I don't understand your question.
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Yes never the best at me english ....have got better over the years ..just never applied myself at school ...think I only got school cert in metal tech ....started work after 6 form ....
.... still haven't done too bad for unqualified investor ...been busy interior painting our debt free central otago lakeside property .... paid for by investment returns
How do young new zealanders get into this market. I have a daughter who rents in mount eden but as you could imagine cannot afford to buy anything there. 2 bedroom units around $700000. So the strategy is to buy something for up to 500000, rent it, pay it off and then use this as a deposit to gain access to a property where she wants to live. So, looking for something that is hands off, as a vehicle that will keep up with capital gain in Auckland. Units in better areas is this where the focus should be?
thanks winner69, hope not to go that way, would a unit always be better than an apartment to start with. I feel a unit you have more control over, no body corp etc but lower yield
I agree with you.
yes there is demand. Demand from migration, and demand from low interest rates and easy credit. But 1 in 3 houses is going for 1mil - That's $50k per annum interest, and if they go up 10%, next year its $55k per annum interest and $60k the year after. That is what, 1.5x the average after tax take home pay?
You can only play pass the parcel for so long among investors before it gets out of reach, and all you need is a couple short interest rate rises and its all over - And lets face it, migrants and first home buyers won't save it, because they can't afford to play - This is now into the range of pure speculators
Herald editorial about housing costs in Auckland. Where and when will it all end?
http://www.nzherald.co.nz/business/n...ectid=11627212
Brit settlers used to come here to increase their chances of owning real estate.
I see Graheme Wheeler is pleased with his LVR restrictions
"The existing loan-to-valuation ratio (LVR) restrictions “have substantially reduced the proportion of risky housing loans on bank balance sheets,” the central bank says."
He and his cronies must be sitting back and poping the champagne on what to them seems like a successful stratergy.. But what he has effectively done is make it that much harder for those who depend on the 10% loan deposit to make it into their first home..
Easy if your parents have a bit of cash saved up or locked away in a property... but if you happen to not be so privliaged then the goal is more unobtainable than ever.. with the introduction of the LVRs there was an addition of a hard limit of how many Home loans banks can issued to the public at 10% deposit.. so if your lucky enough to find that property and have the deposit for only 10%... you now have have a bit of a fight on your hands to secure the loan to make that happen... Lets knock out the bottom level of the property market! What a great idea!!!
It is the opinion of this citizen that we need to put a stop to massive investment in housing if your so worried about this sector! Not to allow people to continue to buy more and more investment properties and with less competition now you have effectively elminated first home buyers!
Source : http://www.nbr.co.nz/article/reserve...ased-jr-188812
Isn't it curious that the govt won't take a first step by following Australia in restricting non-resident property investors to new developments? It hasn't been a "silver bullet" for Oz but it should give supply a boost and stop overseas investors from helping to inflate existing house prices. Naturally, real estate agents, mortgage loan brokers, property investors' organisations and property management companies will tell us that it wouldn't work, but the problem needs a multi-faceted approach if first home buyers are to have a chance of ever owning their own homes.
The problem in NZ is the supply of land. Can you imagine the howls of protest if finding somewhere to build became a competition with foreign buyers? Anyone can get a house built, we're not short of materials - but it's where to put it. There's consequences to this sort of policy that the Brits discovered years ago and Australia is about to. That is developments and sub-divisions quickly become undesirable areas without resident owners in the mix. Having whole subdivisions snapped up by foreign investors would lead to tenant dominated areas - not a good thing. I can't think of one good thing restricting foreign buyers to build new would achieve. After all, wouldn't NZ'ers leap into new building if land was available?
Exactly had this be enacted years ago along with a strong Capital Gains tax structure 28% (IMHO even covering the family home if sold within 3yrs etc)... then instead of young and first home buyers being pushed out of the market by speculators ..those funds from esp overseas investors would have flooded into new developments
It is too late - as it is, (relatively) cheap housing in South Auckland is increasingly being bought by investors, increasingly buying houses that would have been starter homes for first home buyers. There are already many areas increasingly dominated by tenanted houses. Unaffordable deposits for a first home in a (comparatively) cheap area are converting the younger residents into long-term tenants. For a start, the purchase of NZ residential land and housing should be restricted to NZ residents.
well yes completely banning non residents from owning residential property ,, would be to the next level ...but I'm thinking there could be issues round the free trade deals etc...
I personally wouldn't have as much an issue if these overseas investors buy off the plan for a new unit / apartment,house available 6months-2yrs into the future(which most the time they will rent out) etc ....(that if sold for a profit would be taxed 28% etc ) I do also agree now on no land banking for overseas investors etc
why... well it's investment in growing our housing stock ....
