Quote Originally Posted by JBmurc View Post
Not sure how many on here read the "NZ Property investor mag" but now and again I get an issue and as I've enjoyed many a good investment return in NZ Property I like to keep up to date with present market >>

Now in the latest issue I read a piece on "Why you should take interest only loans over your investment properties" and forget about paying off the debts as NZ property only goes higher in value on average 10% pa so just use the increased equity you get and buy more and more properties on I.O and never pay the properties off.

Surely we must be getting to peak Property love here in NZ as looking over the average yields nationwide on current average selling prices we see yields of 3-6% so no wonder I.O lending is all the rave as after an ever increasing insurance/rates costs taxes etc not going be much if capital left to pay down any of the actually property purchase price .. pure madness IMHO
seems like the core investment plan of many is BUY and hope for Cap gain as in the past it worked great so why would it top now
Unless the financial system changes this will always make sense. With stable prices negative gearing would just be about people losing money and investing poorly without the 6-8% tax free capital gain it would just be stupid. People do not expect to pay back debt anymore, they know that central banks will engineering inflation (reduction in the value of a dollar) to sort out their debts. The display since the financial crisis has been shocking across the globe, wholesale printing of money and something as ludicrous as negative interest rates has been preferable to letting asset prices fall. The system doesn't make sense but property investor is giving the right advice for the times.
We need to scrap targeted inflation as a policy it has only been around since 1990 in NZ when people still believed in trickle down economics. That is all it is a dumb idea that if rich people feel wealthier we will all be better off as the wealth trickles down.
I haven't got the statistics but I imagine wealth is actually trickling down while the main flow upwards increases wealth and income inequality.