NZ 1st homebuyers are ScReWeD...

[FTG]

The US median house prices figures to June 30 were reported overnight. With the continued & massive pumping of the FED's Balance Sheet I'm disappointed to report that there are NO surprises. Just like NZ, the US residential housing market has been running away.

The trailing 12 month increase was 23.4% (NZ 28%). Across the border in Canada....26%!

The sobering fact is house prices in many big cities & countries across the globe are showing trailing 12 month increases of >20%. As much as some here would try & lead you to believe, "first home buyers being ScReWed" isn't a problem exclusive to NZ. It's an issue across the globe.

As in life generally, effective long-term problem solving requires one to first understand the real & fundamental CAUSE of the problem. As you correctly point out Bjauck, applying Band-Aids to something that requires surgery is short-sighted & unintelligent. That is only going to suppress the issue for a period, until inevitably the cancer will actually come back even harder. It's tinkering at best.

Imposing CGT, Wealth Taxes, Inheritance taxes, and on the other side of the ledger, strategies like FHB grants & subsidies are all just political Band-Aids & suppressant Drugs to the cancer of an artificially & unsustainably booming housing market. Some would go even further & say it's akin to "an Ambulance at the bottom of the hill". Yes, additional taxes and/or subsidies MAY have impact for a period, but the real CAUSE is not actually being properly addressed. A demonstration of this point is when looking at top 15 countries on the chart for Median House Price to Household Income Ratio. NZ is currently 14th highest on that chart (SBQ, FYI: Canada is 7th). Every....single....country, but 1, for the 13 countries on the list above NZ has a CGT. So the claim that having a CGT or similar regime implemented is a long lasting solution to the housing pricing problem is patently not the case. It could also be easily argued that doing so creates poor investment investment behaviours & further market distortions, hence creating unintended negative outcomes, e.g. moral, social & economic problems.

So, coming back to diagnosing the condition, the question is, "what is the real & fundamental CAUSE?" Some of the more learned contributors on this thread have reminded us of a basic principle re how pricing of ANY market is ultimately determined....

"The Law of Supply & Demand".

Posters here have then gone on to present & debate over the impacts of a multitude of supply & demand inputs for NZ. Examples noted include, high net positive migration numbers, foreign buyers, ghost houses, super slow RMA process, high building costs, skilled labour shortages, FHB grants, Taxpayer partly funded KS deposits, SHA's, no CGT etc etc etc. IMO each of those inputs do contribute to varying degrees to the crazy house pricing problem NZ has. However.....

The REAL underlying cause is a far bigger, uglier & hence harder one for us all to confront & tackle head-on. Plus, it too obediently abides to the Law of Supply & Demand.

So, have you some thoughts to what that Elephant in the room is that I'm referring to?