NZ 1st homebuyers are ScReWeD...

[SBQ]

interesting information in your post. I am sure most households in English speaking countries have more invested in housing than in listed company shares.

Taking into account overseas ownership of NZX listed companies, do you think The ave NZer has at least 14 times as much net equity invested in housing as in NZX listed equities?

I guess we should also consider pension assets? American households would invest indirectly in stocks and shares via pension and investment plans. Nz is still a minnow with respect to pension funds and managed funds. A greater proportion of NZ pension and managed fund assets would also be invested off-shore.

How do we treat trust assets? NZ has a large number of family trusts. Would you count shares and real estate owned by a trust as part of the settlor’s assets, or divide them up equally between all of the discretionary beneficiaries?

Great response. I won't directly respond to FTG's reply because he misses my point, though I will say some of his figures don't address my previous question at all.

Since this thread is about how screwed 1st time home buyers are in NZ, i'm trying to get some meaningful data on the reasons why, maybe some basic simple observations like what % people in NZ hold their wealth in other assets instead of houses? Where do the top 10% of the richest in NZ sit and where to the rest, 90% of the population sit in terms of how they can invest?

The way I see it in NZ, it's very clear the top wealthiest (and let's include all those investment housing trusts because there are so many people that have their $ invested in these schemes) say 10% - how much of this segment can influence the house price in NZ? Because the way I see it is they've turned the NZ residential market into a stock market hype. Over in the US house prices nationally rose 11.6% - here in NZ we're getting close to 30%. What those people in 'that camp of owing the houses as investments' fail to see is the bulk of the price increase occurred for most of NZ population (a fair guess 80% of the total population is affected by the rapid house price rise?). There are hot spots in the US but no way does 80% of their total population is affected from say a 30% rise in housing prices. Even at 20% ? are there some figures we can dig?

Oh and let's not forget about the market manipulation factor. There was a time few years ago that the Jacinda assumed the house price rise in NZ was caused by foreigners buying up houses in NZ. So she imposed a foreign buyer's ban. If it's not these foreign wealthy people buying houses in NZ, then who else? Jacinda has mentioned earlier in the year that a high % of the buyers of houses in NZ were those in the 'already own 4 or 5 houses camp'. Let me ask again, do the top 5 or 10% people in America have an active role in influencing their house price market or do they have a MORE active role in investing the majority of their wealth in the US stock market? What i'm looking at is this 30% rise in NZ houses affects far more of the total NZ population than the 11.6% rise of houses in America affecting their population.

Investing for retirement? NZ has been slow in adopting such 401K schemes like in America, and therefore the size of the Kiwi Saver invested is a lot smaller per capita. Well it will be less because NZ income per capita is a lot less than in America; so when you look at the minimum 3% employer contribution, it's almost a waste of time for a person on $100K/year income. Also as I mentioned before, NZ's tax structure is unfavorable for Kiwi Saver vs buying another house that sees tax free capital gains after 10 years.

Perhaps i'm biased the wrong way. NZ is a small country, we should not be priding ourselves being wealthy as our house prices rocket out of control. We're exposing ourselves a huge amount of risk being tied in 1 asset. There needs to be a CGT on houses or some land tax in NZ and or take away the taxation of Kiwi Saver / PIE funds or do what they do in N. America by 'tax deferring' the gains until retirement for those superannuation schemes.

BTW, it was John Key's party that stopped investment in the NZ Superfund for many years. The opportunity cost lost was massive when i'm seeing the DOW near 35K.

[Bjauck]

Ardern has a good newspeak way of turning failures into signs of success. Inflation at a rate exceeding guidelines becomes a sign of a booming economy; 30% house price rises a sign of having managed covid well. While there may be a little bit of truth in that, mostly they are a sign of failures (failure of housing supply, failure to provide affordable appropriate first homes, failure to improve labour productivity, etc.)

That is not to say that I think National would have done any better in our Covid era.

[FTG]

I won't directly respond to FTG's reply because he misses my point

and I'm certainly not the only one SBQ. ;-)
Therein lies the problem with asking poorly constructed rhetorical questions as a primary way of espousing one's opinion/s.

