland I don't think there are enough people to buy them anyway

Balance
16-06-2014, 11:33 AM
Housing market surely is slowing down, in decline really. The bottom end seems to be thecreason

https://www.reinz.co.nz/shadomx/apps/fms/fmsdownload.cfm?file_uuid=A0D716B2-A683-4398-92E6-64C3C4769260&siteName=reinz

Even if there were heaps of 'cheap' houses in Auckland I don't think there are enough people to buy them anyway

Go and have a look at the newer suburbs like Hobsonville where 3 and 4 bedrooms brand new houses with the latest specs are selling as fast as they can build them W69.

Big reasons are that they are affordable, nicely laid out, have great kitchens and bathrooms and good recreational community parks and recreation areas.

I think the existing house market is cooling down fast (a very very good thing) as house buyers opt for these new houses in the newer suburbs.

I have seen in recent weeks some developers trying to sell their inflated priced sections in the established Auckland suburbs - no takers since April.

skid
16-06-2014, 12:03 PM
Whose behind key one may ask?

He sure seems to be in bed with the USA

skid
16-06-2014, 12:08 PM
Go and have a look at the newer suburbs like Hobsonville where 3 and 4 bedrooms brand new houses with the latest specs are selling as fast as they can build them W69.

Big reasons are that they are affordable, nicely laid out, have great kitchens and bathrooms and good recreational community parks and recreation areas.

I think the existing house market is cooling down fast (a very very good thing) as house buyers opt for these new houses in the newer suburbs.

I have seen in recent weeks some developers trying to sell their inflated priced sections in the established Auckland suburbs - no takers since April.

Agreed--Its not a bad thing the housing market is slowing--Cant go on forever-Time to slow down and take a breath (and I own rentals)
--Disc.-dont let anyone tell you it isnt a fair amount of work maintaining rentals and dealing with tenants.

artemis
16-06-2014, 03:11 PM
Depreciation was never available for financial investors ....

Yes it was, but through the company accounts.

artemis
16-06-2014, 03:15 PM
..... --Disc.-dont let anyone tell you it isnt a fair amount of work maintaining rentals and dealing with tenants.

Yep, and cost as well. I don't think I have ever had an invoice from a drainlayer which was less than $5000, for example. That is a lot of weeks of rent.

artemis
17-06-2014, 08:07 AM
There's something very fishy going on with drain laying ... Even the rest of the building industry can't understand how they're able to justify their prices based on the time and materials going into the job. I have an example of the price gouging and my neighbour, a builder, has more. The ComCom should investigate as they appear to be operating "cartel" like pricing or at the very least think they're worth 500 per hour!

I trust my drainlayer, have worked with him for years. He provides detailed invoices. May be different in other centres, but drains in Wellington can be very complex.

winner69
17-06-2014, 03:26 PM
Yeah I saw that, although I am sometimes a little skeptical of NZIERs work....... (only part of the full post)


OCR rise a 'huge mistake'
http://www.stuff.co.nz/business/money/10167993/OCR-rise-a-huge-mistake

Shamubeel probably only looking at some of the consequences .... but at least he didn't repeat there aint a housing shortage in Auckland story

Keeps economists in the headlines - they love that

Beagle
17-06-2014, 04:30 PM
OCR rise a 'huge mistake'
http://www.stuff.co.nz/business/money/10167993/OCR-rise-a-huge-mistake

Shamubeel probably only looking at some of the consequences .... but at least he didn't repeat there aint a housing shortage in Auckland story

Keeps economists in the headlines - they love that

I spoke at length with the GM of one of the major Australian owned real estate franchises yesterday and he said exactly the same thing about the provincial area's of N.Z. They're doing it really tough already. Interest rate increases are complete madness in my opinion.

winner69
18-06-2014, 07:44 AM
He sure seems to be in bed with the USA

Yep, John over there now getting a pat on the back the next set of instructions

Maybe they asking to sort the Japanese out re the trade agreements

But whatever John just make sure that the good times keep rolling to the elections, ours we mean not yours

Balance
18-06-2014, 07:58 AM
The Elephant in the room is in fact the absence of a Capital Gains Tax to stop "investors" driving up Auckland house prices. ... Alas the RB of NZ can not introduce such a change. Only our short sighted government can do that. The "provinces" should rise up and biff this short-sighted, extremely mediocre National govt out of office.

Capital gains tax has not stopped property prices going to all time highs in Sydney, Melbourne, London etc etc.

The real answer is supply - and that is where central and local governments are absolutely useless with their myriad of rules, regulations and bureaucrats.

In fact, they hinder development and the supply.

In4a$
18-06-2014, 08:17 AM
The Elephant in the room is in fact the absence of a Capital Gains Tax to stop "investors" driving up Auckland house prices. ... Alas the RB of NZ can not introduce such a change. Only our short sighted government can do that. The "provinces" should rise up and biff this short-sighted, extremely mediocre National govt out of office.

Not just a Capital gains tax, Govt needs to remove all incentives to invest in residential property. Since Govt introduced the min 20% dep for 1st home buyers, the 3 house sales in my street have gone to investors at premium prices as rentals, would rather have seen home owners buying. These knobs should be investing in something more beneficial to the country, commercial property / shares etc. Leave the houses for families to buy and live in.

artemis
18-06-2014, 08:46 AM
Not just a Capital gains tax, Govt needs to remove all incentives to invest in residential property. Since Govt introduced the min 20% dep for 1st home buyers, the 3 house sales in my street have gone to investors at premium prices as rentals, would rather have seen home owners buying. These knobs should be investing in something more beneficial to the country, commercial property / shares etc. Leave the houses for families to buy and live in.

Labour's CGT will catch many assets as well as residential property - shares, most businesses and farms for example.

As to incentives for residential property - what are they do you think? Not tax incentives, according to the IRD.

Why should there be different rules for businesses owning rentals compared to businesses owning say commercial buildings?

As to the 20% LVR, it is clear that banks have been too restrictive and are now loosening up on this. And how do you know that investors paid premium prices in your street? Do you mean they paid more than others were prepared to pay? The vendor has skin in the game too - do you think they should be forced to sell more cheaply depending on the intention of the buyer? A very slippery slope. And surely you are aware that investors usually make their money when they buy, as they say, so they are not going to overspend unless they have other reasons to buy.

There has been a lot of hype politically and in the press about house prices mainly in Auckland, the rest of the country not so much. Suggest you don't buy uncritically into it.

Bjauck
18-06-2014, 09:08 AM
Labour's CGT will catch many assets as well as residential property - shares, most businesses and farms for example.

As to incentives for residential property - what are they do you think? Not tax incentives, according to the IRD.
.

I agree... many promote CGT as a way of controlling house prices but it is a blunt instrument for that. A Capital Gains Tax (as applied in the UK and other countries) would only marginally alter the appeal of NZ residential housing as an investment destination. Owner occupied housing (most of the housing market) would be exempt (as otherwise would be political suicide!). So it would become more tax-advantageous to invest more heavily in your own home (as an extra private pension plan perhaps) especially since share and financial investments would become liable to the new capital gains tax unlike owner-occupied housing! There would be no new advantage for share investments...as they would be liable for CGT as well as rental housing investments.

In4a$
18-06-2014, 09:32 AM
Labour's CGT will catch many assets as well as residential property - shares, most businesses and farms for example.

As to incentives for residential property - what are they do you think? Not tax incentives, according to the IRD.

Why should there be different rules for businesses owning rentals compared to businesses owning say commercial buildings?

As to the 20% LVR, it is clear that banks have been too restrictive and are now loosening up on this. And how do you know that investors paid premium prices in your street? Do you mean they paid more than others were prepared to pay? The vendor has skin in the game too - do you think they should be forced to sell more cheaply depending on the intention of the buyer? A very slippery slope. And surely you are aware that investors usually make their money when they buy, as they say, so they are not going to overspend unless they have other reasons to buy.

There has been a lot of hype politically and in the press about house prices mainly in Auckland, the rest of the country not so much. Suggest you don't buy uncritically into it.

When they are sold at auction and the only buyers left at the end are investors, its pretty obvious they can afford to pay more than the families they out bid. I was looking at buying one as a do up, sold way above what I was prepared to pay.

Bjauck
18-06-2014, 09:40 AM
...
As to incentives for residential property - what are they do you think? Not tax incentives, according to the IRD.....

There is an explicit incentive to own your own home especially as you get older. If you need to apply for a subsidy for long-term residential care, the asset threshold if you do not own your own home is $215,132. Whereas if you own your own home, the threshold is $117,881 PLUS your home. As the value of the average home in Auckland is way more than $100,000, this government test is a way of encouraging people to keep as big and as expensive house as they can afford as a way of passing their wealth to their beneficiaries. http://www.health.govt.nz/our-work/life-stages/health-older-people/long-term-residential-care/residential-care-subsidy/changes-residential-care-subsidy-asset-threshold

Another incentive to own your own home (as opposed to investing in rental housing) is the fact that the benefit you derive from it, accommodation, is untaxed. Whilst if you decide to invest in financial assets and live in rental accommodation, you need to find rent out of your taxed income.

Bjauck
18-06-2014, 10:12 AM
Again, exactly right! That is a BS argument used by political parties like National and ACT in the hope of fooling the average Jo voter....
Was it CGT in the UK and USA that kept their prices from going even higher? They also have tax-favourable non-pension financial asset investment plans. These schemes could partly off-set the advantage owner occupied homes gain when a capital gains tax with exemptions is introduced.

vorno
18-06-2014, 12:11 PM
Of course Winner.

The big question is when?

Every 8 years

winner69
29-07-2014, 07:48 AM
Amazing tirade from Mike Hosking this morning on the radio saying how useless the RBNZ has been with its LVR restrictions and how they stuffed a whole generation of NZers and how the RBNZ couldn't forecast their way out of a paper bag

Quite passionate was Mike

Can't fid it on online yet but often his tirades are put up or all to listen to

skid
29-07-2014, 08:09 AM
One things for sure -There are alot gunning for ole property owners-----Its still beyond me how the RBNZ could raise interest rates and still manage to talk down the currency--I personally dont think that they could successfully carry out their threats of controlling the currency by intervening in the market--but for now ,just the hint that they would has worked

RTM
29-07-2014, 09:34 AM
Completely agree with respect to the LVR Moosie. It would only have taken a 10% decrease in house values to see many folk under water. Not to mention the exposure of the banking system. 20% is probably about the right number....for the whole country. Our young folk need to realise that getting into a house takes time effort and considerable saving. Just as it used to years ago. Nothing has changed there. As an aside...on our second house we had three mortgages...18, 21 and 24 %. Times were tough back in those days as well.

Okebw
29-07-2014, 09:41 AM
Completely agree with respect to the LVR Moosie. It would only have taken a 10% decrease in house values to see many folk under water. Not to mention the exposure of the banking system. 20% is probably about the right number....for the whole country. Our young folk need to realise that getting into a house takes time effort and considerable saving. Just as it used to years ago. Nothing has changed there. As an aside...on our second house we had three mortgages...18, 21 and 24 %. Times were tough back in those days as well.

My parents enjoy regaling me with stories of their first mortgage at 24%. Though I too completely agree with the LVR restrictions. Younger people have gotten far used to credit and that is not an approach that should be taken towards housing. We touched briefly on the LVR in a few of my property/finance papers and I feel people are expecting results far sooner than changes like this generally take.

Balance
29-07-2014, 09:41 AM
LVR is proving effective.

But to sting the banks, the RBNZ needs also to act on RAR - reserve asset ratio. Makes it more attractive to lend to businesses rather than houses.

Meanwhile, I will go on record by saying we do not have a housing bubble - what we have is horrendous under supply and strong demand.

What we also have is price inflation by councils who are increasing their charges without restraint - that is the single biggest problem.

vorno
29-07-2014, 09:48 AM
I tell you, I'm temped to move out of Auckland - I love the idea of buying a house in say Dunedin and being able to pay it off in 10 years.

RTM
29-07-2014, 09:52 AM
Try the far north. Better weather. Real estate also well priced. Great lifestyle !
Kerikeri is great !


I tell you, I'm temped to move out of Auckland - I love the idea of buying a house in say Dunedin and being able to pay it off in 10 years.

vorno
29-07-2014, 11:49 AM
Concur. Have bought a "semi-retirement" place there. discl: born and bred in Dunedin. ;)

haha...when someone says "don't go there, I used to live there!" then it certainly rings the warning bells!

skid
29-07-2014, 12:10 PM
Kerikeri would be my choice also ,if I was just getting started,assuming I could make a living there.
We have always been pretty conservative when it comes to our debt to asset ratio--best to be safe.
With todays prices in the Auckland area it is a big job though--requires some serious saving.
Assuming you are capable of that,you would be able to get into a house quicker up North(ie Kerikeri)
I would still stay away from the really depressed areas though.

Whipmoney
29-07-2014, 01:44 PM
But to sting the banks, the RBNZ needs also to act on RAR - reserve asset ratio. Makes it more attractive to lend to businesses rather than houses.

What do you mean by this Balance?

If you force the banks to focus more of their lending towards business then you will end up with over-leveraging in this sector which would have potentially catastrophic long-term effects.

The goal of the LVR restrictions was to lower the aggregate leverage in the housing sector which in turn leads to a higher national savings base as a higher deposit is required. It wasn't intended to force banks to lend more heavily into other sectors (e.g. business/property/farming) as a substitution effect.

By reducing the leverage in the housing sector you reduce aggregate demand and therefore prices and the excessive returns. Lowering of the returns in turn leads to an incentive to 'invest' in other asset classes (e.g. shares or bonds) which is good for the countrys overall capital structure.

