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  1. #181
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    Quote Originally Posted by JBmurc View Post
    ultra low interest rates have also of course allow this to ballon... with everyone jumping on board
    Looks like Grant Robertson agrees with you.

    https://www.stuff.co.nz/business/300...g-house-prices

    Obviously can't rely on Adrian Orr to do the right thing and start slowly raising them.
    Last edited by Aaron; 29-04-2021 at 02:39 PM.

  2. #182
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    Obviously can't rely on Adrian Orr to do the right thing and start slowly raising them.
    Now that would give us world-wide exposure! A shame about the effect on exports, though.


  3. #183
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    Quote Originally Posted by JBmurc View Post
    Its not just limited safe investments in NZ ... but costs of Land...high subdivision costs / monopoly of building products .. greedy tradies ...
    If we could build nice new houses for a fair amount Vs average household NZ incomes then we wouldn't have a run away housing market

    average annual NZ household disposable income (after tax and transfer payments) was $81,934...so using fair housing values 5x times = $405k

    ultra low interest rates have also of course allow this to ballon... with everyone jumping on board
    Ultra low interest rates aren't the 'primary' cause. It's like arguing which came first, the egg or the chicken? I prefer to point at the NZ culture and NZ's lack of taxing capital gains on residential houses as the impetus of the housing problem.

    I've lived in NZ for over 25 years and witness many gov'ts that have never been serious about taxing houses. I mean where else in this world where the #1 choice for getting rich, goes untaxed? How can that be? You may say the low interest rates made it worse ; yes I fully agree. But the driving factor will be from a tax perspective and the recent changes by Jacinda (moving Brightline test to 10 years - excluding mortgage interest rate deductions) do NOT address the primary reason why so many buy houses as investments.

    I agree high cost of land development is a problem in NZ (Developmental Contribution Fees, cost of Notified Resource Consents, RMA) all add to the price tag and i'm afraid, all city councils "Have become dependent on these high fees" as these gov't workers rake in huge salaries. Inefficient at best. If you cut these fees down to half - where would the shortfall come? The $3.4B that Megan Woods announced last month is only a drop in a bucket for municipal gov'ts and will not fix the problem.

    x 5 times = $405K ?? Not when 3/4 of NZ's population lives in the North Island and a good 33% of total NZ population living in Auckland? How about 85% of total population lives in urban areas (say your Alk / Wellington / Chch) ? Tauranga & Queenstowns are pretty hot expensive places too. I prefer to look at this which is more accurate at x 10 times on GROSS income.

    Yes we can build affordable houses (capital improvements) by sourcing overseas ; but that would come at the cost of losing jobs in NZ. Would that be a good thing? You know we have a timber shortage but all those logs are being exported to China instead of being used for timber framing.

    In all aspects, hard to believe NZ is still the land of milk and honey. I look at the next generation and I can't see much hope. Our university education is lacking (on the international scale) - despite how much $ parents sink into private school education. Our ability to invest as a NZ resident is skewed. The winners in NZ don't seem to help the needy much (not seeing much charity from that group).

  4. #184
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    Quote Originally Posted by SBQ View Post
    Ultra low interest rates aren't the 'primary' cause. It's like arguing which came first, the egg or the chicken? I prefer to point at the NZ culture and NZ's lack of taxing capital gains on residential houses as the impetus of the housing problem.

    I've lived in NZ for over 25 years and witness many gov'ts that have never been serious about taxing houses. I mean where else in this world where the #1 choice for getting rich, goes untaxed? How can that be? You may say the low interest rates made it worse ; yes I fully agree. But the driving factor will be from a tax perspective and the recent changes by Jacinda (moving Brightline test to 10 years - excluding mortgage interest rate deductions) do NOT address the primary reason why so many buy houses as investments.

    I agree high cost of land development is a problem in NZ (Developmental Contribution Fees, cost of Notified Resource Consents, RMA) all add to the price tag and i'm afraid, all city councils "Have become dependent on these high fees" as these gov't workers rake in huge salaries. Inefficient at best. If you cut these fees down to half - where would the shortfall come? The $3.4B that Megan Woods announced last month is only a drop in a bucket for municipal gov'ts and will not fix the problem.

    x 5 times = $405K ?? Not when 3/4 of NZ's population lives in the North Island and a good 33% of total NZ population living in Auckland? How about 85% of total population lives in urban areas (say your Alk / Wellington / Chch) ? Tauranga & Queenstowns are pretty hot expensive places too. I prefer to look at this which is more accurate at x 10 times on GROSS income.

    Yes we can build affordable houses (capital improvements) by sourcing overseas ; but that would come at the cost of losing jobs in NZ. Would that be a good thing? You know we have a timber shortage but all those logs are being exported to China instead of being used for timber framing.