So let's ask you a direct question. What is your actual number one key point?
In other words, when you distil it all down, (let's face it, you have written a LOT of the same stuff....you must feel like a broken record) what is the core, fundamental, foundational, belief/principle/opinion that you are wishing to propagate on this thread?

This is your opportunity SBQ! Openly present your thinking for all & sundry to view, inspect & challenge (or as it may be, support).
However, as a friendly challenge, there is just ONE condition....... your answer needs to be limited to one well-constructed sentence; succinct & concise. No waffling, no glibness, no doubts. Straight to the point.

[iceman]

Interesting discussion. But a very difficult one due to the fact it is hard to know what numbers are correct. I read an article by Brian Gaynor on Business Desk on 17 July, which discusses this issue amongst others. His numbers about where USA individuals have their investments is very different to what FTG has posted
Below is a summary from that article. NZD for NZ and equivalent USD in brackets for USA. It indicates Kiwis hold a far higher proportion of their wealth in property than Americans do.

It states NZ net wealth in real estate is NZ$ 1.42 trillion (USD 40.1t), financial assets NZ$ 1.19 (USD 105.6) liabilities NZ$ 0.31t (16.3t)& total net wealth NZ$ 2.30t (USD 129.5)

[iceman]

Interesting discussion. But a very difficult one due to the fact it is hard to know what numbers are correct. I read an article by Brian Gaynor on Business Desk on 17 July, which discusses this issue amongst others. His numbers about where USA individuals have their investments is very different to what FTG has posted
Below is a summary from that article. NZD for NZ and equivalent USD in brackets for USA. It indicates Kiwis hold a far higher proportion of their wealth in property than Americans do.

It states NZ net wealth in real estate is NZ$ 1.42 trillion (USD 40.1t), financial assets NZ$ 1.19 (USD 105.6) liabilities NZ$ 0.31t (16.3t)& total net wealth NZ$ 2.30t (USD 129.5)

[SBQ]

Ardern has a good newspeak way of turning failures into signs of success. Inflation at a rate exceeding guidelines becomes a sign of a booming economy; 30% house price rises a sign of having managed covid well. While there may be a little bit of truth in that, mostly they are a sign of failures (failure of housing supply, failure to provide affordable appropriate first homes, failure to improve labour productivity, etc.)

That is not to say that I think National would have done any better in our Covid era.

I agree I don't think National would of done any better and Ardern or not - all these politicians are smooth talkers. How bad are things really here in NZ? My father left NZ at a time when uni education was free, income taxation was high, the gov't funded all sorts of developments, infrastructures, hydro, etc. Over the many decades living in Canada, he's kept an eye on what's going on in NZ and he was mindful to tell me to do the same thing as I chose to live in NZ. My relatives here constantly ask me when will my dad move back? I said yes there was a time he would consider moving back but FIF is what sealed his fate (and likewise with the many Kiwi's he knew living in Canada). I'm reminded in hearing how Canadian winters are very cold - but snowbirds typically spend a short trip to the southern US or a long vacation in Mexico; and can do so cheaply. If one has the $, they live near Vancouver where winter temperatures are comparable to Christchurch. Does one have to wonder why 20% Kiwis choose to stay living abroad?

The housing mess not only affects future generations but also affects migrants coming to NZ. As an example last week at my son's play date with his school friend, we visited their home. The father of my son's friend migrated from India in 2013 and had a struggled in finding a house as the earthquakes affected the housing stock. So in FOMO fashion they UNknowingly bought one of those leaky house syndrome (2 story, plaster cladded with no roof eaves). He was telling me how the real estate agent supplied all the details like a building report (whom the home owner supplied), EQC scope of works & damages, things that would easily satisfy the new migrant buyer (but not so easily to the local buyer). He told me after a year they noticed moisture creeping in through the walls and when they investigated, they discovered rotting of the timber framing. They had some coverage by insurance and EQC but he told me no builder would guarantee their work on the exterior re-cladding. Quote after quote, all the builders said the same thing and he had estimates around $400K which was about 80% of the value of the house. So his situation was, is it worth while to spend all that $ ? I told him even if you did, you would still end up with a house of the SAME design. The fault is not just only lack of maintenance but these types of houses offer little or no protection of water ingress into the building envelope. Would a greater supply of house in NZ fix this situation? Maybe.