Beagle
29-07-2014, 03:00 PM
I was surprised at how high the prices are in Kerikeri when I was up there recently. Nice place though and good weather.
Whangarei has more job opportunities, warm weather and is cheap.

Beagle
29-07-2014, 03:00 PM
I was surprised at how high the prices are in Kerikeri when I was up there recently. Nice place though and good weather.
Whangarei has more job opportunities, warm weather and is cheap.

fungus pudding
29-07-2014, 03:06 PM
Amazing tirade from Mike Hosking this morning on the radio saying how useless the RBNZ has been with its LVR restrictions and how they stuffed a whole generation of NZers and how the RBNZ couldn't forecast their way out of a paper bag

Quite passionate was Mike

Can't fid it on online yet but often his tirades are put up or all to listen to


All Newstalkzb's broadcasts are available on replay 'week on demand' for 7 days.

RTM
30-07-2014, 10:28 AM
I was surprised at how high the prices are in Kerikeri when I was up there recently. Nice place though and good weather.
Whangarei has more job opportunities, warm weather and is cheap.

Yes... the prices have held reasonably well, but still significantly lower than Auckland. Personally I think that's a good thing, one does not want to live in a totally depressed low cost area.(Moerewa anyone?) Of the smaller towns in the North I predict / hope that Kerikeri will be one to prosper as older folk bail out of Auckland. Enough shopping, a few places for decent coffee, Restaurants, Movie theatre, Turner Center, Placemakers, Bunnings. And then there is the abundance of out door stuff easily accessible. Love it !

Jobs....well...I reckon work is well over rated.

Cheers.

skid
30-07-2014, 11:37 AM
Thats a good endorsement ,seeing you are from there.
I reckon older folk swapping the Auckland house for one in KK with some dosh left over,is a realistic scenario.

Goldstein
06-08-2014, 10:24 AM
Thats a good endorsement ,seeing you are from there.
I reckon older folk swapping the Auckland house for one in KK with some dosh left over,is a realistic scenario.

It's been my reitrement plan for a while now. My autumn holidays are usually up North, and I usually have a look at real-estate while I'm there.

I may even make the move earlier as I currently work from home. There's some wonderful spots north of Auckland.

MAC
23-01-2015, 09:06 AM
I think perhaps Mr Gaynor is overlooking the most significant headwind for the housing market.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11390463

New Zealanders have 73% of their assets in housing, that figure may be higher or lower for the baby boomers, who would really know.

But, they will be starting to downsize from about here on, and as a demographic, many if not most, will need to sell that empty family home and buy something of lower value, as many if not most, will need to start drawing an income from what was their housing assets.

Baby boomers: Born between 1946 and 1964, aged now between 51 and 69.

After a couple of years of travel and kicking about the empty nest, those 69 year olds will be initiating the downward spiral anytime about now.

We’ve seen a secular bull market in housing for 20 odd years, in part pushed along by the wealthiest generation in history pumping 73% of their free cash into the housing market.

Perhaps we will now start to see a secular bear market of similar duration whilst they now suck it out again ?

mikeybycrikey
23-01-2015, 09:21 AM
I think perhaps Mr Gaynor is overlooking the most significant headwind for the housing market.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11390463

I'd like to hear what Mr Gaynor actually said without the unhelpful editorial that they have surrounded it with. Anyone have a link to that?

I don't think the property boom will last forever but to compare it to Ireland and Spain is absurd.

I remember visiting family in Ireland in 2002 (I guess that's 5 years before the crash). Even then, the family were talking about all the houses that were being built near them, out in the country, and wondering who would be buying them. As it turns out no one was buying them but it took five years for everyone to realise that. I also remember visiting San Diego in 2008 and seeing half-built apartment blocks where work had completely stopped because of the crash.

That is completely different from here. More house-building can't be a bad thing right now and I doubt that it will ever go crazy like it did in Ireland, Spain and some parts of the US.

BFG
23-01-2015, 09:24 AM
I think perhaps Mr Gaynor is overlooking the most significant headwind for the housing market.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11390463

New Zealanders have 73% of their assets in housing, that figure may be higher or lower for the baby boomers, who would really know.

But, they will be starting to downsize from about here on, and as a demographic, many if not most, will need to sell that empty family home and buy something of lower value, as many if not most, will need to start drawing an income from what was their housing assets.

Baby boomers: Born between 1946 and 1964, aged now between 51 and 69.

After a couple of years of travel and kicking about the empty nest, those 69 year olds will be initiating the downward spiral anytime about now.

We’ve seen a secular bull market in housing for 20 odd years, in part pushed along by the wealthiest generation in history pumping 73% of their free cash into the housing market.

Perhaps we will now start to see a secular bear market of similar duration whilst they now suck it out again ?

This 28 year old will be waiting at the bottom with his Gen Y cash :)

MAC
23-01-2015, 09:30 AM
This 28 year old will be waiting at the bottom with his Gen Y cash :)

I think you are right Moosie, you're generation will be the big beneficiaries, the anguish for gen y though may be what to do in the interim, perhaps all just rent and wait, that in itself might become a demographic issue in itself later on.

Unfortunately, generation x like myself are well, probably mostly just buggered I suspect, mortgaged and steering into the wind ?

BFG
23-01-2015, 10:53 AM
I think you are right Moosie, you're generation will be the big beneficiaries, the anguish for gen y though may be what to do in the interim, perhaps all just rent and wait, that in itself might become a demographic issue in itself later on.

Unfortunately, generation x like myself are well, probably mostly just buggered I suspect, mortgaged and steering into the wind ?

Renting and playing the stock market are by far the best bets right now as a) rents are far below mortgage costs (unless you have a substantial deposit) and b) QE is still washing over the globe. Unfortunately, the vast majority of my generation have already fallen into the "real estate and debt are the only investments out there trap". Most don't know any better.

vorno
23-01-2015, 11:32 AM
Renting and playing the stock market are by far the best bets right now as a) rents are far below mortgage costs (unless you have a substantial deposit) and b) QE is still washing over the globe. Unfortunately, the vast majority of my generation have already fallen into the "real estate and debt are the only investments out there trap". Most don't know any better.

I tend to disagree - the last time I did a quick calc the average AKL house prices increased by ~$200 a day (based off a few I was looking at). A lot more than I make in a day that's for sure!

So, if you could balance out the mortgage payments then you can make a fair amount of money, if you don't have the cash - effectively making money off lending.

However, if you were to invest say $500,000 on the sharemarket then of course the risks & gains would generally be a lot better.

dingoNZ
23-01-2015, 11:35 AM
Leverage being the key difference - try find a bank willing to give you a $400k loan with $100k initial capital to put down on the share market, they will laugh you out the building. Unless you have a decent chunk of security...

Schrodinger
23-01-2015, 11:38 AM
I tend to disagree - the last time I did a quick calc the average AKL house prices increased by ~$200 a day (based off a few I was looking at). A lot more than I make in a day that's for sure!

So, if you could balance out the mortgage payments then you can make a fair amount of money, if you don't have the cash - effectively making money off lending.

However, if you were to invest say $500,000 on the sharemarket then of course the risks & gains would generally be a lot better.

If you run the numbers BFG is right. However it comes down to how good you are on the market. If you make only 10% CAGR on the market I would go housing as it is more stable (currently) and you can get 10% without lifting a finger.

Te Whetu
23-01-2015, 11:43 AM
Leverage being the key difference - try find a bank willing to give you a $400k loan with $100k initial capital to put down on the share market, they will laugh you out the building. Unless you have a decent chunk of security...

Yes, but not too difficult to get 40-50% leverage across a share portfolio (interest at ~7.2% without negotiating). Interest is tax deductible, assuming a marginal tax rate of 33%, this is equivalent to a post-tax cost of borrowing of 4.8%.

vorno
23-01-2015, 01:29 PM
Leverage being the key difference - try find a bank willing to give you a $400k loan with $100k initial capital to put down on the share market, they will laugh you out the building. Unless you have a decent chunk of security...

Indeed... land will always have a value!

mikeybycrikey
23-01-2015, 01:33 PM
Indeed... land will always have a value!

You'd think that but then you get the Christchurch earthquake and the red zone. I'm pretty sure one of many Auckland's volcanoes might have something to say about land always having value too.

artemis
23-01-2015, 01:53 PM
... After a couple of years of travel and kicking about the empty nest, those 69 year olds will be initiating the downward spiral anytime about now. We’ve seen a secular bull market in housing for 20 odd years, in part pushed along by the wealthiest generation in history pumping 73% of their free cash into the housing market. Perhaps we will now start to see a secular bear market of similar duration whilst they now suck it out again ?

In NZ trusts are a major factor in home ownership, a factor often overlooked, probably because it is a bit nebulous. There are up to half a mill trusts in NZ - Law Commission's best guess as who really knows? (Answer, nobody.) Many if not most will contain one or more houses, usually including the family home. Trusts can of course sell their assets but it is not as simple as an individual owner selling. Partly because the settlor/s no longer own the properties and partly because the intention of trusts usually includes protecting assets for the offspring. Not to mention the implications of many trusts being poorly set up and/or managed.

And again, it is common for parents to own property which is rented to their children. (Tax benefits anyone?) The kids will inherit one day, so are effectively the owners anyway.

That is potentially a truckload of properties which may not end up on the market.

Downsizing is not inevitable either. Can hire a lot of gardener, cleaner and handyman for the cost of selling, buying and moving. And people with large houses often like them a lot. I live in a street of large houses - almost all have only 1 or 2 people living in them. Occasionally someone sells up and buys an apartment. Not often though. Some have put in private cable cars in order to stay in their homes (this is Wellington!).

skid
23-01-2015, 02:00 PM
In NZ trusts are a major factor in home ownership, a factor often overlooked, probably because it is a bit nebulous. There are up to half a mill trusts in NZ - Law Commission's best guess as who really knows? (Answer, nobody.) Many if not most will contain one or more houses, usually including the family home. Trusts can of course sell their assets but it is not as simple as an individual owner selling. Partly because the settlor/s no longer own the properties and partly because the intention of trusts usually includes protecting assets for the offspring. Not to mention the implications of many trusts being poorly set up and/or managed.

And again, it is common for parents to own property which is rented to their children. (Tax benefits anyone?) The kids will inherit one day, so are effectively the owners anyway.

That is potentially a truckload of properties which may not end up on the market.

Downsizing is not inevitable either. Can hire a lot of gardener, cleaner and handyman for the cost of selling, buying and moving. And people with large houses often like them a lot. I live in a street of large houses - almost all have only 1 or 2 people living in them. Occasionally someone sells up and buys an apartment. Not often though. Some have put in private cable cars in order to stay in their homes (this is Wellington!).

The Demograghics can also be nullified by immigration.

Jay
23-01-2015, 02:04 PM
Downsizing is not inevitable either. Can hire a lot of gardener, cleaner and handyman for the cost of selling, buying and moving. And people with large houses often like them a lot. I live in a street of large houses - almost all have only 1 or 2 people living in them. Occasionally someone sells up and buys an apartment. Not often though. Some have put in private cable cars in order to stay in their homes (this is Wellington!).

Not just the elderly that need cable cars or some form of for some of the houses I have seen in Wellington recently.

Yes can cheaper to get someone to do the "chores" than living somewhere like a retirement village where you can get them to take care of that for you, plus they are more comfortable in their own home.

brend
23-01-2015, 02:13 PM
And again, it is common for parents to own property which is rented to their children. (Tax benefits anyone?) The kids will inherit one day, so are effectively the owners anyway.

If they are really renting the property from the trust, the rent being charged must be at a market value otherwise IRD will have issues with that if deductions are claimed. However if they a renting the property in their capacity as discretionary beneficiary of the trust its likely no rent is being paid and there should be any claim for tax deductions. Its possible that the trustees resolve to require the beneficiaries pay of all outgoings on the property and maintain it to a standard.

The kids might be final beneficiaries of the trust but they don't own it, the trustees do.

MAC
23-01-2015, 02:39 PM
The Demograghics can also be nullified by immigration.

Immigration trends may influence short term moves up or down, it won’t prevent a secular cycle.

Not unless the government decided to do something radical like double the population in 20 years, but who would really want or vote for that, far too many arriving as it is IMO.

BFG
23-01-2015, 03:14 PM
Immigration trends may influence short term moves up or down, it won’t prevent a secular cycle.

Not unless the government decided to do something radical like double the population in 20 years, but who would really want or vote for that, far too many arriving as it is IMO.

I agree. You guys already let one too many Canadians in. Next thing you know you'll be known as the Land of the Long White Cloud... and Maple-Flavoured Moose :D

artemis
23-01-2015, 03:26 PM
If they are really renting the property from the trust, the rent being charged must be at a market value otherwise IRD will have issues with that if deductions are claimed. However if they a renting the property in their capacity as discretionary beneficiary of the trust its likely no rent is being paid and there should be any claim for tax deductions. Its possible that the trustees resolve to require the beneficiaries pay of all outgoings on the property and maintain it to a standard. The kids might be final beneficiaries of the trust but they don't own it, the trustees do.

Well I was mainly commenting on what might happen if the post war generation do or don't downsize. Still, 'market rent' still leaves a lot of wiggle room. The market rents tables on the DBH website, which are based on bond lodgement info, show a wide variation in rents for similarly sizes of property types. It's a blunt instrument but IRD would accept it as 'proof' I'm sure, since it is the most comprehensive and current data.


Correct, neither the settlor/s or the beneficiaries own the property outright, yet anyway. But in practice living in a place owned by a trust in which one is a beneficiary is quite different to a rental owned by an independent third party.

artemis
23-01-2015, 03:30 PM
Immigration trends may influence short term moves up or down, it won’t prevent a secular cycle. Not unless the government decided to do something radical like double the population in 20 years, but who would really want or vote for that, far too many arriving as it is IMO.

