NZ 1st homebuyers are ScReWeD...

[SBQ]

Bit of a CJ going on here. Meanwhile inflation has hit 5.9% and the RBNZ is expected to hike the OCR in February.

Great comments Logen. House next door has the for sale sign going up for auction Feb 18th. When we moved to this new neighbourhood sub-division here in Chch 2010, the price of the section was $185K and to put a house on of average size 210m2 was around $240K so $425K. House down the street of similar size and land sold for $1M last year. My neighbour, he's aiming to get $1.3M

How sustainable are these price rises? in 11 years a 3 fold gain? You hinted a windfall to the boomers. But if these families are not roughed up, most downsize and give the remaining proceeds to their adult children as they move away. No more are the days where a school grad could earn enough $ to pay for the mortgages required to buy a house. That pool is only for the top 1% crowed. Typically the ones that have gone to private school and whom their parents have been able to fund their whole education and training to ensure they reach top level. It's a social divide the way I see it, mixed in with using houses as a commodity asset of achieving financial wealth.

As I mentioned before, 2/3rds of NZ's wealth is tied in real estate. Over in N. America, it's 2/3rds of their wealth that is tied into businesses and in their stock markets that create new businesses. It's not hard to see this distinction when you compare NZ's GDP/capita figures with US or Canada's GDP/capital. We ARE a low productivity nation because we pool most of our wealth in houses. It's a key reason when the UN rapporteur visits NZ, she complains on NZ's lack of progress in making housing affordable (as per UN's belief, housing is a "human right") - and NZ has done poorly by look at the long list of social housing claimants. This social divide, I point to the top 1% of the wealthy neglecting the rest of society as more of the middle class gets shoved down to lower income class. To be able to start from nothing, to being able to own a home is a monumental step for the middle class, and as time carries on, you will find that more and more people will be left behind, without a chance to get into a home. I call it a cane-ing.

[Bjauck]

As property (and other asset) owners age and fall off the perch, the offspring will inherit not a trickle but a veritable waterfall. Unearned.

Thanks to NZ's highly regressive tax system, true - for the kids of wealthy parents. I wonder for how much longer NZ will be able to avoid multiple home stamp duties, CGT, Inheritance & transfer tax.

[Logen Ninefingers]

Thanks to NZ's highly regressive tax system, true - for the kids of wealthy parents. I wonder for how much longer NZ will be able to avoid multiple home stamp duties, CGT, Inheritance & transfer tax.

You talk about CGT at a time when interest rates are on the rise, inflation is mounting, new supply is in train, and the bubble is at top.

What I am saying is that the horse has bolted and is up the road and over the hill, while the powers that be are still looking at the stable door and mulling things over. If anyone buying now and over the next few years can make a capital gain, then good luck to them. I think it's more likely they will be holding a bag marker 'negative equity'. To be clear, the cavalry that always rode to the rescue of the property market is not coming to the rescue anymore. We have an inflation problem now and that means things will change. It's all well and good when it's a house ("we're all gonna be rich!"), but it hits them in the gut when everything else is now going up. You can already see the political heat that Labour is copping over inflation: people don't like it when they see prices increasing at the rate they are. It doesn't get any more visceral than the basic need to feed your family or pay your energy bill (keep the lights on so to speak).

[fungus pudding]

I wonder for how much longer NZ will be able to avoid multiple home stamp duties, CGT, Inheritance & transfer tax.

Yeah. Sort of thing that worries me too.

[Logen Ninefingers]

Yeah. Sort of thing that worries me too.

Chloe Swarbrick is talking about wealth taxes but I wouldn't worry about it if I were you. The governing parties know that no-one from the middle class above is going to vote for tax increases, so it's a non starter. "Just borrow whatever you need Robbo maaate".

[Bjauck]

If these investors did not intend to be landlords earning taxable rental income, what was the intention behind their purchase of an investment property?

“We never planned to be landlords,” Mike Bennett said of the couple's decision to sell their Forbury property before Christmas.
Bennett and his wife, Claire, had planned to use some of the $300,000 profit, after the mortgage had been settled, to renovate the home they lived in“
https://www.stuff.co.nz/business/127...t-consultation

[fungus pudding]

If these investors did not intend to be landlords earning taxable rental income, what was the intention behind their purchase of an investment property?

Who cares - it's their business.

[Bjauck]

Who cares - it's their business.

Isn’t Intent important with investments for tax purposes? And net profit is taxable? Whether or not a profit on an investment property is taxable affects investor demand for houses.

[artemis]

If these investors did not intend to be landlords earning taxable rental income, what was the intention behind their purchase of an investment property?

....

Plenty of accidental landlords out there. Like inheritance, or buying a new owner occupied home and renting out the old one. Who knows.

What we do know is that in the last 4 years the costs and rules around rental properties have changed dramatically. Regardless of how and why rentals started out no surprise if owners make decisions based on the current rules.

Maybe some of those decisions will be to sell, maybe repurpose. There does seem to be a shortage of rentals in many locations, and as borders reopen what is available will be under more and more pressure. There is always the social housing waiting list. For the extremely patient.

[Bjauck]

Plenty of accidental landlords out there. Like inheritance, or buying a new owner occupied home and renting out the old one. Who knows.

What we do know is that in the last 4 years the costs and rules around rental properties have changed dramatically. Regardless of how and why rentals started out no surprise if owners make decisions based on the current rules.

Maybe some of those decisions will be to sell, maybe repurpose. There does seem to be a shortage of rentals in many locations, and as borders reopen what is available will be under more and more pressure. There is always the social housing waiting list. For the extremely patient.

Sure - but these people bought the property and said they did not have the intent to become landlords. They were not accidental owners of the property.