Population Growth and Growth in Property Values

[Halebop]

Sorry I was referring to the economics of real estate rather than the author's own prognosis.

Comments like "Landlords typically make a loss on rental properties after mortgage interest and expenses" and "But big jumps in rents were not likely, with increases constrained by what people could afford" tells me investor perception and simple math have something of a reality (or is that realty?) gap.

[Steve]

Don't forget that many MP's have rental properties, and they are unlikely to want to put national interest above their personal interests...

[patsy]

quote:Originally posted by Steve

Don't forget that many MP's have rental properties, and they are unlikely to want to put national interest above their personal interests...

Thre is no question that MPs will do as they suit personally best for them. However, the increase in the tax rate for trusts to 36% is almost a given, and this also impacts them most of them directly - yet they are going to do it anyway in the next budget.

The problem is that tax deductions for investment properties were put in place with the social objective of fostering the increase in housing stock (like business deductions were put in place to foster the creation of employment opportunities). However, the gap between taxation for property investment and taxation for other types of investments (e.g., the recent overseas share holding tax change) has widen so much that the social benefits of tax deduction for property developers/investors have severely backfired to those who were meant to benefit (i.e., the community overall has property ownership as an elusive objective).

[rmbbrave]

Brits look to NZ for first step on property ladder
By COLIN MARSHALL - NZPA | Tuesday, 13 March 2007

Young British people are so desperate to get on the property ladder they are considering moving to New Zealand for a "cheap" house with the aim of saving enough to then buy a house back in Britain.

A new survey by Britain's National Savings and Investments (NS&I) has found a quarter of Britons trying to buy their first house would consider moving overseas to do so �Eand a third of those had their eye on New Zealand or Australia.

NS&I spokesman Mark Brooks said a property boom in Britain had caused average house prices to double over the past six years.

Told that New Zealand's own property boom had pushed the national median in this country to about $330,000 or £119,000, Mr Brooks said that was unlikely to deter British househunters.

"Ours is £200,000 ($NZ563,539)."

NS&I surveyed 1000 people who did not own their own home for its latest Quarterly Savings Survey.

Mr Brooks said it was surprising to find so many people would consider immigrating to New Zealand or elsewhere to buy property but with more households in Britain than houses available, people were looking for a solution.

"It's harder and harder for people when they're looking for new homes to actually get on the housing ladder and first time buyers especially.

"Instead of either staying at home longer, living with their parents, or alternatively renting, which is also expensive, the survey shows that people are looking for alternative ways to get on the UK housing ladder."

New Zealand's "cheaper" prices appealed, as did the weather, and a strong affinity with New Zealanders, many of whom had lived in Britain, Mr Brooks said.

Also, many young British people had travelled to New Zealand on extended holidays.

"They see New Zealand and think `what a great place to live' �Ethat's why it's higher on the agenda than it would have been previously."

Mr Brooks doubted British people would be aware New Zealand had had its own property boom.

He said property ownership was part of British culture and moving to New Zealand was just one way of fulfilling that "normal" dream.

"Getting on the housing ladder is very important."

Other destinations considered by British people looking to move abroad to buy a house were Spain (43 per cent), America (22 per cent) and Eastern Europe (20 per cent).

New Zealand's national median property price eased in January to $327,000 from $330,000 in December.

Auckland's median was $415,000, Wellington $351,868, and Canterbury/Westland stayed the same at $290,000.

In Waikato/Bay of Plenty, the median was $307,875 while Southland, the fastest growing region, had 25.6 per cent growth from from $124,250 in January 2006 to $156,000 this January.

Other median prices for January included Manawatu/Wanganui $215,000, Taranaki $272,500, Northland $305,000, Hawke's Bay $280,000, Wanganui $215,000, Nelson/Marlborough $307,000, Central Otago Lakes $432,200, Otago $221,750.

Reserve Bank Governor Alan Bollard last week raised the official cash rate from 7.25 per cent to 7.5 per cent in a bid to cut household spending, citing the booming housing market as a main reason.

http://www.stuff.co.nz/3991698a10.html

[Steve]

quote:Originally posted by patsy

Thre is no question that MPs will do as they suit personally best for them. However, the increase in the tax rate for trusts to 36% is almost a given, and this also impacts them most of them directly - yet they are going to do it anyway in the next budget.

Is this increase to 36% a definite or proposal?

[patsy]

quote:Originally posted by Steve

quote:Originally posted by patsy

Thre is no question that MPs will do as they suit personally best for them. However, the increase in the tax rate for trusts to 36% is almost a given, and this also impacts them most of them directly - yet they are going to do it anyway in the next budget.

Is this increase to 36% a definite or proposal?

Not signed up yet but it is the quid-pro-quo of business and personal tax reduction, plus closing a "loophole" (per Cullinski words) for all the small business owners who hold shares in trust thus defeating our beloved government's personal top rate.

[rmbbrave]

Bankruptcies hit 8-year high
By ROB STOCK and KAREN ARNOLD

Bankruptcies have reached an eight-year high and experts are warning people to reduce their personal debt.

In the first eight months of this financial year, 2380 people have become bankrupt, a 22 per cent rise on the same period last year.

Until this year, bankruptcies have been rising by only a few percentage points each year.

The five main causes of people going broke are job loss, excessive use of credit, relationship breakdown, ill health and a lack of health insurance and decisions to stand as guarantor for someone else's loan or business venture.

