Auckland housing market

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Originally Posted by SBQ

NZ is worse than most places around the world for tangling rental ownerships with individual non-rental ownership. ....

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I agree. In addition the ability to minimise taxable net rent to maximise untaxed capital gains has helped bring about Mom and Pop investments in a second house becoming their de facto pension schemes too.

It means would be owner occupiers can end up being outpriced and becoming renters, subject to NZ rental laws. So if new land owners want vacant possession or landlord family want to live in the renters' home, the renters are evicted. Codified feudalism?

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Originally Posted by Bjauck

I agree. In addition the ability to minimise taxable net rent to maximise untaxed capital gains has helped bring about Mom and Pop investments in a second house becoming their de facto pension schemes too.

It means would be owner occupiers can end up being outpriced and becoming renters, subject to NZ rental laws. So if new land owners want vacant possession or landlord family want to live in the renters' home, the renters are evicted. Codified feudalism?

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NZ model of land rights management etc. is different than abroad. Very different to where I grew up in Canada. Land section prices should not amount to over half the price of the cost to construct the dwelling. Here in Christchurch every new section has a minimum $30K sub-divisional 'Developmental Contribution Fee". Then due to regulations, you have a whole stack of fees, surveying, drainage, and the battle of all mega's, the NZ Resource Mgt Act. You also have Iwi issues too on crown land that gets released. So it's not only the discriminant taxation issue, but also you have local councils that have no vested interested in making land affordable. Likewise at the national Parliament level - any cut on tax take that the municipal loses, you can be sure Wellington isn't going to transfer credit that loss.

How's the cost of water running in Auckland? A family can easily pay $2,000 - $3,000 in water rates (use and discharge sewer) a year.

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Originally Posted by Bjauck

I agree. In addition the ability to minimise taxable net rent to maximise untaxed capital gains has helped bring about Mom and Pop investments in a second house becoming their de facto pension schemes too.

It means would be owner occupiers can end up being outpriced and becoming renters, subject to NZ rental laws. So if new land owners want vacant possession or landlord family want to live in the renters' home, the renters are evicted. Codified feudalism?

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Yet of the $6billion odd a month residential bank lending 80% is to owner occupiers. Not outpriced then.

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Originally Posted by artemis

Yet of the $6billion odd a month residential bank lending 80% is to owner occupiers. Not outpriced then.

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After years and years of falling home ownership rates, the last couple of years has indeed seen a bit of a change I believe.

Is that a NZ or Auckland statistic? Always some who can afford to buy. What is the average age of first home buyers in Auckland these days? How many first home buyers have to empty out their retirement Kiwisavers to get a deposit? Maybe there are more first home owners in that group of owner occupier purchasers too? Maybe Auckland home ownership rate will stay above 50%.

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Originally Posted by Bjauck

After years and years of falling home ownership rates, the last couple of years has indeed seen a bit of a change I believe.

Is that a NZ or Auckland statistic? Always some who can afford to buy. What is the average age of first home buyers in Auckland these days? How many first home buyers have to empty out their retirement Kiwisavers to get a deposit? Maybe there are more first home owners in that group of owner occupier purchasers too? Maybe Auckland home ownership rate will stay above 50%.

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FHB's are about 20%of the lending dollars, similar to investors. Lending dollars fairly flat for all sectors. This is not the same as home ownership rate, and in fact if dollars remain fairly consistent while prices increase the rate will be falling.

Reserve Bank residential lending dollars is NZ wide.

How many first home buyers have to empty out their retirement Kiwisavers to get a deposit? None, it is not at all compulsory.

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Originally Posted by SBQ

NZ model of land rights management etc. is different than abroad. Very different to where I grew up in Canada. Land section prices should not amount to over half the price of the cost to construct the dwelling. Here in Christchurch every new section has a minimum $30K sub-divisional 'Developmental Contribution Fee". Then due to regulations, you have a whole stack of fees, surveying, drainage, and the battle of all mega's, the NZ Resource Mgt Act. You also have Iwi issues too on crown land that gets released. So it's not only the discriminant taxation issue, but also you have local councils that have no vested interested in making land affordable. Likewise at the national Parliament level - any cut on tax take that the municipal loses, you can be sure Wellington isn't going to transfer credit that loss.

How's the cost of water running in Auckland? A family can easily pay $2,000 - $3,000 in water rates (use and discharge sewer) a year.

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Can't answer the city water rates question! I have tank water and septic tank so maintenance costs tend to be "large and lumpy" every few years.

As you have mentioned previously Canadian houses tend to be of much better quality. About a decade ago, I stayed in a friend's average type house in Ontario both in Summer and Winter and it was cool in Summer and warm and dry in Winter - insulation in ceiling, walls and floor. Every aspect was better quality. It was great that so much value was wrapped up in housing ("improvements") rather than the cost of land.

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Originally Posted by artemis

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How many first home buyers have to empty out their retirement Kiwisavers to get a deposit? None, it is not at all compulsory.

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Of course it is not compulsory. However with NZ's expensive housing, even for a low quartile house, the reality for many is that do need to empty out their Kiwsaver accounts of their contributions to get a deposit.

Also about 70% of Auckland first home buyers get financial help from families to buy a house. So as it is also a popular investment for some, owner-occupied home ownership is becoming more limited to those with access to inherited wealth.

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Originally Posted by Bjauck

Of course it is not compulsory. However with NZ's expensive housing, even for a low quartile house, the reality for many is that do need to empty out their Kiwsaver accounts of their contributions to get a deposit.

Also about 70% of Auckland first home buyers get financial help from families to buy a house. So as it is also a popular investment for some, owner-occupied home ownership is becoming more limited to those with access to inherited wealth.

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Personnaly IMO, the Auckland house is a far better investment than Kiwi Saver from a tax point of view. If a person does not have a roof over their head, by all means, they should buy their 1st home before they consider investing into anything else. I can't stress this enough.

BTW, in Canada rolling in an investment scheme is nothing new. Their RRSP way back in 1990 allowed the individual to move the gains in their RRSP, directly as a deposit on their 1st home. The key difference between NZ Kiwi Saver and Canada RRSP is the RRSP grows 100% tax free compounding, whereas the former, they pay all sorts of tax as a managed fund or FIF.