Labour govt 2020-23

[SBQ]

It won't decrease in price (nominal) but it will decrease in value (real).
If it were possible to buy a block of land - split in two, and build a house on one - leaving the other half vacant. Fifty years later pull out the plans and build a brand new carbon copy of the first house. The new one will be worth considerably more. That is because the first one will have depreciated.
But it's not just at 50 years. It happens throughout the life of the building. The reason recent price rises went up in excess of 20% is because they were too cheap - the market was caught sleeping. New homes sell on a cost plus basis, whereas existing homes sell on a comparative basis, which is often lagging. The real estate market is largely a second hand market so will always have fits and starts.

Don't forget inflation ; cost of building materials and increasing standards & regulations.

Houses too cheap in NZ? I'll reiterate this :
https://businessdesk.co.nz/article/t...w-it-all-began

This mess was not started by the 1st time home owners. It was started because of market speculation (you say too cheap is the same as someone saying Gamestock shares were too cheap at @ $300 and it went on to $400).

I want to add that comparing a house in NZ to one in say America or Canada is like comparing apples with oranges. Canada for most part of the country does have affordable housing but there are hot spots like Toronto and Vancouver. If you really want to compare apples with apples, then when I take a $2M house in Vancouver of similar age to a $2M house in Auckland ; there is no contest. The Vancouver house would be in every way, better built, more comfortable / central heating, LARGER IN SIZE due to 'livable area is what realators use to measure house size', and while many may say larger is not better ; you will find the women tend to prefer larger kitchens & bedrooms. How can NZ compete when building materials are x 3 times the cost one can buy at Home Depot?

@ Zaphod: Indeed not an ideal situation to have separate titles with leaseholds. When I was looking at a house few years ago, I came across "cross lease" titles but if I recall correctly, the house and land were together under 1 rate bill ; but the cross lease meant permission required by the other lease holder too (in party with the other title). Permission such as if 1 day the house had to be brought down and how / where the new build could be.

[fungus pudding]

Don't forget inflation ; cost of building materials and increasing standards & regulations.

Houses too cheap in NZ? I'll reiterate this :
https://businessdesk.co.nz/article/t...w-it-all-began

This mess was not started by the 1st time home owners. It was started because of market speculation (you say too cheap is the same as someone saying Gamestock shares were too cheap at @ $300 and it went on to $400).

I want to add that comparing a house in NZ to one in say America or Canada is like comparing apples with oranges. Canada for most part of the country does have affordable housing but there are hot spots like Toronto and Vancouver. If you really want to compare apples with apples, then when I take a $2M house in Vancouver of similar age to a $2M house in Auckland ; there is no contest. The Vancouver house would be in every way, better built, more comfortable / central heating, LARGER IN SIZE due to 'livable area is what realators use to measure house size', and while many may say larger is not better ; you will find the women tend to prefer larger kitchens & bedrooms. How can NZ compete when building materials are x 3 times the cost one can buy at Home Depot?

@ Zaphod: Indeed not an ideal situation to have separate titles with leaseholds. When I was looking at a house few years ago, I came across "cross lease" titles but if I recall correctly, the house and land were together under 1 rate bill ; but the cross lease meant permission required by the other lease holder too (in party with the other title). Permission such as if 1 day the house had to be brought down and how / where the new build could be.

A crosslease is an undivided share of the freehold. Ownership flats are an example. Leasehold is when another party owns the freehold.*
Second hand houses can become too cheap when the market is ignoring (unaware) of repacement costs. Such periods often precede a sudden price jump as the buyers catch on to the replacement cost.

*Almost all NZ homes are freehold. Residential leasehold is not common. Several churches, councils and other institutions are the typical owners of leased land.

[Bjauck]

Something had to be done to try to fix the NZ residential property market, high prices and supply. However the manner in which Labour is attempting to do this should be questioned.

Tova O'Brien: Jacinda Ardern and the mother of all broken promises
https://www.newshub.co.nz/home/polit...-promises.html

[fungus pudding]

Something had to be done to try to fix the NZ residential property market, high prices and supply. However the manner in which Labour is attempting to do this should be questioned.