I take it you are not an employer struggling to find skilled staff, then.

MAC
23-01-2015, 03:47 PM
I take it you are not an employer struggling to find skilled staff, then.

Ha Artemis, you may consider paying the staff you have more to stay or to attract more, perhaps then wages here might actually match those we see in Australia someday.

There's 5% unemployment in Christchurch if you want to take and train them, the next boat load of Philippeno's suppressing wage growth will probably mean they will no doubt be available for you.

There are no native New Zealanders, we are all from immigrants whether we arrived in 1350, 1840 or 2015. Less people and burden on the environment long term though has got to be a better thing to leave for our great grandchildren.

Perpetual immigration growth is not necessary for a sustainable prosperous economy, it’s a mechanism used by politicians to stabilise cyclical economic dips and consumer sentiment to garner votes or minimise electoral impacts.

Bjauck
23-01-2015, 03:57 PM
Well I was mainly commenting on what might happen if the post war generation do or don't downsize. Still, 'market rent' still leaves a lot of wiggle room. The market rents tables on the DBH website, which are based on bond lodgement info, show a wide variation in rents for similarly sizes of property types. It's a blunt instrument but IRD would accept it as 'proof' I'm sure, since it is the most comprehensive and current data.


Correct, neither the settlor/s or the beneficiaries own the property outright, yet anyway. But in practice living in a place owned by a trust in which one is a beneficiary is quite different to a rental owned by an independent third party.

When the baby boomers head for retirement, the government will probably boost immigration from countries with a surplus of younger people to replace them in the workforce and the immigrants will snap up the houses the boomers will sell when they downsize or move into retirement units.

NZ trust law is so liberal now...trusts were traditionally for assets over which the settlor had surrendered a beneficial interest or control. NZ family trusts where settlors are also beneficiaries and/or trustees would fail that test. It seems strange that a settlor be able to settle his house on a trust, yet still retain the de facto level of control over it he had prior to transferring into a trust. The assets of a trust should be regarded as the assets of the settlor who retains an interest in them as a trustee or a discretionary beneficiary.

MAC
23-01-2015, 04:01 PM
When the baby boomers head for retirement, the government will probably boost immigration from countries with a surplus of younger people to replace them in the workforce and the immigrants will snap up the houses the boomers will sell when they downsize or move into retirement units

Over populating the country so that real estate speculator annual profits don't dip by a percent or two. Not if they actually want to get re-elected.

Bjauck
23-01-2015, 04:07 PM
Over populating the country so that real estate speculator annual profits don't dip by a percent or two. Not if they actually want to get re-elected. I think it is already happening to a point... and to mix a metaphor, the government does not want to stop the music as the whole house of cards could come crashing down!

MAC
23-01-2015, 04:13 PM
I think it is already happening to a point... and to mix a metaphor, the government does not want to stop the music as they whole house of cards could come crashing down!

Not necessarily, if the housing market went flat for 10 years like it has in the past many might think that was a good thing.

I was content when the pop was around 3M, since then we now have more crowded beaches, more traffic congestion, Auckland water supplies from Hamilton waste crapped into the Waikato river, and well the beautiful sight that is a much greater South Auckland, ..........

Well, yes, and a shortage of housing of course.

I don't believe we are on the eve of destruction, but it would seem that it shouldn't just keep going.

Bjauck
23-01-2015, 04:24 PM
...As a South Aucklander, I can say there are some lovely areas here still! I have been to the plush northern slopes of Remuera and Mission Bay and seen some infill housing where you could almost bring in your neighbour's washing from your living room. It would be good if the housing market went flat...as opposed to a boom-bust scenario. Unfortunately unlike UK and Aus, we do not have a well-developed share market or capital market to provide much of a buffer.

artemis
23-01-2015, 04:44 PM
Not necessarily, if the housing market went flat for 10 years like it has in the past many might think that was a good thing. I was content when the pop was around 3M, since then we now have more crowded beaches, more traffic congestion, Auckland water supplies from Hamilton waste crapped into the Waikato river, and well the beautiful sight that is a much greater South Auckland, .......... Well, yes, and a shortage of housing of course. I don't believe we are on the eve of destruction, but it would seem that it shouldn't just keep going.

There's lots of tradeoffs needed. It's not as simple as capping the population. People want more (healthcare, border control, research, graduates, support for the poor, social housing, improved private rentals, minimum wage increase, roads, cycleways, trainsets ... ), many worthy causes. The funding will come from borrowing or growth or cutting back elsewhere. Surely the most palatable is growth? That means matching skilled NZers or migrants with employers who want to maintain or expand, and pay tax. And most migrants have to pass the skills test.

MAC
23-01-2015, 04:54 PM
There's lots of tradeoffs needed. It's not as simple as capping the population. People want more (healthcare, border control, research, graduates, support for the poor, social housing, improved private rentals, minimum wage increase, roads, cycleways, trainsets ... ), many worthy causes. The funding will come from borrowing or growth or cutting back elsewhere. Surely the most palatable is growth? That means matching skilled NZers or migrants with employers who want to maintain or expand, and pay tax. And most migrants have to pass the skills test.

Agree that economies are complex and dynamic, though desirable skills can be obtained through more private sector training than we have, there's a desire for skills but a reluctance to train, and a better focused education system in some areas also.

And, yes through immigration, though it doesn't have to be immigration growth and a greater population.

Those leaving for what ever reason can adequately be replaced by those arriving with selected desired skills, with a net balance.

BFG
23-01-2015, 05:16 PM
Read an interrsting article yesterday about the amount of childless couples/singles on the rise worldwide due to work/study commitments or financial decisions. Being one of these people, by choice, it makes me wonder what future demand there will be for the typical Kiwi home of yesteryear with 4+ bedrooms? This could result in much cheaper housing with fewer rooms and bigger, more expensivr houses being neglected/abandoned.

Food for thought...

skid
24-01-2015, 08:32 AM
Small houses need cheap land--With expensive land (like in Auckland) Its either a big expensive house-or multi dwelling, like apartments or attached townhouses.

Zaphod
24-01-2015, 09:36 AM
I think it is already happening to a point... and to mix a metaphor, the government does not want to stop the music as the whole house of cards could come crashing down!

IMO it's a fine balancing act. Any government that substantially brought down the price of housing in either Auckland or throughout New Zealand, would be kicked out at the next election. We want lower housing prices, but at the same time we don't want to lose the value of our investment. Perhaps the best long term (politically expedient) solution is simply to stabilize prices while simultaneously growing incomes.

MAC
24-01-2015, 10:29 AM
Yep, it’s definitely time for a flat 10 years in the housing market.

http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=11391028

It would seem sensible that the government engineer a soft landing, by LVR, cutting immigration, restricting foreign ownership, preferably all of those things until household debt ratios return to what they were in 1990 or thereabouts.

All New Zealander's will prosper from having lower debt ratios, and there are other markets in which to invest for those whom have been obsessed with real estate.

6704

artemis
24-01-2015, 10:44 AM
Couple with no children and two incomes probably collect even more stuff than the average family! So they may need an even larger place to live. Plus they can afford bigger and better.

Bjauck
24-01-2015, 10:51 AM
Small houses need cheap land--With expensive land (like in Auckland) Its either a big expensive house-or multi dwelling, like apartments or attached townhouses.
True and in recent times with the increasing divergence of wealth the number of people per dwelling has actually been increasing with more multi family households and people staying in flatting situations or with parents because of worsening home affordability. At the wealthy end of the scale...increasingly McMansions are being built on small expensive sections.

Bjauck
24-01-2015, 10:56 AM
IMO it's a fine balancing act. Any government that substantially brought down the price of housing in either Auckland or throughout New Zealand, would be kicked out at the next election. We want lower housing prices, but at the same time we don't want to lose the value of our investment. Perhaps the best long term (politically expedient) solution is simply to stabilize prices while simultaneously growing incomes.

The wild West NZ stock market in the 1980's helped turn off a generation of investors from share investments, their wealth has ended up in real estate. MP's who are also of that same generation (and who have real estate investments in their family trusts!) are scared to do anything that may impact that real estate wealth.

artemis
24-01-2015, 11:27 AM
True and in recent times with the increasing divergence of wealth the number of people per dwelling has actually been increasing with more multi family households and people staying in flatting situations or with parents because of worsening home affordability. At the wealthy end of the scale...increasingly McMansions are being built on small expensive sections.

Maybe but the average household size at 2.7 (2013 census) has changed very little since 1996 when it was 2.8. A blunt instrument but at least based on evidence.

BFG
24-01-2015, 11:54 AM
Couple with no children and two incomes probably collect even more stuff than the average family! So they may need an even larger place to live. Plus they can afford bigger and better.

True. My partner and I have quite a bit of stuff (currently rent a 3 bedroom house and use all of it) but no house of our own to put in! Go figure eh?

skid
24-01-2015, 11:54 AM
Yep, it’s definitely time for a flat 10 years in the housing market.

http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=11391028

It would seem sensible that the government engineer a soft landing, by LVR, cutting immigration, restricting foreign ownership, preferably all of those things until household debt ratios return to what they were in 1990 or thereabouts.

All New Zealander's will prosper from having lower debt ratios, and there are other markets in which to invest for those whom have been obsessed with real estate.

6704

Just the restricting foreign ownership of large holdings and expensive houses would go a long way--citizenship should be a requirement.IMO

Bjauck
24-01-2015, 12:28 PM
Maybe but the average household size at 2.7 (2013 census) has changed very little since 1996 when it was 2.8. A blunt instrument but at least based on evidence.
Fair enough - much of my post was personal observation and hearsay. However, from census stats, there had been no change in NZ household size between 2006-2013. The post I was responding to referred to Auckland where inter-census household size has increased to 3.0 from 2.9 and where 4+ households have increased from 32.8% (2006) to 33.7% (2013) of total households. In 2001 the 4+ households comprised 31.8% in Auckland so there seems to be a trend there in NZ's most expensive city.

Tomtom
25-01-2015, 11:35 AM
Obviously we could adopt the German approach if we ever got serious about balancing supply and demand for houses while stabilising prices. However I don’t think there is yet much political incentive to do this yet despite their own reports recommending similar measures.

However given this reluctance one direction that often seems overlooked is the idea of relocating economic activity. Currently companies can locate offices in Auckland at relatively low direct cost as the associated infrastructure expenses are carried by the public purse. Perhaps there are economic incentives that could persuade companies to relocate many activities to regional centres where the cost of labour is lower and inefficiencies (commuting times etc.) are greatly reduced.

That said the same could be applied to government. You have to question the wisdom of concentrating public services in Wellington, a city with limited usable space, an unappealing microclimate and prone to natural disasters.

Bjauck
25-01-2015, 12:24 PM
Obviously we could adopt the German approach if we ever got serious about balancing supply and demand for houses while stabilising prices. However I don’t think there is yet much political incentive to do this yet despite their own reports recommending similar measures.

However given this reluctance one direction that often seems overlooked is the idea of relocating economic activity. Currently companies can locate offices in Auckland at relatively low direct cost as the associated infrastructure expenses are carried by the public purse. Perhaps there are economic incentives that could persuade companies to relocate many activities to regional centres where the cost of labour is lower and inefficiencies (commuting times etc.) are greatly reduced.

That said the same could be applied to government. You have to question the wisdom of concentrating public services in Wellington, a city with limited usable space, an unappealing microclimate and prone to natural disasters.
Auckland City is still rebalancing the rates differential on business properties which will further reduce the rates burden on business premises....so this will make the city even more appealing. That, coupled with the "rebalancing" of rates throughout the region following the "anschluß" of the previous councils, will mean even larger increases for some residential ratepayers, adding further to the household expense pressures in the area. Many businesses prefer to be closer to their markets and Auckland appeals in NZ as it is a big, camparatively dense and growing market.

How are infrastructure costs carried more by the public purse in Auckland than elsewhere? Certainly to the extent that Councils bear the cost of infrastructure, then that is covered to an extent by ratepayers (including businesses) and land developers. One of the issues cited for house price increases has been the size of the development levy (for infrastructure requirements) on new subdivisions. To stimulate a move to provincial NZ, maybe this cost could be shifted on to business ratepayers to help ease the residiential cost burden and to make Auckland a less attractive place for businesses to set up shop?

artemis
25-01-2015, 01:16 PM
.... You have to question the wisdom of concentrating public services in Wellington, a city with limited usable space, an unappealing microclimate and prone to natural disasters.

Most of the sharp end of government departments is located outside Wellington CBD and indeed Wellington. Many might think that head offices that fall over in, say, an earthquake, might be no great loss. Though there are relocation plans ready to go.

I lived in Auckland for a long time, never left home without a brolly. Trust me the Wellington microclimate is a great improvement. The air here is clean and clear, and Wellington on a good day .....

Bjauck
25-01-2015, 01:55 PM
I lived in Auckland for a long time, never left home without a brolly. Trust me the Wellington microclimate is a great improvement. The air here is clean and clear, and Wellington on a good day .....
It depends whereabouts you live in each city...micro-climates differ across the Auckland isthmus and region.
From experiencenz.com:
Auckland winter ave temp high 14.7°C; Wellington 11.3°C
Auckland winter rain days/month 13; Wellington 11

So Welly is drier and colder. So, you may be less likely to get wet in the capital but, when you do get wet, you may be more likely to catch a chill :)

couta1
25-01-2015, 02:08 PM
Wellingtons wonderful microclimate at 2.30pm. Wellington City 26c, Lower Hutt 28c Wainuiomata 32c and Upper Hutt 34c ;)

BFG
25-01-2015, 03:59 PM
Wellingtons wonderful microclimate at 2.30pm. Wellington City 26c, Lower Hutt 28c Wainuiomata 32c and Upper Hutt 34c ;)

Feilding today: freakin' hot with little to no wind and a good dose of river thrown in. High chance of CC & Dry and/or ciders past 7pm ;)

robbo24
25-01-2015, 05:28 PM
Feilding today: freakin' hot with little to no wind and a good dose of river thrown in. High chance of CC & Dry and/or ciders past 7pm ;)

Check the percentages and write your address on your arm in vivid.

