The Aussies are concerned yet they already have some restrictions on what residential property foreign investors can buy. NZ is asleep at the wheel.
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OCR down and banks follow with mortgage rates ...and no doubt start fighting for every loan
That'll keep things bubbling along for even longer
The amount of rubbish that a property would produce depends on how many people live at the address, the amount of recycing they do etc. So a one-bedroom place occupied by a greenie would not produce much trash. I agree rubbish collection should be on a user pays basis.
Charging rates evenly across all residential properties - if I understand you correctly that would mean charging a one-bedroom apartment or house the same as a multi-bedroom Remuera mansion? I am not sure that would be fair or user-pays. It would end up being a regressive tax with poor pensioners subsidising wealthy large families!
Auckland owner-occupied housing have provided their owners handsome tax-free capital returns over the years, with the benefit of ownership, namely accommodation, not having any imputed income tax levied. Why shouldn't those of us who have more valuable properties in highly sought after areas which have seen greater capital appreciation pay more in the way of rates. There is always HER. Renters have to find their rent out of tax-paid income. Rates are a small price to pay and already have uniform charge components regardless of the value of the property.
Some alternatives for local government funding:
1. A local sales tax - would hit the poor as they do not have much discretionary spending / cannot save.
2. Wealth tax (on each resident's wealth, both financial and real estate). those who complain about high rates, would be unlikely to like this option!
3. Poll tax - a uniform tax on each resident (either over the age of 5 or 18). Would hit the poor. Anyone remember the riots in Britain when they tried to introduce this type of tax?
4. A local income tax. The income-poor pensioner in an expensive house would like this one. However just imagine the objections to another income tax from high income earners. There would be another argument over whether it should be flat or progressive.
Finance Minister Bill English this morning raised the spectre of Auckland house prices possibly dropping.
Surely some mistake! lol
Fell by $20,000 in July
https://www.reinz.co.nz/shadomx/apps...siteName=reinz
Well,its looking like NZ property is now going to cost the Chinese more(since devaluation)--the knock on affect could effect house prices in other ways.(China housing bubble)
Rental prices are down in Auckland(I have found)---Im seeing the property market looking a bit vulnerable atm--If China has a crash in property-and Oz--you can bet you will see one here as well(housing shortage or not)--at best Im picking the market taking a breather(and Im a property owner)
I cant really think of an ideal place to park money atm
Skid,
I don't mean to alarm
But unfortunately the property market has crashed in China (earlier this year).
This happened about the time the construction industry in China ran out of new high rises to build (hence the massive slump in iron ore price that has hit AUS so hard)
At the time the Chinese government told investors to start investing in the stock market. Which has since crashed (mid July and has wiped out half the wealth of most Chinese millionares).
Tho some companies listed on the Chinese stock exchange were close to 400 times their worth and had not turned a profit in years.. it was pretty obvious a crash was going to happen..perhaps obvious to everyone but the Chinese
Now China is trying to kick start their exports again (which dropped 8% in the last year) by dropping the value of their currency. This took everyone by surprise... basically china has said it was moving away from exports to a domestic driven economy (This may mean a number of Chinese start selling foreign properties to pay back debt or for the return)
On top of all this..Now oil, gold, and milk prices are all crashing globally ..So yeah the world is in real bad shape.. all the traditional methods of wealth generation are failing and Europe is still panicking about the possibility of the Euro zone breaking up..
I think New Zealand will be ok tho. We are geared for exports and with the falling NZ dollar our economy will keep ticking over at about 3% growth so a property crash is unlikely.. but a cooling definitely if driven by foreign demand
(Young Aucklander desperate to get his first home)
I think Chinese prices have fallen but not crashed. For one thing you need to have a 30% deposit to buy a property in China. Maybe we should have that here too - or higher - for investors. Interesting article from the FT "What next? A China housing crash?" http://www.ft.com/intl/cms/s/0/8d3c2...#axzz3iYIQDN00
I think there will be continued demand for NZ property by Chinese investors. Chinese capital controls are loosening, so any cooling in their economy and reduced purchasing power of their currency may be off-set by that. NZ also has a weak currency at the moment because of commodity price uncertainty. Plus, NZ will still be regarded as a safe haven for Chinese investors. I think NZ should still introduce Australian-style measures restricting foreign buyers to new properties.
30% deposit is only ever going to cut out more first time buyers.. good luck saving $135,000 for a modest $450,000 property (Average price in Auckland is 550,000 btw)
Plus your only targeting 1/3 of the market by doing this. Remember property investors can use capitol from their portfolio as security and foreigners will have access to cheaper credit
(I've given up on Auckland.. Making plans to move to Wellington early next year)
I'm calling it. I think Auckland house prices have ht their peak and we will not see these prices for at least another 5 years. I think the Dec 15 average price will be less that today's.
Reasons:
-Foreign investors needing IRD numbers
-LVR rules
-Change of sentiment. Even my most bullish banking friend reckons house prices will just level out now
I may not have made it clear, I wondered whether NZ should apply a 30% deposit rule for investors.
Basically, I think if you want to buy a holiday home or a property as an investment to rent out, you should have to provide a bigger deposit than someone buying their primary or only residence. In addition, I think there should be comprehensive restrictions on non-residents buying residential property.
We should see next stage of property cycle in the property market especially in overvalued Auckland housing market.
A massive delay in increasing the housing supply is now leading to higher prices in the Auckland apartment space. - (Remember It took 15 months after the announcement to build a single house in the Auckland special housing areas )
Hence first home buyers are now fighting each other over anything in the 250K - 400K
With the OCR drop this situation is only going to get worse
My prediction for the next year is that we will see a massive jump in the average house price in Auckland due to the following
1. Home owners will continue to purchase more houses for their retirements plans (Cheaper loans leads to refinancing and more funds issued by banks for purchasing additional property)
2. First Home Buyers will see they can now get bigger loans for their low deposits which in turn leads to bidding wars that push the price higher.
3. More delays in Special housing areas as building companies start going under and the prices increase above and beyond affordable ( Building companies are struggling to keep the prices down and debt levels of these companies is becoming a concern )
4. Delays in building in and out of the special housing areas will make it more profitable for building companies (Slowing down production leads to bigger profits.. Do you honestly think they care about the shortage? If you do then you must also think National are trying everything they can to fix this issue )
You could be right actually
This was posted on the National Business review today
http://www.nbr.co.nz/article/propert...rket-nr-180007
So If this whole situation is being caused by an influx of money from China then it will be pretty obviously in a few months
Interestingly I went to a few Auctions this week... there was a lot of desperate people if body language is anything to go by.
We watched in disappointment at one house listed in the 400 K search range that had a reserve of 600 K... unsurprisingly no bids!
To make matters worse when the place didn't sell and the Auctioneer was pretty condescending about it... I feel sorry for those who's dreams had been crushed
Looks like this starting to become an issue across other Auctions too
http://www.nzherald.co.nz/property/n...ectid=11528636
Some years ago I missed out on a property despite placing the highest bid in a range that the real estate agent had assured me would be acceptable to the vendor and which was about 15% above the professional market valuation I had been naive to get prior to the auction. That house was sold over a year later so the vendors had basically been just "testing the water". One of the reasons why Auctions can be bad for both vendor and prospective purchaser. It is unethical for an agent, who should have an idea as to what price range the vendor wants for a property, to market the property in a price range that is too low for the vendors. It is a waste of time for prospective serious bidders who will need to undertake due diligence prior to bidding. Auctions should be reserved for the unusual or very expensive properties imo.
An Australian development that may have relevance for NZ.
http://www.theage.com.au/business/in...14-gk8n3d.html