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).
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