Tova O'Brien: Jacinda Ardern and the mother of all broken promises
https://www.newshub.co.nz/home/polit...-promises.html

The bright line test at 10 years isn't all bad. it seems to have buried the intention rule we have had since the dinosaurs began trading their caves, but the IRD had never managed to enforce, and largely gave up on in the late 1960s. (They used to send out silly letters to anyone who had sold a property that they had rented out. It was just a matter of ticking boxes or telling them that you had not sold the property just to pocket the property - but because you discovered it was haunted, or some equally stupid excuse.)
The same cannot be said of applying income tax to outgoings. That is bizarre and simply wrong. It is not how commerce works. I'm waiting to see the effect on residential rental property. E.g. what change will there be to a block of ten purpose built flats now that tax is to be applied not just to the profit - but also to the mtge. interest, usually the largest outgoing? It reminds me of Labour's nonsense in the 70s - when the pathetic Rowling dreamt up something he called 'spec tax'. Like Rowling himself - it was a disaster.

[artemis]

The bright line test at 10 years isn't all bad. it seems to have buried the intention rule we have had since the dinosaurs began trading their caves, but the IRD had never managed to enforce, and largely gave up on in the late 1960s. (They used to send out silly letters to anyone who had sold a property that they had rented out. It was just a matter of ticking boxes or telling them that you had not sold the property just to pocket the property - but because you discovered it was haunted, or some equally stupid excuse.)

governments with a majority do what they do. But to double the bright-line test with a few days notice ain't right. Unfair to change the rules with pretty much no notice when settlements are under way.

The same cannot be said of applying income tax to outgoings. That is bizarre and simply wrong. It is not how commerce works. I'm waiting to see the effect on residential rental property. E.g. what change will there be to a block of ten purpose built flats now that tax is to be applied not just to the profit - but also to the mtge. interest, usually the largest outgoing? It reminds me of Labour's nonsense in the 70s - when the pathetic Rowling dreamt up something he called 'spec tax'. Like Rowling himself - it was a disaster.

A very strange decision, stinks of panic and gotta be seen to be doing something. Anything.

The social housing waiting list and transitional housing (motel) numbers are reported monthly and will quickly reflect any rental trend. (Up 51% and 30% respectively in 2020.)

[RTM]

https://www.newsroom.co.nz/national-...43ed8-97906431

Worth reading, not sure where it should go, but this might be close enough.

[jonu]

The reality of how Euthanasia will be implemented is beginning to emerge. Sadly, for those of us called scaremongers, being proved right is no consolation. No surprise when Andrew "Brains Trust" Little is in the thick of it.

https://www.msn.com/en-nz/news/natio...?ocid=msedgntp

Euthanasia will be much like abortion, whereby the vast majority of health practitioners, who fully understand what is happening in practice, don't want anything to do with it.

[fungus pudding]

The reality of how Euthanasia will be implemented is beginning to emerge. Sadly, for those of us called scaremongers, being proved right is no consolation. No surprise when Andrew "Brains Trust" Little is in the thick of it.

https://www.msn.com/en-nz/news/natio...?ocid=msedgntp

Euthanasia will be much like abortion, whereby the vast majority of health practitioners, who fully understand what is happening in practice, don't want anything to do with it.

No point in worrying about it. Until they make it compulsory you will be free to go as you please.

[dobby41]

The same cannot be said of applying income tax to outgoings. That is bizarre and simply wrong. It is not how commerce works. I'm waiting to see the effect on residential rental property. E.g. what change will there be to a block of ten purpose built flats now that tax is to be applied not just to the profit - but also to the mtge. interest, usually the largest outgoing? It reminds me of Labour's nonsense in the 70s - when the pathetic Rowling dreamt up something he called 'spec tax'. Like Rowling himself - it was a disaster.

Brian Fallow's opinion piece in the Herald (premium) had an interesting perspective.
He postulated that capital gain made up a larger part of the expected return for someone buying an investment property.
As the capital gain isn't taxable then neither should the interest be deductible.
Under the bright line test the gain is taxable so the interest paid is taken into account for that.

He, and Liam Dann, pointed out that in a normal business a 50% gain in value (of the business) would have meant that the business produced more but a 50% rise in house prices doesn't mean anything else in the business has changed (it doesn't house 50% more people).
Property investment isn't a 'normal' business.

When thinking that interest costs are deductible for every other business have a look at the 'thin capitalisation' rules.

[jonu]

No point in worrying about it. Until they make it compulsory you will be free to go as you please.

It's the uninformed decision making and coercion that is the saddest thing. There is already a sad tendency toward subtle elder abuse in our society. It is about to get a lot worse.