Business commentator Rod Oram said people had been pushing their luck for a long time and warned bankruptcy rates would accelerate should there be a severe recession and unemployment. "It's time to start reducing debt now."

http://www.stuff.co.nz/3997084a10.html

2380 people are not very many though - there are around 20,000 new immigrants every year.

[rmbbrave]

Migrant numbers may be twice forecast rate
By SUE ALLEN - The Dominion Post | Wednesday, 21 March 2007

Permanent inward migration may be almost double official estimates and will help keep the housing market solid for some time, an economist says.

Figures from Statistics New Zealand issued yesterday show permanent and long-term arrivals exceeded departures by 2100 last month, compared with 3100 in February 2006.

In the year to February, New Zealand gained 13,200 more permanent migrants than it lost, compared with 8300 in the February 2006 year.

The number is slightly below the Reserve Bank forecast of 14,000 to 15,000.

Deutsche Bank chief economist Darren Gibbs said that, taking a different approach and deducting all arrivals from all departures during the year, he calculated net migration was closer to 24,000 for the year.

Statistics New Zealand bases its calculations on those people declaring an intention to live here for 12 months or more from the time of arrival.

It appeared that some people were arriving for a declared short term, but ended up staying longer, Mr Gibbs said. "That may explain why the housing market has done so well in the last few months."

Last week, Real Estate Institute figures showed that the number and value of sales had picked up in February, with median prices at a record high of $335,000.

The link between one of the Reserve Bank's biggest headaches, the housing market, and migration is well established. The more people arriving, the more houses are needed and the higher prices climb.

Mr Gibbs said consumer confidence and wage increases were also helping to underpin the housing market.

Daniel Wills, ASB Treasury economist, said migration remained elevated though slightly below expectations, providing little relief for the Reserve Bank's concerns that domestic spending would fuel medium-term inflation.

Reserve Bank governor Alan Bollard raised the official cash rate from 7.25 per cent to 7.5 per cent this month. Interest rates are up to about 8.5 per cent for two-year fixed mortgages and could rise further.

On an average $160,000 loan, the rate rise will mean about an extra $50 a fortnight, which should slow spending and take some heat out of the economy.

The net loss to Australia in the February 2007 year was 22,200, up from 21,100 in the February 2006 year. Annual net permanent migration has eased since reaching 14,800 in the year ended November 2006.

[rmbbrave]

Lincoln Tan: NZ wages too meagre for home ownership dream

TV stars can no longer afford their home
Once, I had a dream. In fact, I had many dreams when I lived in Singapore.

One was to be able to live in a place which had four seasons, and not just hot, hotter and hottest.

Another was to raise a family in a land that offered space - both physical and psychological - so my children would have space to run around in and be able to think critically.

But most of all, my dream was to own my own house.

Not a two-bedroom apartment on the sixth floor like ours in Singapore, but a house - with a garden - that sat firmly on the ground.

Coming from a country which has a land mass no bigger than Lake Taupo but with a population soon to reach one and a half times that of New Zealand's, it's not surprising 90 per cent of its people live in high-rise apartments. Owning a house with a real backyard was just a fantasy for most of us.

So, exactly 10 years ago this week, I packed my bags and moved to New Zealand with the hope of making my dreams come true.

Then, the houses in New Zealand were really cheap - considering my little condominium apartment, which friends called my pigeonhole, cost more than $500,000.

We bought our house, in fact two houses, even before we moved to New Zealand permanently. One was a house on the North Shore, which was to be our new home, and the other was an investment property in Wellington.

The low kiwi dollar then meant what we paid for the two houses did not even amount to the cost of my 80sq m apartment.

So much has changed in the past 10 years. We sold our Wellington house, and when I had to move to the South Island five years ago, sold our Browns Bay home so we could buy a house in Christchurch.

We made a few bucks from the exercise, but it also turned out to be one of my most dream-shattering actions.

Who would have dreamed the median price of an average home in Auckland would reach a new record high of $430,000, or that an average house in the North Shore where I live will cost $503,000?

The home I sold in the low $300,000s was back on the market last year for $570,000, and Auckland's property market is still showing no signs of slowing down.

Since I moved back to Auckland last year, I have been renting and hoping against all odds that Isaac Newton would be proven right - that what goes up must come down.

It takes an average Aucklander about seven years of earning $57,500 to afford to buy a house at the median price, says this year's Demographia International Housing Affordability Survey. But I guess that span of time would likely be a lot longer than seven years if one is Chinese.

Nielsen Media Research found 47 per cent of Chinese here earned an annual income of $10,000 or less. Low pay and inability to find work has forced many immigrants to look for work offshore.

I have met many Taiwanese and Korean families who are "fatherless" because he is working back in their country of origin. This has actually worked out well for some people.

I have a journalist friend who had struggled to find decent work in the mainstream media here after a short stint with the now defunct Auckland Sun, so he went on to become a senior leader writer for The Straits Times in Singapore.

What he earns enables him to afford maintaining his home and lifestyle in New Zealand, even though he has to shuttle regularly between the two countries.

Just as I viewed Auckland property prices a decade ago, houses here continue to be seen as cheap and affordable only by those earning their wages offshore.

One American I interviewed last month thought houses here were dirt cheap, compared to Los Angeles.

Last week, it was reported the British are looking to New Zealand to buy their first home because they were cheap.

So, as politicians continue their debate on whether to turn parents who smack their children into criminals and whether to tear down billboards in the city, little time is spared to talk about our economy or how we can raise income levels.

Kiwi employee

[Mr_Market]

I see no reason why the NZ$ could not fall 50%. After all it has been there before.