:D:D:D:D

troyvdh
25-01-2015, 06:47 PM
Come on ...everyone knows that here in CHCH ..we have weather....at times 4-5 times a day it can change...."not to hot not to cold"....plus the mainland is truly empty...we have less the population of Auckland here...and long may that continue.....by the way everything hot and cold happens here....cheers...down south its either 15 d minus or 45 plus ...

MAC
26-01-2015, 10:20 AM
They’ll all go when they do faster than they come;

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11391731

6710

BFG
26-01-2015, 11:10 AM
They’ll all go when they do faster than they come;

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11391731

6710

Looks like the bubble merchants are starting to spring up to take advantage of the market. No doubt the vast majority of these listings will be in Auckland where they can cream the most off as quickly as possible.

The higher it goes, the more spectacular the implosion...

MAC
26-01-2015, 11:31 AM
Looks like the bubble merchants are starting to spring up to take advantage of the market. No doubt the vast majority of these listings will be in Auckland where they can cream the most off as quickly as possible.

The higher it goes, the more spectacular the implosion...

I just wonder too Moosie how many will be exposed to taxation that they are not necessarily aware of and how much the IRD are watching the bubble formation right now also. Inc foreign investors whom may have assumed that there is not any capital gain treatment here.

Anyone buying now and selling out quick within 12 months may very well find the IRD man on their tails.

http://www.ird.govt.nz/property/property-common-mistakes/investment-becomes-dealing/

Zaphod
26-01-2015, 11:36 AM
Just the restricting foreign ownership of large holdings and expensive houses would go a long way--citizenship should be a requirement.IMO

A register of foreign ownership will help uncover whether this is a large contributing factor. Thus far on the basis of the evidence provided, it appears not to be.

Schrodinger
26-01-2015, 12:20 PM
I honestly feel we need to do the European housing version and reign this in before all of us are paying extra taxes to prop up the banks. Not to mention the council is currently looking for other revenue streams to cover for the RMA rort gravvy train.

Bjauck
26-01-2015, 12:38 PM
I honestly feel we need to do the European housing version and reign this in before all of us are paying extra taxes to prop up the banks. Not to mention the council is currently looking for other revenue streams to cover for the RMA rort gravvy train.
True...and unlike Greece, Ireland and Spain, we have no Germany who will bail us out.

Bjauck
26-01-2015, 01:03 PM
A register of foreign ownership will help uncover whether this is a large contributing factor. Thus far on the basis of the evidence provided, it appears not to be.
A lot of the evidence floating around now is conjecture. Some say because the percent of foreign buyers seems smaller than others suggest then the issue is not great. However surely the type of buyer is relevant. If you have 3% additional 100% cashed up wealthy overseas buyers with access to overseas-based cheaper finance chasing the limited housing stock, it is going to exert far greater upward price pressure as opposed to an extra 3% who need to scrape together a deposit and nz-based finance.

In a tight market the addition of any overseas-based buyer will exert upward pressure. When there are no restrictions on overseas buyers then surely that will have an even greater effect. To the extent that there overseas buyers wanting to invest in NZ and in addition to have access to cheaper finance than Aucklanders/Kiwis, then we will increasingly be priced out of our own market and end up as tenants to absentee landlords.

Valuegrowth
27-01-2015, 04:33 AM
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11390463

Housing warning: It's an Ireland repeat

Entrep
27-01-2015, 08:10 AM
Doesn't every country have a city like Auckland that attracts a large premium? Look at New York in the US, London in the UK, Sydney in Australia etc. If you want to live in the big cities where presumably there is the most opportunity, then you have to pay a premium. There are plenty of places under $500K in Hamilton etc that are very nice houses otherwise.

artemis
27-01-2015, 08:26 AM
Interesting article in the Herald today.

"Parents could save hundreds of thousands of dollars by forgoing properties in elite Auckland school zones then privately educating their children with the money saved by buying elsewhere, new data reveals."



http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11392191

Valuegrowth
02-02-2015, 04:05 AM
http://www.scoop.co.nz/stories/AK1411/S00540/auckland-housing-market-bursting-bubble-a-risk-for-nz.htm

Auckland housing market bursting-bubble a risk for NZ

vorno
02-02-2015, 06:52 AM
http://www.scoop.co.nz/stories/AK1411/S00540/auckland-housing-market-bursting-bubble-a-risk-for-nz.htm

Auckland housing market bursting-bubble a risk for NZ

There is only risk if the demand disappears and/or the interest rates hike up. Auckland cannot keep up with demand.
Here's an example from those who rent: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11394453
Also, don't forget migration http://www.sharechat.co.nz/article/e31155d6/nz-migration-surged-to-a-record-in-2014-helped-by-robust-economy.html

...Ever since the 2011 earthquake in CHCH - prices have gone mad.
In my opinion, Auckland is the next London - luckily we're no where near their levels yet.

Valuegrowth
04-02-2015, 04:32 AM
Will a bust follow the boom? We had a boom in NZ dollar and AUD. Now they are plummeting. I think every asset has cycle. Stock market has cycle, commodity market has cycle, property market has cycle, currency and other assets also have cycles. We didn’t see meaningful correction in housing markets in Australia and New Zealand. Two of the over valued housing markets in the world. In New Zealand, Auckland housing market poses threat to the economy. I think Auckland housing market is more vulnerable now. After oil, gold, NZD and AUD we may see fall in prices in other asset classes specially over valued housing markets in Australia and New Zealand.

Beagle
09-02-2015, 02:51 PM
History has shown us time and again that as interest rates get cheaper houses get dearer. Today in the market we have a new mortgage low of only 5.19% fixed for two years, see www.interst.co.nz and last week we had a new 10 year fixed rate by TSB of 5.89%. These sort of things seriously influence the market but by far the biggest influence is the tsunami of Asian buyers which shows no sign of relenting.

skid
10-02-2015, 09:18 AM
Just read this. I wonder if this will be the beginning of the great property crash in Australia and New Zealand?
http://www.marketwatch.com/story/trouble-for-china-as-money-flows-out-2015-02-08?link=MW_latest_news

"Another possibility is authorities will step up efforts to trap liquidity inside China.
We have already witnessed this in Macau. The gambling enclave has now recorded its eighth months of declining gaming revenues after a clampdown on the movement of illicit funds. Beijing has also been proceeding with efforts to clamp down on overseas property purchases by mainland Chinese that skirt capital controls."

IMO this would be the area that would cause the most damage to house prices in NZ (and many other places)---The new catch phrase is ''Birth Tourism'' (Chinese coming to a western country to give birth and get citizenship to have a ticket out of China.)--Its happening big time in the USA.
I believe in NZ its happening more with students coming for education and then immigrating.

The Chinese Gov. has apparently put an extra tax on Chinese to travel (in an attempt to keep Chinese tourist money in China)

There is no reason they could not pass laws to keep people in China full stop (if it suits them)

Or the respective Governments tightening up immigration laws.

All these things would have an effect on housing--but will they happen is the big question.

I heard a statement once by Tony Alexander that said ''If you do something that makes China unhappy politically--they will make you pay economically''-so it may be more an issue of what china wants,than what NZ wants.

Schrodinger
11-02-2015, 04:35 PM
IMO this would be the area that would cause the most damage to house prices in NZ (and many other places)---The new catch phrase is ''Birth Tourism'' (Chinese coming to a western country to give birth and get citizenship to have a ticket out of China.)--Its happening big time in the USA.
I believe in NZ its happening more with students coming for education and then immigrating.

The Chinese Gov. has apparently put an extra tax on Chinese to travel (in an attempt to keep Chinese tourist money in China)

There is no reason they could not pass laws to keep people in China full stop (if it suits them)

Or the respective Governments tightening up immigration laws.

All these things would have an effect on housing--but will they happen is the big question.

I heard a statement once by Tony Alexander that said ''If you do something that makes China unhappy politically--they will make you pay economically''-so it may be more an issue of what china wants,than what NZ wants.

This applies to any large economy. It is amusing to see China being picked on while other Western powers display the same behaviour.

skid
13-02-2015, 01:37 PM
China is more powerful economically than alot of other western countries,but your right of course.
There are certainly other countries that would like to have a piece of NZ. and some of them may also have a slight effect on Auckland housing.

vorno
13-02-2015, 03:03 PM
China is more powerful economically than alot of other western countries,but your right of course.
There are certainly other countries that would like to have a piece of NZ. and some of them may also have a slight effect on Auckland housing.

*The debt of China (primarily corporations I believe) has raised from ~$7 trillion in 2007 to ~20 trillion now. That's around 282% of China's GDP.

*Also, I believe China is looking to tighten the chains on "money" leaving the country. Hence, it might just have a correction factor here, depending on the numbers of Chinese moving to NZ.

*I can't remember where I obtained said material, feel free to correct me!

Bjauck
25-02-2015, 06:48 AM
Another report on the impact of overseas investors on the property market. As usual no action will be taken as MPs themselves are mostly property owners and have time horizons of a 3-year parliamentary term.
http://www.stuff.co.nz/business/industries/66599919/ridiculous-nz-property-deals-concern-banks-kpmg

Valuegrowth
08-03-2015, 08:50 PM
Just like other assets property market also has cycles. I believe currently property market in Auckland, Christchurch and Queenstown are more vulnerable than other areas. If we analyse history of different types of assets there had been boom and bust period time to time. Property is not exception. Auckland housing market is in a bubble stage now. We can expect bust in some point.

DYOR

troyvdh
14-03-2015, 07:41 PM
mmmm...I listened to Mr Gaynor talking at a recent meeting of folk....If Im correct he indicated that Auckland "house prices" are fairly in line with overseas seas cities performances....perhaps even Auckland has been less spectacular ..than some....Yes I and most posters would agree this is nuts....BUT would anyone stand in front of a moving train...that hasn't stopped for at least a hundred years (in NZ anyways).

Roger vorno Entrep ..all good stuff.

Dear MW...do you own property...how long for...I have for decades...I could go on here...but I wont.Cheers anyway.

PS....remember the old saying "they aint making anymore of the stuff (land) except of course in Holland.

vorno
14-03-2015, 09:29 PM
PS....remember the old saying "they aint making anymore of the stuff (land) except of course in Holland.
Holland... I imagine that could be quite an interesting place to visit/live!

JBmurc
09-04-2015, 10:41 AM
Auckland housing maybe inline with international city prices but it's extreme on Auckland household income levels 2nd most expensive in the world

Bjauck
10-04-2015, 11:17 AM
Auckland housing maybe inline with international city prices but it's extreme on Auckland household income levels 2nd most expensive in the world
Most countries have a capital or major "international" city, in which house prices are more expensive than the "provinces". NZ is different from most because of the lack of regulation or stamp duties in relation to residential house purchases by foreign based purchasers. In addition Auckland has 31% of NZ's population. Compare that to London, which has about 16% of the UK population and Sydney which has about 20% of the Australian population. It means that native Aucklanders have fewer other NZ options.

Harvey Specter
10-04-2015, 12:32 PM
Most countries have a capital or major "international" city, in which house prices are more expensive than the "provinces". NZ is different from most because of the lack of regulation or stamp duties in relation to residential house purchases by foreign based purchasers. In addition Auckland has 31% of NZ's population. Compare that to London, which has about 16% of the UK population and Sydney which has about 20% of the Australian population. It means that native Aucklanders have fewer other NZ options.Alternatively if you look at it on a state by state basis in Australia (and probably most US as well), the state capital is about 50% of the state population. Given the free flow between NZ and Australia (for NZ/Oz residents anyway), should be we viewed any differently from an Australian state.

Bjauck
10-04-2015, 06:57 PM
Alternatively if you look at it on a state by state basis in Australia (and probably most US as well), the state capital is about 50% of the state population. Given the free flow between NZ and Australia (for NZ/Oz residents anyway), should be we viewed any differently from an Australian state.
I disagree with you in relation to NZ to Australia. There may be a free flow of people compared with other foreigners going to Australia, but NZers in Oz certainly do not have same status as OZ inter-state migrants. Especially for people with fewer financial resources and/or non-professional jobs, moving from NZ to Australia is definitely not akin to an Interstate move. Apart from the obvious necessity for passports and a trans-ocean move and journey to what is still a foreign country, major differences are the NZD/AUD exchange rate which can fluctuate wildly, and the sub-migrant status in OZ for Kiwis (access to social services is limited for special-category NZ migrants.) Those hurdles just do not exist for interstate moves in Australia (or the USA for that matter). I stick by my original post - the access to alternatives for native Aucklanders is more limited than for Sydneysiders and Londoners.

One way to help ease the pressure on house prices in Auckland would be to introduce regulations or taxes on foreign-based foreign buyers purchasing residential real estate. Of course, foreigners who are NZ residents should still be free to purchase housing. A grey area would be NZ citizens living overseas - perhaps they would be exempt from the foreign-based residential house purchasers' regulations, provided they return to NZ within a certain period after their purchase.