Nevertheless, they are in the consent stages of building a new home but he's disgusted at how expensive building costs are. If the housing stock goes up in price, so will the building cost as those in trade won't leave free $ on the table.

[peetter]

Interesting discussion. But a very difficult one due to the fact it is hard to know what numbers are correct. I read an article by Brian Gaynor on Business Desk on 17 July, which discusses this issue amongst others. His numbers about where USA individuals have their investments is very different to what FTG has posted
Below is a summary from that article. NZD for NZ and equivalent USD in brackets for USA. It indicates Kiwis hold a far higher proportion of their wealth in property than Americans do.

It states NZ net wealth in real estate is NZ$ 1.42 trillion (USD 40.1t), financial assets NZ$ 1.19 (USD 105.6) liabilities NZ$ 0.31t (16.3t)& total net wealth NZ$ 2.30t (USD 129.5)

NZX has very limited number of companies listed and investing oversees hasn't been easy until companies like Hatch came around. Even now the FIF is somewhat of a stop for average retail investor.

[SBQ]

NZX has very limited number of companies listed and investing oversees hasn't been easy until companies like Hatch came around. Even now the FIF is somewhat of a stop for average retail investor.

Still no excuse for NZ to have a limited range of investments. The reason is clear - past NZ gov'ts have successfully turned houses into a commodity for maximum profit, while other investment choices like Kiwi Saver / PIE funds are taxed at RWT. If you look at America (like Canada), the tax approach there is entirely the opposite of NZ. Own more than 1 house and you will pay CGT. Want to invest in the stock market via an education / disability / TFSA RothIRA fund - then you get the tax free or tax deferred benefits. The wealthy realise the cards are stacked against them if they use houses a as commodity to profit (even with mortgage leveraging). If you're a non-resident wanting to buy a house in Canada, you pay a 20% 1 off tax! (that's $200K for every $1M on a luxury house, not small change here). Leave it empty like a vacation home, and you'll be dong with a Vacancy tax every year. The message is clear over there just like the message is clear in NZ that houses has made the top 10 or 20% of NZ rich.

Remember, 20+ years ago NZ treated all asset classes the same - foreign shares or not, they had no CGT or taxes applied to them. Then FIF came along to penalize foreign share investments (interestingly FIF does not apply to houses overseas) ; all while capital gains on houses were not touched. What kind of message is the NZ gov't telling? The UN is certainly not fooled about this kind of approach.

[fungus pudding]

Still no excuse for NZ to have a limited range of investments. The reason is clear - past NZ gov'ts have successfully turned houses into a commodity for maximum profit, while other investment choices like Kiwi Saver / PIE funds are taxed at RWT. If you look at America (like Canada), the tax approach there is entirely the opposite of NZ. Own more than 1 house and you will pay CGT. Want to invest in the stock market via an education / disability / TFSA RothIRA fund - then you get the tax free or tax deferred benefits. The wealthy realise the cards are stacked against them if they use houses a as commodity to profit (even with mortgage leveraging). If you're a non-resident wanting to buy a house in Canada, you pay a 20% 1 off tax! (that's $200K for every $1M on a luxury house, not small change here). Leave it empty like a vacation home, and you'll be dong with a Vacancy tax every year. The message is clear over there just like the message is clear in NZ that houses has made the top 10 or 20% of NZ rich.

Remember, 20+ years ago NZ treated all asset classes the same - foreign shares or not, they had no CGT or taxes applied to them. Then FIF came along to penalize foreign share investments (interestingly FIF does not apply to houses overseas) ; all while capital gains on houses were not touched. What kind of message is the NZ gov't telling? The UN is certainly not fooled about this kind of approach.

Translation: 'I'm an absolute idiot for not stocking up on houses while I was younger. Obviously it wasn't tenants that robbed me of my sanity. I wonder what it was'?

[Bjauck]

Translation: 'I'm an absolute idiot for not stocking up on houses while I was younger. Obviously it wasn't tenants that robbed me of my sanity. I wonder what it was'?

Wouldn't that lead us to a NZ version of Georgian Ireland - A poor country with a landowning aristocracy, with many overseas-based absentee landlords, and with company shareholdings and industry being substantially foreign owned?