    In all aspects, hard to believe NZ is still the land of milk and honey. I look at the next generation and I can't see much hope. Our university education is lacking (on the international scale) - despite how much $ parents sink into private school education. Our ability to invest as a NZ resident is skewed. The winners in NZ don't seem to help the needy much (not seeing much charity from that group).
    So you think fair value housing in NZ should be 10x median income ?? I did some numbers in our my southern City... I could create a basic 3bd home for well under 400k(flat land on outskirts of city /New Transportable 80sqm house ... that should be a norm right across our large Landmass to population but sadly it isn't .. far too many hands out clipping the ticket..that and having Cities surrounded by coasts ...

    I agree ultra low rates aren't the only factor increasing property prices but they sure have added fuel .. we purchased our last property early 2016 this was when we seen fixed 1yr rates come down from the high 5% in 2015 to mid 4% 2016 ... to present 2.25%. ... when watched our property go from $550k go to $950k in 5yrs ... no way that would have happen if rates had moved back to 2015 levels 5%+

    Still this is just a few of many factors why we don't have affordable housing in Major centres ...
    Last edited by JBmurc; 29-04-2021 at 09:28 PM.
    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim Helu

  5. #185
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    Quote Originally Posted by macduffy View Post
    Now that would give us world-wide exposure! A shame about the effect on exports, though.

    maybe bring in a financial transactions tax at the same time. Speculative money sloshing in and out of NZ at least the nz taxpayer could clip the ticket. An increasingly socialist govt might scare away the speculators.

  6. #186
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    Quote Originally Posted by SBQ View Post
    Ultra low interest rates aren't the 'primary' cause. It's like arguing which came first, the egg or the chicken? I prefer to point at the NZ culture and NZ's lack of taxing capital gains on residential houses as the impetus of the housing problem.
    I disagree the list you provided has Sydney ahead of Auckland. Aussie has a capital gains tax and a housing affordability crisis. You might be able to tell us if your beloved Canada also has a capital gains tax and high house prices.

    Although there are many reasons for high house prices in NZ I would argue that monetary policy and low interest rates are the main reason. In the herald today they discussed rising house prices since 1981. If you take a graph of the NZ OCR over that same time you will notice that the OCR has fallen over this time in an inverse relationship. A well established relationship that as interest rates fall asset prices rise. We have had 30 years of falling interest rates that have become more and more extreme after each crisis and coincidentally (I don't think so) house price rises becoming more and more extreme.

    People like investing in houses because the reserve bank guaranteed capital gains are untaxed (true), but surely the fact that monetary policy pretty much guarantees you a gain is a big plus to current investors (not so much for future investors if interest rates change course). Also it is simple to understand, you have some control of your investment and you don't have some guy in a suit clipping the ticket come rain or shine or allocating him/herself a ridiculously large salary at your expense. And most of all you you can use a lot of leverage to amplify gains as long as you know the NZRB and the National or Labour govt has your back.
    Last edited by Aaron; 30-04-2021 at 07:50 AM.

  7. #187
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    NZ doesn't have a comprehensive capital gains tax much of the developed world does. If Australia, Canada, UK etc have historically high house prices to income then it won't be capital gains tax being the main driver. Although it will play a part. What they do have in common is lower and lower interest rates and loose monetary policy.
    Check for yourself
    https://www.global-rates.com/en/inte...ral-banks.aspx

  8. #188
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    Interesting read
    https://thespinoff.co.nz/business/30...ike-it-or-not/

    Reminded me Adrian did try to force the banks to increase the amount of capital they hold from around 10% to closer to 20%. But turned back into a jellyfish as soon as covid hit.

  9. #189
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    You read articles like this and realise that rising rents are at least partly(if not wholly) due to crazy monetary policy. The NZRB is largely responsible for this. Maybe rather than controlling rents governments should get out of controlling interest rates and let the market weigh up risk and decide.

    House prices would not be so ridiculous and landlords would not have to constantly push up rents to justify the price they paid for their property if prices were based on a reasonable current yield rather than a future capital gain aided by rising rent.

    In the current environment the price of a house seems more dependent on how much you are allowed(willing) to borrow, rather than the yield provided by the investment because as we all now know the tax free capital gain is where the real money is made.

    https://www.stuff.co.nz/life-style/h...-nz-initiative

    the NZ initiative point out keeping rent at below market rate is a bad thing yet don't mention keeping interest rates below market rates as a bad thing. I guess consistency is not part of their way of thinking.

  10. #190
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    the NZ initiative point out keeping rent at below market rate is a bad thing yet don't mention keeping interest rates below market rates as a bad thing. I guess consistency is not part of their way of thinking.
    If the RBNZ wasn't setting interest rates, what are these "market (interest) rates?

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