Originally Posted by
SBQ
@Aaron
I agree the housing affordability is a mess. But let's be mindful NZ is a small nation and it's choices are limited in terms of investments. The article is not biased adjusted in terms of inflation figures. As the principle amount on houses always rise (due to inflation), the % mortgage rates will continue to go down over multi-decade time frames. Can you imagine what 20% mortgage rates would be on a $1.5M house in Auckland? Think about it, 1978 is entirely different to the past 20 years - we have not seen hyperinflation yet.
Mr Church also neglects the fact that 1st time home buyers are unaffected by these changes in LVR. What Mr Church should be arguing about is how the average millionaire in NZ has become so rich solely on investing in residential / real estate properties. A far cry difference compared to the millionaires created in N. American through stock market investments in retirement planning. The NZ Reserve Bank is not to blame but if you ask me to compare. Well the NZRB has made people in NZ rich off buying houses vs in the US, the US Fed has made people rich from rises in the stock market. Talk about wealth inequality!
There's a lot of things wrong in NZ in terms of financial inequity. As in my other posts in other threads, the key problem in NZ lies in un-fair taxation. Those choosing to buy houses and holding for 10 or 30 or 40 years will definitely get the benefit of tax free capital gains. Those that choose to buy Kiwi Saver funds (as much as the FMA promotes how good they are) will only retire an average life - if they can contribute enough. The KS funds even in PIE, after paying annual mgt fees, FIF / FDR, and taxes on dividends RWT, will result in the individual having less at retirement than the leveraged approach to buying a 2nd home.
Labour Party was not serious about widening the investment landscape for NZders. No NZ Political party has (after all FIF was introduced by Bill English). When you look at 20% of expat NZ citizens living abroad - there is good reason why.