Valuegrowth
14-04-2015, 06:49 PM
I believe property market in Queenstown and Auckland could bring another financial crisis. History will repeat in a different manner. Next crisis could become worst than previous occasions. One of the main reasons for higher asset prices is availability of easy credit globally. Almost all the crises in the past were link to property related and credit related assets and instruments. We saw different types of credit, property and financial crises in countries such as Dubai, Ireland, Iceland and other western countries etc in the past.Even in New Zealand many finance companies went into receiverships. In addition, these countries have experiences in asset crashes such as property crash. We cannot avoid different types of cycles in the financial system as it has not fixed yet. Even Chinese property market is more vulnerable now.

http://economyandmarkets.com/markets/foreign-markets/chinas-real-estate-bubble-ready-to-burst-urbanization-domino-effect/

Look Out! Is China’s Real Estate Bubble Ready To Burst?


http://www.scoop.co.nz/stories/HL1503/S00217/is-easy-credit-the-problem-keith-rankin.htm

Is Easy Credit the Problem? | Keith Rankin

My ideas are not a recommendation to either buy or sell any property, security, commodity or currency. Please do your own research prior to making any investment decisions. Please note that I do not endorse or take responsibility for material in the above hyper-linked sites.

baller18
14-04-2015, 09:42 PM
Auckland housing maybe inline with international city prices but it's extreme on Auckland household income levels 2nd most expensive in the world
I am pretty certain, house prices on incomes levels is definitely not 2nd most expensive in the world.
I have been lucky enough to travel heaps, due to my gf being a flight attendant and my tickets being 5% of the normal price. This has allowed me to meet a lot of friends from asia and my girlfriend lives in hong kong as she works for cathay pacific.
A tiny as studio in central hong kong will cost you 1million nzd and I can assure you average salary of people in hong kong is less than what it is in NZ. Studio not even a house!
A new grad from taiwan makes 22k TWD which is just nearly $1000 NZD. If you wanna live in areas in taiwan which is like epsom, mt eden and etc, for a 70sqm apartment, you will be paying north of 2million NZD.
So auckland house prices is definitely not expensive on incomes levels when comparing it to the rest of the world, still, it is definitely expensive in relation to our incomes...

baller18
14-04-2015, 09:51 PM
Don't think houses will double every ten years, as it will just not be affordable to anyone. However, I do think it will increase by 50% in the next ten years, it has to be more than inflation.
Impossible for it to double every tens years. Which means a house in epsom and mt eden, the minimum price you would be looking at 3million? Thats insane. Herne bay 4-5 million?

vorno
15-04-2015, 07:32 AM
Don't think houses will double every ten years, as it will just not be affordable to anyone. However, I do think it will increase by 50% in the next ten years, it has to be more than inflation.
Impossible for it to double every tens years. Which means a house in epsom and mt eden, the minimum price you would be looking at 3million? Thats insane. Herne bay 4-5 million?

Incorrect - the average value does double ten years, unless of course you're not in a popular area (Gore anyone?). The only consolidating factor is every recession, which slows it down. However the same 10 year average does tend to apply.

Numerous examples can be given. How much did houses cost for your folks? When did they buy? Do the math, it may just surprise you!

EDIT: Yes it is unaffordable for many! However if you have 2 salaries and if you're good with your money then it can be done. I myself am limited to a $300,000 budget currently - So, I ask you, what can I buy for that in Auckland?

stoploss
15-04-2015, 11:41 AM
recent speech from the RBNZ .

http://www.rbnz.govt.nz/research_and_publications/speeches/2015/action-needed-to-reduce-housing-imbalances.pdf

baller18
15-04-2015, 12:06 PM
I Dnt believe in the future it will, simply noone can afford anything in central auckland. Yes, my folks houses have increased five times, all their properties. But every ten years in the future will be way too out of reach dont you think?

vorno
15-04-2015, 12:33 PM
I Dnt believe in the future it will, simply noone can afford anything in central auckland. Yes, my folks houses have increased five times, all their properties. But every ten years in the future will be way too out of reach dont you think?

That's why its best not to end up with a job that gives 3% PA rises. It becomes very difficult for those folk.

Valuegrowth
15-04-2015, 07:33 PM
We are closer to severe housing crisis especially in Auckland followed by Queenstown and Christchurch. Auckland housing market is very hot now.

First home buyers are at high risk if they buy property at inflated prices. It is time to apply value approach to the property market. We don’t see great value in the property market especially in Auckland. It is one of the hot property markets in the world. Auckland housing prices are at least overvalued by more than 35%. Surprisingly, Wellington housing prices have stagnated when compare with other cities. We should see strong correction in housing market especially in Auckland followed by Christchurch and Queens-town. Auckland property market is not affordable to students,business organizations, and first time home buyers. Their average weekly rent also has rocketed. Higher cost environment could create another crisis. It can lead to crisis in the banking system as well.

http://www.nzherald.co.nz/northern-advocate/news/article.cfm?c_id=1503450&objectid=11426278

Property investors are set to be labelled higher risk

My ideas are not a recommendation to either buy or sell any property, security, commodity or currency. Please do your own research prior to making any investment decisions. Please note that I do not endorse or take responsibility for material in the above hyper-linked site.

Puggy
15-04-2015, 07:57 PM
Yes, my folks houses have increased five times, all their properties.

Your folks are part of the problem. Too many people investing in unproductive assets looking for easy tax-free capital gains, all the while feeding into the Auckland ponzi housing market.

Joshuatree
15-04-2015, 08:23 PM
Yep thats so right Puggy. the Reserve bank governor wants capital gains tax in Auck and it makes so much sense ; but we may have to wait for the next govt to enact it.

Valuegrowth
15-04-2015, 09:02 PM
Capital gain tax could be one of the good moves. Still we cannot avoid housing market correction in over valued housing markets. Just like in other countries such as USA and Europe, imbalance in the housing market will adjust in countries such as New Zealand, Australia, Singapore, China, Hong Kong, Taiwan and other over valued markets. It is time to avoid overvalued hot property cities in above countries. In New Zealand, housing market in Auckland and Queenstown are more vulnerable. How many financial institutions will get into troubles this time? It is not different this time. We are heading for lower housing prices and lower NZD.

http://www.stuff.co.nz/business/industries/67768129/auckland-house-prices-particularly-stretched-reserve-bank-says

Reserve Bank call to look at untaxed property gains

My ideas are not a recommendation to either buy or sell any property, security, commodity or currency. Please do your own research prior to making any investment decisions. Please note that I do not endorse or take responsibility for material in the above hyper-linked site.

Bjauck
15-04-2015, 11:04 PM
Don't think houses will double every ten years, as it will just not be affordable to anyone. However, I do think it will increase by 50% in the next ten years, it has to be more than inflation.
Impossible for it to double every tens years. Which means a house in epsom and mt eden, the minimum price you would be looking at 3million? Thats insane. Herne bay 4-5 million?

Without controls on non-resident overseas-based buyers, whether local residents can afford to purchase local houses will become more irrelevant as long as more wealthy overseas buyers find our houses affordable and our country attractive as an investment destination. More wealthy immigrants will also add demand for the housing supply.

However even without foreign buyers, continued low and lowering mortgage rates coupled with increasing incomes will mean that local buyers will be able to service bigger loans which will further inflate prices. Hence the Reserve bank wants to step in to mitigate the inevitable hangover when the party ends...

JBmurc
15-04-2015, 11:13 PM
That's why its best not to end up with a job that gives 3% PA rises. It becomes very difficult for those folk.

Or work in the export sector with AUS and your income will be down 20-30%

baller18
15-04-2015, 11:21 PM
Problem? They've had their properties for over 20 years, and has not sold a single one. So what captain gains tax when its for dividend purposes? Just like holding onto shares, so would ppl want captain gains tax if they held onto their shares for 10-20 years? Im all for capital gains tax, everyone needs to be tax, noone should get away with ot.
lol @ auckland ponzi house market, mate you need to see the world and read my previous comments about our house prices compared to the rest of the world. Not just in price, but size, land and etc. In china u purchase an apartment and u only own ot for 70 years. Dyor.
your comments are a bit sour to be honest...

vorno
16-04-2015, 07:06 AM
Or work in the export sector with AUS and your income will be down 20-30%

This is true and I feel for those people, however odds are if you're working in the export sector you're unlikely to live in Auckland. Unless of course you're working at the port or as a truckie' (not many farmers or loggers around here).

Jay
16-04-2015, 07:45 AM
Probably been said before, what we need is more houses to satisfy demand. It is mainly Auckland and Ch Ch in this country
A few countries have a capital gains tax, hasn't stopped their prices increasing especially in the main cities.

And as has been said before, there is already a tax, it is called Income tax, what the IRD need to crack down on is property speculators who are doing something similar to what was done on Our First home. Buy a house do it up and sell again without declaring the income, I'm sure a few more dollars to the IRD to help with them that would generate a very good return.

dingoNZ
16-04-2015, 09:39 AM
I would be interested to hear peoples arguments (for/against) on the removal of deductability of interest on mortgages and if this merits any thought from the IRD/RBNZ?

Jantar
16-04-2015, 10:22 AM
I would be interested to hear peoples arguments (for/against) on the removal of deductability of interest on mortgages and if this merits any thought from the IRD/RBNZ?
How about changing the whole deductability method to making mortgage interest deductable for a property you actually live in for more than 9 months of the year, but not on any other property? This would help with home ownership, but work against property as an investment. :p

gv1
16-04-2015, 11:15 AM
Probably been said before, what we need is more houses to satisfy demand. It is mainly Auckland and Ch Ch in this country
A few countries have a capital gains tax, hasn't stopped their prices increasing especially in the main cities.

And as has been said before, there is already a tax, it is called Income tax, what the IRD need to crack down on is property speculators who are doing something similar to what was done on Our First home. Buy a house do it up and sell again without declaring the income, I'm sure a few more dollars to the IRD to help with them that would generate a very good return.

This is already being done by IRD... some off course must be getting away with it. Curb should be done to someone owing more than 3 properties. They would have to put 50-60% deposit.

Valuegrowth
16-04-2015, 06:28 PM
All types of assets have cycles. There are different types of investors, traders and speculators. Similarly, there are different types of instruments links to assets. Crisis such as credit, banking and asset crises can happen suddenly. When they happen we can see lot of repercussions. Some are trying to highlight this time is different. No it is not different. Currently we having commodity crisis. There will be property, credit, banking,currency and housing crisis too at different time at different places. Both New Zealand and Australia are due for bigger housing market correction especially in over valued cities such as Sydney, Auckland, Goal coast and Queenstown etc. In addition, we should see fall in NZD and AUD dramatically in the coming years.

My ideas are not a recommendation to either buy or sell any property, security, commodity or currency. Please do your own research prior to making any investment decisions.

JBmurc
16-04-2015, 07:18 PM
Maybe Stamp duty on Auckland property over 600k 15% on every transaction

craic
17-04-2015, 10:50 AM
The problem is the imbalance between supply and demand and fiddling taxes will not affect that. Stick any amount of tax you like on a house and the seller will just add that to the price with a couple of percentage points for his trouble. One of the greatest problems to my mind is the mindless restrictions on land use coupled with the Auckland City council Cost structure imposed on day one of any developement. The result is that you cand drive around the city and see many potential house sites that are not developed because it isn't worth the trouble and the cost involved. The RMA doesn't help but if the "costs" were added as an addition to rates rather than an upfront charge, and the rules were relaxed to cope with the reality that land in the city should be much easier to develop, then progress might be made. I visit a relative in Onehunga and I would say that I could find half a dozen house sites within walking distance of his place in Pleasant Street. A tax on undeveloped sections, some of which are held for years, might get some movement in the city

JBmurc
17-04-2015, 03:12 PM
The problem is the imbalance between supply and demand.....Yes demand coming from the 30k+ people coming to the city mostly Indian Chinese nationals ...then if they like sell take the nice profit and head home tax free

Bjauck
18-04-2015, 07:57 AM
How about this as a way to cool off and consolidate "overpriced" residential property markets:
It would be even more of a political liability than CGT, but an imputed interest tax would help even the field between financial investment and investment in real estate. Because of tax on investment income there is a bias in our system towards buying as expensive an owner-occupied home as possible. Owner occupied homes are untaxed as to both capital gain AND the annual benefit of occupying rent-free. You are at a tax disadvantage if you want to rent whilst investing your capital in productive assets, whose returns or interest are taxable at your marginal rate of income tax. In addition if you invest your money in a financial arrangement that has capital appreciation. the capital profit is taxed unlike capital profit on your home. You then have to pay your rent out of tax-paid income. On the other hand, the benefit derived from your investment in your own home is untaxed.

If there were a tax on the interest foregone on the equity in your own home, that would help overcome the in-built bias from the tax system towards home ownership. It would have a greater imposition on those people who own their own expensive homes without a mortgage and the least effect on first home buyers buying a modest home with a small amount of equity in their home.The imputed interest rate would be similar to a 5-year bank deposit rate.

This imputed interest scheme could be introduced gradually along with reductions in other taxes...along the lines of the introduction of GST. However this will never happen. The inbuilt tax bias to as-expensive-as-possible home ownership will no doubt continue.

*Owners equity could be calculated either historically (what you actually paid less any outstanding mortgage priincipal) or by more subjective council-type revaluations.

*Rates are a broader based tax levied on all property (not just owner occupied property) and they are charges for the use of council services not an investment tax on the equity in the property. As a proportion of the property value they vary throughout the country. Similarly the fixed or uniform charge component varies.

G on
18-04-2015, 08:25 AM
Another way is to apply the FDR to all houses just like FIF shares!!!!! Would only take a few extra words attached to the tax legislation. That would wake people up!

Bjauck
18-04-2015, 12:31 PM
Another way is to apply the FDR to all houses just like FIF shares!!!!! Would only take a few extra words attached to the tax legislation. That would wake people up!
That sounds a good concept! I guess with FDR applied to share valuations, share valuations can be easily determined by referring to trading prices on stock markets. However valuing individual properties is not so easy and open to objections.