If both NZ citizens and other citizens were subject to NZ residency requirements would there would be an FTA issue? After all citizens of FTA partner countries and NZ citizens would be subject to the same requirements. Do any of NZ's FTA partner countries have residential requirements on residential property ownership?
Answering my question: The Singapore Residential Property Act contains this restriction: For restricted property such as vacant land, landed properties such as bungalows, semi-detached and terrace houses, prior approval is still needed if foreigners wish to buy. Landed properties is a special class of residential property that Singaporeans aspire to own, and should remain restricted. Foreigners need to apply for approval from Singapore Land Authority before buying. Singapore also has stamp duties, with foreigners paying the highest rate of 15%, followed by those who own multiple properties, with those buying their only property paying no stamp duty.
http://www.singaporeexpats.com/guides-for-expats/procedure-for-purchase.htm
Singapore is one of NZ's closest partners and a Commonwealth country with whom we have an FTA. Like NZ, it has a small population (5.4m) compared with NZ's 4.4m. Like NZ, its people, looking to buy a home, can easily be outbid by foreigners deciding it is a good residential real estate market to invest in. The Singapore Residential Property Act also distinguishes between permanent residents and citizens, with citizens paying lower stamp duty rates than permanent residents who are not citizens. Presumably they wanted to give some small advantage in buying a home to those who are committed to the country as citizens.
Loan to income ratios for bank lending? If getting a big deposit wasn't enough now you have to have a well paid job. I guess in a way you are saving the younger generation from worrying about home ownership (unless their parents can give them a leg up). I guess Australians with an average income 25% higher than NZ can invest in NZ if their own markets get too overheated. Any country with a GDP higher than NZs I suppose. Good one baby boomers and your national party, make NZ a nice place for wealthy foreigners and f**k the next generation of Kiwis unless Mum and Dad are already well off. Mind you it seems NZ is not alone in this hope there will never be another recession ever and inflation will take care of all our problems. All MPs on both sides of the house with their high home ownership rates must be rubbing their hands while the next generation gets screwed over. Mind you maybe it is time for the next generations to wake up and think about their future and make your voice heard at the polling booth at the next election.
Central bank easy money and low interest rates are designed to rob savers through inflation. They have rampant inflation in house prices but can't raise interest rates until the rest of the world does or else run the risk of destroying our export competitiveness. What's the solution... I don't know but trying to save speculators and rob savers with easy money and low interest rates doesn't seem right to me. The fact that negative interest rates are a reality is mind blowing. I guess as long as no one has savings it is a vote winner and I am an idiot for not joining in.
There was an interesting graph in the RBNZ financial stability report the other day showing the debt-to-income ratios (and proportion of interest only loans, which is scary enough on its own) for investors and owner-occupiers. Clearly investors will be harder hit by any new regulation, and if it has a genuine effect on house prices then it'll be fantastic for first home buyers. Investors who still are able to borrow should be somewhat more reluctant to invest once prices stabilize or start to fall. I agree it'd be good to see more regulation of foreign buyers, but I'm hopeful debt-to-income ratios will help.
Attachment 8038
Thanks for that mfd.
Took awhile to work out the other half of the graph but if I read it right just over 50% of borrowers have debt over 5 times their income. The home-owner occupiers on interest only loans are probably mostly bulls**t artists not wanting to pay tax when they sell. But to be fair with tax free capital gains over 10% annually I guess I am just upset I haven't joined in. I wouldn't be so upset if I was mortgaged to the hilt and held real assets rather than sitting in cash hoping the world central banks don't totally wipe me out before they allow some price deflation.
Yep...the rental property investor with negative gearing (with their losses being deducted from their other income) has been effectively subsidised. The government also pays accommodation supplements so that the tenant can afford the rent on investment properties! In addition the geared up property investor has been enjoying non-taxable capital appreciation. In the meantime the fixed interest investor is even taxed on the effect of inflation on their money! The Financial Service Council have interesting research - especially their Taxation and Savings Paper. http://fsc.org.nz/
Some fixed interest investors cannot afford to buy housing so they are denied the opportunity to enjoy the "tax efficiency" of rental property investment.
In addition, owner occupiers are effectively subsidised by renters as rent has to be paid out of taxed income whereas the imputed rental benefit derived from owner occupation is not taxed. As more renters (compared with owner occupiers) tend to be younger and/or poorer, from both an income and wealth point of view, that is another inter-generational and regressive effect of the current tax system. It all adds to real estate being a preferred asset class in NZ.
Tax is always based on cumulative income. Real estate is no different in any way from other businesses or investments. And do not assume it provides automatic gains in value.
This roller coaster graph has been around for a while but it's a good reminder that it's not all beer and skittles.
https://www.youtube.com/watch?v=kUldGc06S3U
Look for the years as you ride.