On the other hand, referring to actual price paid for the property plus capital additions less outstanding mortgage would reflect actual equity that could otherwise have been deployed in a productive (yet tax-incurring) investment.

fungus pudding
18-04-2015, 09:53 PM
How about changing the whole deductability method to making mortgage interest deductable for a property you actually live in for more than 9 months of the year, but not on any other property? This would help with home ownership, but work against property as an investment. :p

That flies in the face of all accepted accounting practice. Tax is assessed on profit - not turnover. Further, iyt amounts to paying tax on money you haven't got. Makes it pretty hard to collect.

Bjauck
19-04-2015, 06:31 AM
That flies in the face of all accepted accounting practice. Tax is assessed on profit - not turnover. Further, iyt amounts to paying tax on money you haven't got. Makes it pretty hard to collect.

Currently the NZ tax system can impute a 5% FDR on overseas FIF investments, even though their actual income may be less than that. If the FIF investment is subject to Forced comparative value assessment than the full unrealised change in value becomes assessable income. It is basically a tax on UNREALISED capital gain.

Also if you are subject to the accrual method of accounting for financial arrangements you can be deemed to earn a greater amount of interest than you actually received. Why should housing, both owner-occupied and rental, investment continue to have a tax advantage over productive investments?

Is it any wonder that wealthy New Zealanders continue to put their money in housing, both owner occupied and rental, when other investments encounter such tax disadvantages and complexities?

fungus pudding
19-04-2015, 07:03 AM
Currently the NZ tax system can impute a 5% FDR on overseas FIF investments, even though their actual income may be less than that. If the FIF investment is subject to Forced comparative value assessment than the full unrealised change in value becomes assessable income. It is basically a tax on UNREALISED capital gain.

Also if you are subject to the accrual method of accounting for financial arrangements you can be deemed to earn a greater amount of interest than you actually received. Why should housing, both owner-occupied and rental, investment continue to have a tax advantage over productive investments?

Is it any wonder that wealthy New Zealanders continue to put their money in housing, both owner occupied and rental, when other investments encounter such tax disadvantages and complexities?

The tax treatment of real estate is no different from tax treatment of any other NZ investments. Owner occupied housing is not generally considered an investment. Some wealthy NZers no doubt dabble in residential housing, but I suspect (after an initial dabble)) most would run a mile. It's more suited to a DIY type who can work all night cleaning up, repairing and and patching up after tenants, leaving his/her daylight hours free to deal with debt collectors, private detectives, police and drug squad, attend tenancy tribunals and the like.

Bjauck
19-04-2015, 08:12 AM
The tax treatment of real estate is no different from tax treatment of any other NZ investments. Owner occupied housing is not generally considered an investment. Some wealthy NZers no doubt dabble in residential housing, but I suspect (after an initial dabble)) most would run a mile. It's more suited to a DIY type who can work all night cleaning up, repairing and and patching up after tenants, leaving his/her daylight hours free to deal with debt collectors, private detectives, police and drug squad, attend tenancy tribunals and the like.
If you invest in NZ financial arrangements you are taxed on both capital profits and interest...any gain in value. If your arrangement is over a certain value, in any one year, you can be taxed on income and unrealised capital appreciation accrual even if no income is actually received by you. Just imagine if that applied to investment properties! Overseas investments, NZ bonds and other financial arrangements (NZ and overseas) all have capital gains taxation in some form.

In addition to owning a home, owner occupied housing is treated as an investment by many Kiwis. Many Kiwis have treated their homes as rungs on a ladder, using mortgages to leverage up their equity, with the capital gains remaining untaxed and the accommodation benefit from their equity untaxed of course. It has been a de facto retirement scheme by many especially in the absence of an offical financial retirement plan until Kiwisaver belatedly came along.

fungus pudding
19-04-2015, 08:13 AM
If you invest in NZ financial arrangements you are taxed on both capital profits and interest...any gain in value. If your arrangement is over a certain value, in any one year, you can be taxed on income and unrealised capital appreciation accrual even if no income is actually received by you. Just imagine if that applied to investment properties! Overseas investments, NZ bonds and other financial arrangements (NZ and overseas) all have capital gains taxation in some form.

Owner occupied housing is treated as an investment by many Kiwis. Many Kiwis have treated their homes as rungs on a ladder, using mortgages to leverage up their equity, with the capital gains remaining untaxed and the accommodation benefit from their equity untaxed of course. It has been a de facto retirement scheme by many especially in the absence of an offical financial retirement plan until Kiwisaver belatedly came along.
'
You will be not taxed if you invest in 'NZ financial arrangements' that are not traders, you will be taxed only on income. Be selective.

Bjauck
19-04-2015, 12:21 PM
'
You will be not taxed if you invest in 'NZ financial arrangements' that are not traders, you will be taxed only on income. Be selective.

Are you an accountant? If Roger is reading this maybe he can add to the discussion?

I am not being selective. I am sure any financial arrangement, local or overseas is covered by the financial arrangement rules - you do not need to be a trader. You will be under the taxation of financial arrangement rules even if you have just one financial arrangement, which you hold for many years.

It is incorrect to say there is no tax on capital gains in this country on individuals who hold assets long term and who are not "traders". Capital gains on many financial investments, including fixed interest and overseas equities (FIF rules are complex and have some Australian exemptions) are taxed at the owner's marginal income tax rate. There is therefore a tax-bias in favour of those investments, including real estate, that do not currently have a tax on their capital profits.

DYOR

This link is informative. http://www.interest.co.nz/opinion/72887/terry-baucher-says-financial-arrangements-regime-means-falling-dollar-might-mean-risin

Valuegrowth
19-04-2015, 04:01 PM
mmmm...I listened to Mr Gaynor talking at a recent meeting of folk....If Im correct he indicated that Auckland "house prices" are fairly in line with overseas seas cities performances....perhaps even Auckland has been less spectacular ..than some....Yes I and most posters would agree this is nuts....BUT would anyone stand in front of a moving train...that hasn't stopped for at least a hundred years (in NZ anyways).

Roger vorno Entrep ..all good stuff.

Dear MW...do you own property...how long for...I have for decades...I could go on here...but I wont.Cheers anyway.

PS....remember the old saying "they aint making anymore of the stuff (land) except of course in Holland.

Dear Troyvdh...Yes I own a property. I think I bought it too late. I believe in asset cycles.

GTM 3442
19-04-2015, 04:28 PM
Ever since the great influx of American silver to Europe in the 16th century, it's been generally understood that increasing the amount of money in circulation leads to a rise in prices.

The corollary is that decreasing the supply of something, while demand stays static or rises leads to a rise in prices.

The price of housing in Auckland is rising. So is it more money chasing the same number of houses, or is it not enough houses to cater for the demand?

If the first, then the Reserve Bank and the Treasury are stuffed to the gills with bright, well-paid economists who I am sure will have no trouble in sorting things out.

If the second, then increasing the number of houses seems a logical step.

But as for the "Auckland Housing Market", surely there's more than one "Auckland Housing Market"?

I should imagine that there :
People who want to buy a house to live in. (kiwisavers?)

And that there are people who want to buy a cheap house which they can do up and then sell (capital gain).

And that there are people who want to buy a house to rent out for the income stream (dividends).

And that there are people who want to buy a house to store value (gold).

So which part (or parts) of the "Auckland Housing Market" is/are actually "broken"?

Bjauck
20-04-2015, 07:00 AM
I should imagine that there :
People who want to buy a house to live in. (kiwisavers?)

And that there are people who want to buy a cheap house which they can do up and then sell (capital gain).

And that there are people who want to buy a house to rent out for the income stream (dividends).

And that there are people who want to buy a house to store value (gold).

So which part (or parts) of the "Auckland Housing Market" is/are actually "broken"?

I don't think "the market" is broken. I do think that the Auckland market is affected by "broken" parts of the NZ financial system and circumstances which put increasing buyer demand on the market.

1. As per the previous discussion. There needs to be an overhaul of taxation on capital gains. We have a piecemeal approach at the moment with non-traders incurring taxation on the capital profits on some investments but not others. This then creates a tax bias in favour of other investments, including housing, that are free of any tax on capital gains. Also, maybe the law surrounding the taxation of capital profits on any asset bought with the intent of capital gain needs to be tightened.

2. Rental housing has been been the investment of choice by many because (a) after the 1987 crash in NZ, the stock market was seen as unregulated and too risky (b) in addition leverage by borrowing is readily available and (c) the memory of the Finance Companies collapse scared many away from fixed interest investments.

3. Housing, both rental and owner-occupied, has been used to store value because (a) There was no pension scheme with tax concessions or credits until Kiwisaver came along. With its advantages, real estate investment filled the void and became the default pension scheme for so many (b) In recessions, housing has been less volatile than shares and finance companies.

In addition, Auckland is the preferred destination for newcomers and there is unregulated overseas-based access to NZ residential housing.

winner69
20-04-2015, 07:38 AM
Bring in a CGT as soon as possible. When property prices collapse plenty of tax deductions to soften the blow

Bjauck
22-04-2015, 04:57 PM
This advert in Singapore recognises a good investment with little tax burden for an overseas investor, when it sees it! What's more...you get get Kiwis, desperate for a roof over their heads (and outpriced in their own home market), who will pay you half their income.

"The advert, aired amid '60s classic hits on Singaporean radio station 90.5 Gold, sells Auckland as "an investors' dream" with no land tax, stamp duty or capital gains tax."
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11436779

John Key seems to like to play with a pony but won't address the elephant in the room!

skid
24-04-2015, 08:57 AM
If you buy a house to do up and rent for a year (or three or five) you are considered an investor (trader) and you are taxed on the gains because the taxman considers that speculating--just like holding shares short term (trading)--If you bought and held you Apple shares for long term and sell for a substantial profit ,you are not taxed on the capital gain as far as i know--short term -yes(just like housing)
I believe they should legislate to stop (or make it very expensive)to buy for foreigners who are not residents,but the normal Kiwi family home is going to be a stretch.
In terms of investment properties--i believe those who have not done it, maybe dont realize what is involved--alot have tried it and given up.
You dont just get on your computer and check to see how much your investment has gone up (or down)-like shares.
Maintenance costs can be a killer-finding and keeping tenants can be hard--actually anything involving people (tenants) well..dont even get me started.
The tenancy laws are heavily weighted in favor of the tenant--those with the wrong intentions can easily do you out of a substantial amount of dosh.
Its a relatively illiquid asset that has the potential to lose alot of value(It happened in the States and it can happen here)
Im not complaining but on the other hand its not all easy sailing.
You have some points,but are also missing some

Bjauck
24-04-2015, 09:46 AM
If you buy a house to do up and rent for a year (or three or five) you are considered an investor (trader) and you are taxed on the gains because the taxman considers that speculating--just like holding shares short term (trading)--If you bought and held you Apple shares for long term and sell for a substantial profit ,you are not taxed on the capital gain as far as i know--short term -yes(just like housing)
I believe they should legislate to stop (or make it very expensive)to buy for foreigners who are not residents,but the normal Kiwi family home is going to be a stretch.
In terms of investment properties--i believe those who have not done it, maybe dont realize what is involved--alot have tried it and given up.
You dont just get on your computer and check to see how much your investment has gone up (or down)-like shares.
Maintenance costs can be a killer-finding and keeping tenants can be hard--actually anything involving people (tenants) well..dont even get me started.
The tenancy laws are heavily weighted in favor of the tenant--those with the wrong intentions can easily do you out of a substantial amount of dosh.
Its a relatively illiquid asset that has the potential to lose alot of value(It happened in the States and it can happen here)
Im not complaining but on the other hand its not all easy sailing.
You have some points,but are also missing some
Apple Shares - If you are a long term investor - not a trader _and your total foreign FIF investments are over $50,000 and your shares go up by at least 5% in a year, then you are deemed to earn 5% as taxable income even if the actual dividend is 1%. So you may be liable to pay tax on an unrealised capital gain. DYOR.

On average, share prices can fluctuate more wildly than real estate. In NZ the 2008 credit crunch saw a much greater drop in share prices than residential homes. Savings were wiped out in the finance companies collapses. It is not as cheap or easy to use borrowings to leverage up your equity in shares as it is with bricks and mortar housing. For a fee, you can get an agency who will look after the maintenance and letting of your rental property. Just as, for a fee, you can get your share portfolio managed. Tenancy protection laws are more rigorous in many other developed countries. Each investment class has its pros and cons.

baller18
24-04-2015, 10:18 AM
regardless with all the CGT and blah blah blah.
House prices of NZ has been long in an uptrend ever since yonky years.....

skid
24-04-2015, 10:21 AM
Dont get me started on Property Managers --but your right there are pros and cons

In terms of Apple --not talking about taxable income--Im referring to Capital gain if you sell--Landlords pay tax on rent received in terms of income (dividends)

If captial gains are introduced, then there of course is some other cans of worms--The most level headed approach seems to me to be to value the home at the time the law comes into affect and go from there(and then if the value of your home goes down and you sell,can it be deducted from your normal income ?

skid
24-04-2015, 10:23 AM
regardless with all the CGT and blah blah blah.
House prices of NZ has been long in an uptrend ever since yonky years.....

And research has shown that a CGT does nothing to stop that

artemis
24-04-2015, 10:30 AM
If you buy a house to do up and rent for a year (or three or five) you are considered an investor (trader) and you are taxed on the gains because the taxman considers that speculating--just like holding shares short term (trading)--.....

Not necessarily. The tests are intention at time of purchase and any pattern which indicates trading. Same as shares. I record my intention at the time of purchase. With property an email to the lawyer at the time setting out the intention including expected timeframe to become profitable. With shares I email myself the contract note with a description of intention, which includes my views on income from dividends current or future.

Have never been audited so can't tell how IRD will interpret intention. But what I do is at least something.

artemis
24-04-2015, 10:33 AM
.... If captial gains are introduced, then there of course is some other cans of worms--The most level headed approach seems to me to be to value the home at the time the law comes into affect and go from there(and then if the value of your home goes down and you sell,can it be deducted from your normal income ?

The Labour CGT once-was-policy did not allow a loss to be treated as an expense, but required any loss to be carried forward against the property 'account' to be offset against future gains. I think that would have required a separate IRD record for each property. Nightmare?

Bjauck
24-04-2015, 09:19 PM
...
In terms of Apple --not talking about taxable income--Im referring to Capital gain if you sell--Landlords pay tax on rent received in terms of income (dividends)

If capital gains are introduced, then there of course is some other cans of worms--The most level headed approach seems to me to be to value the home at the time the law comes into affect and go from there(and then if the value of your home goes down and you sell,can it be deducted from your normal income ?

In relation to Apple (and other FIF shares)...you are right that non-traders don't pay a capital gains tax when they sell. But that would be double taxation since under FIF FDR rules they would probably have been paying income tax on some of the unrealised capital gains in previous years. Foreign Income tax rules incorporate a capital gains element already.

Valuing homes/rental properties for any capital gains tax would be contentious. I could foresee that there would be many disputes.

winner69
30-04-2015, 03:02 PM
Wheeler and his little talk this morning will keep the housing market bubbling along

But watch out for inflation >3% next year and a series of rate hikes. Heck that'll slow things do a bit I reckon

winner69
30-04-2015, 07:04 PM
what is going to drive inflation next year winner

Many of the things that drove the CPI down have turned up. RBNZ are forecasting CPI heading back close to 2% in 2016

Reading their stuff I feel they have not fully allowed for labour cost increases that invariably occur when economic growth is pretty strong (3.5% odd) and unemployment falls. The impact of higher than forecasted labour costs could easily send CPI over 3%

Maybe CPI >3% early 2017 and not 2016 but the signs will be evident in 2016

That's my story and I sticking to it until something happens for me to change it. These things play out slowly it seems

Bjauck
01-05-2015, 08:18 AM
Interesting item about NZ being the fifth most popular country for property searches on a Chinese website http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11440480

With the exception of Singapore (10th most popular), the other countries in the list have a significantly larger population and housing stock than NZ. It is interesting to note that Singapore has increased a foreign purchaser's stamp duty from 10 to 15%. Sensible move!

Will Emperor Key continue to fiddle whilst the hopes of average Aucklanders, of owning their own homes in their own city, are burned*?

* "Investors were still active in the market, capitalising on low interest rates, high equity across their portfolios and rapidly rising prices"
Average Auckland home now over $800,000
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11441676

winner69
08-05-2015, 07:57 AM
No bubble in Auckland propert according to BNZ chief

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11445042

Jay
08-05-2015, 09:24 AM
I'll say it again, demand & supply is the main problem, try to fix one or both, council partly(mainly??) to blame IMHO, cost for compliance and slowness for approvals.
Can't they see that more houses = more rates collected on an on going basis.

It is not a bubble (until it bursts) If immigration continues, supply is limited then prices will keep rising unless we get another GFC type scenario

vorno
08-05-2015, 10:57 AM
...It is not a bubble (until it bursts) If immigration continues, supply is limited then prices will keep rising unless we get another GFC type scenario

There are many indicators present for the next impending doom! However, the signs of buckling will be hard to see and will come suddenly, when it eventually does.

Beagle
08-05-2015, 01:15 PM
Well that lying len brown has well and truly shafted Aucklanders with his election promise of rates being kept to a rise of no more than 2.5% per annum. What a ****ing weasel...dressing up a massive rates rise as a transport levy is not keeping your promise your arrogant little man . What did we expect from this low life that can't even keep his marriage vows. This weasel is a true rodent.

vorno
08-05-2015, 01:23 PM
Well that lying len brown has well and truly shafted Aucklanders with his election promise of rates being kept to a rise of no more than 2.5% per annum....

How else do you tow the voters in - make false promises.
No one will vote for him again, so remember to read the next lot of candidates carefully.

skid
08-05-2015, 04:01 PM
Ouch! those rates are going to hurt!

As far as Len goes,I guess we should have suspected it--He has already shown he is pretty lacking in the moral fiber dept.

I think what gets up every ones nose is he tries to come off as the upright caring sort (has a good cry once in a while to show hes human)

A good campaign for his relection would be a Tui billboard

Bjauck
09-05-2015, 11:17 AM
A weasel is an honourable carnivore compared to the dirty rat that Auckland has.
Were Aucklanders given a referendum on whether the Super Spending City should come into existence? No.
Opinion canvassing, on how to fund transport projects, showed most wanted motorway tolls and/or congestion charging. Once again Central Government gave Aucklanders the two-fingered salute. So now we have a rates hike. No surprise and it puts paid to the myth that a Super City was going to save us money!

Valuegrowth
09-05-2015, 03:19 PM
There are many indicators present for the next impending doom! However, the signs of buckling will be hard to see and will come suddenly, when it eventually does.

Prices aren't determined by supply and demand alone.There is too much speculation on housing market in Auckland.

winner69
10-05-2015, 03:09 PM
See, Real Estate Agents are really good caring guys (esp in Auckland) after all, whoever doubted it

http://www.stuff.co.nz/life-style/home-property/68324088/good-samaritan-investor-takes-pity-on-young-auckland-buyers

Valuegrowth
10-05-2015, 03:29 PM
I feel very sad about first time home buyers in some of the cities in the world such as London, Sydney and Auckland etc. Inexperienced first time home buyers have to depend on others to buy their houses. Those who had experienced in the real estate sector know risk and return, bubble and burst etc. I think this time also some of the first time home buyers will have to pay the price when housing market start to fall.

It looks like that some are thinking this time is different. No It is not different. Next crisis can come at any time.

troyvdh
10-05-2015, 09:14 PM
beginning of the end...did anyone see tv1 news...about this bloke taking punters around in designer signed vans...each supposedly buying and doing blah blah...as a job...like a game...much like monopoly...

Its all over folks.

Joshuatree
10-05-2015, 09:54 PM
Investors riding wave of capital gain in Auckland (http://tvnz.co.nz/business-news/investors-riding-wave-capital-gain-in-auckland-6310697) cheers troy

Int watching the pause when Key and English are asked if there is a bubble.

Markymarknz
11-05-2015, 07:43 AM
Relevant article: "Shades of 87"
http://www.stuff.co.nz/business/68378529/The-Auckland-housing-bubble-and-shades-of-1987
Also saw the property spruiker on TV1 last night. Such a bogan with his big V8 Holden!
He didn't look that intelligent (extremely judgemental I know) and that seems to be the story with Auckland, anyone can make hundreds of thousands without being smart, in fact without having to do anything....surely it can't go on.

Jay
11-05-2015, 09:36 AM
Sean Wood, has been doing the same thing for years, and "training/helping" people buy for around 10 years that I know of.
Some people I know went to a few of their seminars and remember seeing the averts for them.
Think he was doing the same thing when the last "Bubble" was being talked about.

From memory he buys the houses "cheap" - looking for people close to Mortgagee sales, matrimonial sales etc, then on sells them to his "clients" (he calls it wholesale price??)then giving advice on what to do re renovations etc, alternatively he finds the houses for you and/or negotiates for you and you pay him a fee, the latter is what I understood from the piece about it on TV.

Only thing that is new is that it has got media coverage

artemis
12-05-2015, 08:32 AM
Are units in retirement villages counted in the new housing numbers - built, under construction or consented? There's a lot of build activity in that market and most purchasers of licences to occupy will have sold the family home.

Bjauck
12-05-2015, 12:02 PM
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11447214
Not before time. Those who are buying a residential property to actually reside in should be given preferential treatment.

Crystal Ball
12-05-2015, 02:05 PM
Well that lying len brown has well and truly shafted Aucklanders with his election promise of rates being kept to a rise of no more than 2.5% per annum. What a ****ing weasel...dressing up a massive rates rise as a transport levy is not keeping your promise your arrogant little man . What did we expect from this low life that can't even keep his marriage vows. This weasel is a true rodent.
Don t hold back Roger..... But have to say I totally agree with every word !

baller18
16-05-2015, 03:20 PM
WIll the new rule make any impact on the property market? Will the prices start to decrease when it comes into effect in october? Or even earlier? Or nil?

vorno
16-05-2015, 05:14 PM
WIll the new rule make any impact on the property market? Will the prices start to decrease when it comes into effect in october? Or even earlier? Or nil?

Well, let me put it to you this way... you can side-step a turd but you can't avoid the freeway.
We've had Net ~50,000+ move to NZ in the last year vs less than 10,000 new homes built in AKL. It is fair to assume that at least 50% of those moving to NZ will settle in Auckland.

Therefore, both rent & house prices will increase.

winner69
16-05-2015, 06:32 PM
http://www.stuff.co.nz/life-style/home-property/68598011/auckland-house--derelict-and-dangerous--sells-for-677000

Suppose a decent piece of land in a desirable part of town

Bjauck
17-05-2015, 04:01 PM
http://www.stuff.co.nz/life-style/home-property/68598011/auckland-house--derelict-and-dangerous--sells-for-677000

Suppose a decent piece of land in a desirable part of town
It will be interesting to see if there is a scramble for property before the new rules come into play...

The item mentions the RE agent saying that overseas investors are willing to pay "just about anything " for AKL property. What is still needed...more than the the RB and budget new requirements is a stamp duty on off-shore purchases or a residential requirement...restricted to Auckland if necessary.

winner69
17-05-2015, 07:02 PM
Suppose a decent piece of land in a desirable part of town

Ha Ha as long as the wind is blowing the right way
real estate agents are selling mangere bridge as the new ponsonby,
those of us that live there know its just mangere

but the guy is going to build a huge 8 bedroom (I think) mansion on this desirable site

Valuegrowth
17-05-2015, 08:58 PM
Auckland housing bubble is great threat to the economy and banking system in the country.

baller18
18-05-2015, 02:39 PM
Suppose a decent piece of land in a desirable part of town

Ha Ha as long as the wind is blowing the right way
real estate agents are selling mangere bridge as the new ponsonby,
those of us that live there know its just mangere[/QUOTE]


Lol, don't u forget though, 20 years ago ponsonby was mainly state houses, they were cheap as dirt compared to epsom, mount eden and remuera...
Not saying that mangere will ever reach the level of ponsonby, but the outer skirts are increasing in price by a lot

baller18
18-05-2015, 02:42 PM
Auckland housing bubble is great threat to the economy and banking system in the country.
You keep saying it's a bubble? BUt how? You have not stated any good facts to back it up?
Doing a lot of research on the irish house bubble and comparing it to the akl property market, there are a lot of differences, huge differences...
The number of immigrants is not even on par...
Then there is the supply and demand problem for ourselves not even accounting for the foreigners...
I just don't see a bubble, maybe a correction, but a bubble?

Harvey Specter
18-05-2015, 03:13 PM
but the guy is going to build a huge 8 bedroom (I think) mansion on this desirable siteFact or making it up? He could probably fit on 3 townhouses which makes $600k look cheap for the land. Townhouse on 200sqm are going for $700k at Hobsonville.

Valuegrowth
18-05-2015, 09:36 PM
http://www.scmp.com/comment/insight-opinion/article/1792594/juggling-asset-bubbles-china-and-australia

http://www.stuff.co.nz/business/68378529/the-auckland-housing-bubble-and-shades-of-1987

The Auckland housing bubble and shades of 1987
http://www.nbr.co.nz/article/tax-change-right-pin-pop-auckland%E2%80%99s-housing-bubble-172522

Tax change — but not CGT — the right pin to pop Auckland’s housing bubble

Bjauck
19-05-2015, 07:56 AM
I agree with Gareth Morgan's capital tax without exemptions. However it would be political suicide for whoever brought it in. You would need a cross-party agreement - maybe after a financial crisis...

Bubble territory or not, it is not satisfactory to see first home buyers being out-bid by foreign purchasers, who could then become absentee landlords to those potential first home buyers.

Valuegrowth
23-05-2015, 07:30 PM
We are seeing more and more traders in the Auckland housing market as it has become profitable business for those who have experience in the industry. We had bubble in the past as well. How many finance companies went under water? How about collapse of property market, crisis in banking and finance world in the past globally and in New Zealand? Do they think that this time is different? No it isn't different. Auckland market is one of the housing bubble markets in the world. It is pure speculation. Sooner we have some sort of solution it is better. Why only property business is free from tax? Any crisis in property sector will lead to banking and credit crisis.

It is sad to see first time home owners have to out-bid other speculators in the market. As unaffordable first home buyers have to pay bubble prices for houses, after property crisis there could be debt crisis as well when housing prices begin to fall in the coming years.

fungus pudding
24-05-2015, 07:17 AM
We are seeing more and more traders in the Auckland housing market as it has become profitable business for those who have experience in the industry. We had bubble in the past as well. How many finance companies went under water? How about collapse of property market, crisis in banking and finance world in the past globally and in New Zealand? Do they think that this time is different? No it isn't different. Auckland market is one of the housing bubble markets in the world. It is pure speculation. Sooner we have some sort of solution it is better. Why only property business is free from tax?


It isn't free from tax, and it is treated harsher than many other things for that tax as depreciation is not an accepted expense.

Bjauck
25-05-2015, 07:27 AM
It isn't free from tax, and it is treated harsher than many other things for that tax as depreciation is not an accepted expense.
The justification for many investors paying current Auckland prices is that they are buying in the expectation that the return from their investment will chiefly be from anticipated capital appreciation. Consequently they are prepared for their net taxable rent income (net of expenses and interest) to be minimal, non-existent or even negative.

Per $1000 investment in housing Landlords would end paying much less in tax than $1000 in shares or $1000 in bonds or fixed interest. So, despite the application of the same tax rules (depreciation* and recent budget notwithstanding), in reality, property investment enables the landlord's return to be relatively free of tax, compared with other investment types.

*Most residential buildings appreciate in value...so the depreciation would be recovered on sale anyway.

artemis
25-05-2015, 07:46 AM
... Per $1000 investment in housing Landlords would end paying much less in tax than $1000 in shares ....

Not if it is capital gain.

iceman
25-05-2015, 08:13 AM
Not if it is capital gain.

Exactly. I mainly invest long term in shares and my capital gain is tax free. No different to housing !

Bjauck
25-05-2015, 11:37 AM
Exactly. I mainly invest long term in shares and my capital gain is tax free. No different to housing !
You can always find exceptions. It depends on the individual that's for certain..but I think the average individual investor in the average NZX company with average dividend yield, would have a tax burden far exceeding that of the average individual landlord with an average Auckland rental property.

What's more that investment in rental housing can be leveraged much more readily than the same value investment in shares. So if both real estate and equity markets increase by (say) 10% then with the easier leveraging, the real estate investment will produce greater untaxed capital return. That coupled with zero or negative net rent (by virtue of expenses and interest), will mean there is much less tax produced from the returns of that $1000 investment in rental housing in actuality - much less as a % of the returns.

I am not referring to traders but to long term investors in both rental housing and shares. The tax take from the return from the same value of equity in the average (Auckland) rental housing investment would be less than the tax take from the return an investment of the same value in an average portfolio of shares.

Bjauck
25-05-2015, 04:53 PM
According to Barfoot's, currently the Gross rent yield on the average Auckland property is 3.33%. Expenses are deductible from the gross rent. The dividend return on NZX 50 is about 5% (I am basing that on the NZX 50 Portfolio Fund). So even comparing cash investments in both rental property and shares, there would be more tax to pay on the income from an average investment in shares.

However in reality, rental housing investors are likely to borrow to fund a property purchase. An avenue much less likely for investors in shares. The mortgage interest being deductible from gross rent. With mortgage interest rates at about 5.5%. Even those investors who provide up to perhaps 50% of the purchase price using their own equity, could end up with sufficient mortgage interest (and other expenses) to reduced their net rent return to zero. They will end up with a minimal tax burden. These long term investors will be relying on capital appreciation to provide the return on their investments.

These are for average share investments and average properties. You can obviously find and invest in NZ shares that have no dividends and rental properties that furnish a higher than average rental return.

http://www.barfoot.co.nz/market-reports/2015/april/suburb-report (http://www.barfoot.co.nz/market-reports/2015/april/suburb-report)

Bjauck
27-05-2015, 09:28 AM
The values in the Auckland house market have increased by 14.6% in the past year. That is compared to to an increase of about 7.7% in the NZ50 capital index.

An investor paying cash for the average Auckland home a year ago would have seen an unrealised tax-free capital increase of 14.6%. The taxable Rent yield after expenses would have been under 3%. However many/most investors would purchase the property with a mortgage. With a 50% mortgage, the taxable rent yield has been reduced to about 0% yet the leveraging has given the landlord/ investor an unrealised tax-free return of 29.2% in the past year.

The dividend yield on the NZ50 was about 5%.

The real world lighter actual tax burden on the returns from typical investments in rental housing compared with other investments including overseas investments, fixed interest and shares is not a recent phenomenon. It has contributed to the large percent of NZ household wealth that is in rental housing as opposed to financial investments.

http://www.stuff.co.nz/life-style/home-property/68193977/auckland-average-house-value-cracks-800000-says-qv

Bjauck
09-06-2015, 01:42 PM
Year-on-year price growth is now 16.1%.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11462255&ref=rss

For the Landlord who has a mortgage, this translates into even greater unrealised percentage growth in equity. That is a good investment performance. Bill English has said that a rental housing warrant of fitness would reduce rental housing supply. If the demand for residential housing by investors were reduced and consequently the pressure on prices alleviated, then surely that would be a good thing. It could mean that potential first home buyers would be less likely to be out-bid by investors. Those successful first home buyers would then mean less demand for rental properties.

Whatever, in the absence of meaningful changes in the housing market, Auckland will continue down the path to have housing owned by fewer yet wealthier overseas and domestic investors, whose heirs will inherit and become landlords, with the rest of the population becoming perpetual tenants. A landed aristocracy and a peasant class in the making if you will. Just like how the old country used to be. Unless there is a big correction round the corner...or, unfortunately less likely, housing developments occur at the level needed to match immigration and population growth.

vorno
10-06-2015, 06:45 AM
It's getting at the stage where I think I'll have to move out of Auckland.

artemis
10-06-2015, 07:59 AM
...... If the demand for residential housing by investors were reduced and consequently the pressure on prices alleviated, then surely that would be a good thing. It could mean that potential first home buyers would be less likely to be out-bid by investors. Those successful first home buyers would then mean less demand for rental properties......

Unless migration continues to increase, or even maintain present level.

vorno
10-06-2015, 08:20 AM
Unless migration continues to increase, or even maintain present level.

Lets say migration rates half, that still means a net gain of ~25,000 people (whole of NZ). They can't even build 10,000 homes a year in Auckland - not to mention the existing networks are buckling at the seams.

As strange as it may sound we almost "need" a crash.

JBmurc
10-06-2015, 09:19 AM
Lets say migration rates half, that still means a net gain of ~25,000 people (whole of NZ). They can't even build 10,000 homes a year in Auckland - not to mention the existing networks are buckling at the seams.

As strange as it may sound we almost "need" a crash.

Not till we sell our house ...then happy to see another crash

Bjauck
11-06-2015, 10:19 AM
I would not like to be a potential first home buyer -period - but especially for the next few months. With lower interest rates, will there be even more of a scramble for property by investors before the (albeit token) announced investor requirements come into force? Will the annual price rise kick up a further notch?

vorno
11-06-2015, 12:06 PM
I really do not understand the reasoning behind the interest rate dropping yet again. If anything, it should have gone up by 0.25-0.50% - in my humble opinion at least.

*All I want for Christmas is my "2 squared feet".

Bjauck
11-06-2015, 05:07 PM
2 sq ft maybe all we can afford come Xmas....I think I can understand the reasons behind an int. rate rise for the terms of trade and currency. IMO however, the RB interest rate announcement takes the feeble "cooling" plans for the Auckland residential property market and hits them out of the ball park. The Govt need to step up a notch and introduce some reforms (just for Auckland perhaps) with more teeth than hitherto announced.

Valuegrowth
13-06-2015, 06:05 PM
One way to make cool Auckland bubble housing market is to introduce 30% capital gain. Those who buy houses to live should exempt from capital gain and there should be capital gain for other traders in the housing market. However there are cycles for every asset. Auckland housing market is above the cycle as well. Just like oil, gold and kiwi dollar, Auckland should start its bear journey from the second half of this year. The hot money also drives the housing market in Auckland. On the other hand, house prices have stagnated in the Wellington areas and it take longer period to sell houses. It is completely different scenario in Auckland.

Fed will increase interest rates by the end of this year or in 2016. Interest rates easing will continue in Asian Pacific region. In addition to New Zealand, the Bank of Korea lowered its key interest rate to an unprecedented low. Overvalued Auckland property market should drop at least by 25% to 40% by 2016. Sooner Auckland housing market has correction it is better. Otherwise there could be Auckland housing market crash and banking crisis in New Zealand.

My ideas are not a recommendation to either buy or sell any property, security, commodity, or currency. Please do your own research prior to making any investment decisions

Aaron
17-06-2015, 08:08 AM
I read a heart warming story in the herald this morning. There is a group of (mostly) NZers whose pay rises are keeping pace with the rise in Auckland property prices. It appears that the CEOs of large companies pay has been increasing at roughly 20% a year. So there you go it is not all doom and gloom. All those moaning layabouts without houses need to do is become the CEO of a large company and their financial and housing problems are history.

winner69
17-06-2015, 08:15 AM
I read a heart warming story in the herald this morning. There is a group of (mostly) NZers whose pay rises are keeping pace with the rise in Auckland property prices. It appears that the CEOs of large companies pay has been increasing at roughly 20% a year. So there you go it is not all doom and gloom. All those moaning layabouts without houses need to do is become the CEO of a large company and their financial and housing problems are history.

Like the good advice of that great Australian politician Joe Hockey (and Treasurer) when talking about home affordability - if you want a house get a better job

Sage advice

Aaron
17-06-2015, 09:06 AM
Like the good advice of that great Australian politician Joe Hockey (and Treasurer) when talking about home affordability - if you want a house get a better job

Sage advice
Life is so easy once you start listening to the likes of Joe Hockey and Gina Rinehart. I wonder if they are friends.

cammo
18-06-2015, 05:41 PM
The Auckland housing market ( and rest of nz will follow ) is primarily due to New Zealand being viewed by foreign immigrants as safe, safe for kids , reasonably affordable housing relative to the world and your commuting distance. Nz is the Queenstown of the world , where people can gain entry with a reasonable wad of cash and a few qualifications and come somewhere where they don't get shot, car jacked, turn their houses into prisons, free schools, free healthcare, clean air etc etc etc. It is not going to change I don't think as the world globalises further. UK, s.Africans etc aren't going to stop coming here anytime soon. Add some Asian investors who can get cheap education for their kids in an English speaking country by owning some dirt here .....prices are now representative of global value- not our old wee red neck banana republic think me first world leader country. Unfortunately you can't have seagull prices when you are attracting eagles looking for somewhere safe to fledge their brood....they don't care about huge wages because the lifestyle wins out. Just ask a saffa what they think about being able to go to the supermarket after dark.

Bjauck
19-06-2015, 12:01 PM
The Auckland housing market ( and rest of nz will follow ) is primarily due to New Zealand being viewed by foreign immigrants as safe, safe for kids , reasonably affordable housing relative to the world and your commuting distance. ... True, NZ is good for wealthy immigrants who already have a good wad of cash to buy a house and manage to outbid locals relying on local income levels.

Immigrants also get an tax exemption not available to locals. Income from overseas investments or pensions can be exempt from New Zealand tax for their first four years of living here. Locals with foreign income have to pay local tax on their foreign income. Is that fair? Perhaps immigrants with overseas income should not be allowed to buy local houses during that four year transitional period unless they elect to pay NZ tax on their foreign income. Maybe during that four year period, if they want to buy housing, immigrants should only be allowed to build or buy new houses?

As for NZ being safe...true in some respects (accident rate on NZ roads notwithstanding) but manual workers in NZ work places (for example just look at standards at forestry, mines and quarries) have a greater chance of meeting an accident than in other "Developed" countries included Australia, UK and EU. However there again, many of the wealthy immigrants, who can out-bid existing locals to buy housing, would probably not be affected by such workplaces.

cammo
19-06-2015, 03:33 PM
It's interesting you align safety with workplaces. Life safety is what I'm talking about. Those immigrants are likely to be white collar not blue. They appreciate the general safety and freedom available here. About 1 murder a week here, 50 per day in sth Africa for example. For a lot of them , social factors like Crime are their most important motivator for leaving.

Bjauck
19-06-2015, 04:54 PM
It's interesting you align safety with workplaces. Life safety is what I'm talking about. Those immigrants are likely to be white collar not blue. They appreciate the general safety and freedom available here. About 1 murder a week here, 50 per day in sth Africa for example. For a lot of them , social factors like Crime are their most important motivator for leaving.

Workplace safety is part of life safety surely. No doubt the NZ murder rate is better than in South Africa and probably about the same or worse than in the UK and most countries in Europe.

NZ population 4.5m; ZA 53.0m. As the highest accident and murder rates globally tend to be for young males from disadvantaged backgrounds and ethnicities...bald notional comparisons are of limited usefulness and most ZA migrants to NZ are white or Asian white collar. But I agree, the South Africans I know, say that crime (and the threat of crime) is a motivating factor for them to come to NZ. When in NZ they also tend to live in good areas and work in safe office situations.

Valuegrowth
20-06-2015, 09:25 PM
There was a NZD bubble and it is depreciating rapidly now as it is still overvalued. Similarly we should see housing burst in Auckland after this bubble. Every asset has cycle and property is not immune to external and local shocks. It is time to avoid property in Auckland. Cycle will repeat in a different manner.

My ideas are not a recommendation to either buy or sell any property, security, commodity, or currency. Please do your own research prior to making any investment decisions.

baller18
20-06-2015, 09:45 PM
There was a NZD bubble and it is depreciating rapidly now as it is still overvalued. Similarly we should see housing burst in Auckland after this bubble. Every asset has cycle and property is not immune to external and local shocks. It is time to avoid property in Auckland. Cycle will repeat in a different manner.

My ideas are not a recommendation to either buy or sell any property, security, commodity, or currency. Please do your own research prior to making any investment decisions.

Just because the NZD is depreciating does not correlate with the housing crisis, the NZD is a lot more volatile...
Long term charts, house prices have been in an uptrend ever since... so however, you look at it, fundamentally and technically it is still in an uptrend...

Valuegrowth
21-06-2015, 07:06 AM
Just because the NZD is depreciating does not correlate with the housing crisis, the NZD is a lot more volatile...
Long term charts, house prices have been in an uptrend ever since... so however, you look at it, fundamentally and technically it is still in an uptrend...

Yes at the moment there is an uptrend due to speculation and property hype. I believe there will be property crisis in overvalued cities sooner than later. I am one of the big bears for housing markets in Auckland, Sydney and Melbourne etc now. It is time to become fearful not greedy.

My ideas are not a recommendation to either buy or sell any property, security, commodity, or currency. Please do your own research prior to making any investment decisions.