NZ 1st homebuyers are ScReWeD...

[Bjauck]

Does NZ need to introduce policy changes to shift more of the tax burden from incomes to housing and other wealth. Hopefully this would encourage productive investment with well paid employees, and stop more workers from leaving because of the high cost housing and high cost of living.

Thousands head overseas, partly because of economic conditions, with departures accelerating and labour shortage feared
https://www.theguardian.com/world/20...cost-of-living

[Logen Ninefingers]

Does NZ need to introduce policy changes to shift more of the tax burden from incomes to housing and other wealth. Hopefully this would encourage productive investment with well paid employees, and stop more workers from leaving because of the high cost housing and high cost of living.

Thousands head overseas, partly because of economic conditions, with departures accelerating and labour shortage feared
https://www.theguardian.com/world/20...cost-of-living

Yes, people are heading overseas in droves. Inflation is hitting hard with people having less disposable income. Interest rates are rising and rising, up another 50 bps today. We are going through a construction boom. US equities are going through a slow motion crash, KiwiSaver balances are down. And sentiment is turning negative rapidly.

The government won’t be able to collect a cent from ‘property wealth’, even if they introduce a comprehensive CGT tomorrow. The party is over.

[Crypto Crude]

NZ 1st home owners are screwed.

No incentive for those in power to change things.

https://www.stuff.co.nz/business/128...o-help-renters

Mind you when suggesting first home buyers might be a bit thick voting for Labour or National I could compare us to the Philippines for thick voters they just voted in the son of the last dictator who has the same name as his Dad. Ferdinand Marcos was ousted by an uprising of the people now his son has been voted in.

Obviously I am an outsider and have no idea why they would have voted this way but on the face of it, it seems bats*it crazy as he won in a landslide.

You don't have to win elections to be voted in anymore...
It's happening worldwide...

[Logen Ninefingers]

Recession is guaranteed. Lock it in. And here is NZ with the worlds biggest housing bubble and a deluded population that were at one stage paying any old ridiculous price for a bog standard 3 bedroom house built decades ago. When will the penny drop for the hold out fantasists who believe this is just a temporary blip that will last weeks? Countless trillions are currently being erased in equity markets and crypto.

[SBQ]

Recession is guaranteed. Lock it in. And here is NZ with the worlds biggest housing bubble and a deluded population that were at one stage paying any old ridiculous price for a bog standard 3 bedroom house built decades ago. When will the penny drop for the hold out fantasists who believe this is just a temporary blip that will last weeks? Countless trillions are currently being erased in equity markets and crypto.

As i've eluded many posts aga in this thread, the key problem isn't macro economics. The key problem is somewhere, some time, the rich (the haves), need to put their wealth into something. I'm afraid in NZ, that is none other than owning houses (plural). Our tax laws favour it and when I sat through every major stock market crash (dot com, 2008 GFC, etc), NZ house prices have done thing but go UP.

Recessions won't kill it. I will even say it's not even a housing bubble because NZ operates on a different world. Like the Japan bond market, NZ houses are insulated to global changes. When our gov't has created a mix where they're too scared to do the right thing in squashing housing prices, they put all the cards in houses and make damn sure that it stays protected.

So what if interest rates go up. It just means people won't sell their houses and wait. I've seen that rising interest rates in NZ do not affect housing prices much compared to abroad. If that was a concerning model, then we would not see so many foreign banks operating in NZ to get their fingers into the NZ housing market pie.

[Logen Ninefingers]

As i've eluded many posts aga in this thread, the key problem isn't macro economics. The key problem is somewhere, some time, the rich (the haves), need to put their wealth into something. I'm afraid in NZ, that is none other than owning houses (plural). Our tax laws favour it and when I sat through every major stock market crash (dot com, 2008 GFC, etc), NZ house prices have done thing but go UP.

Recessions won't kill it. I will even say it's not even a housing bubble because NZ operates on a different world. Like the Japan bond market, NZ houses are insulated to global changes. When our gov't has created a mix where they're too scared to do the right thing in squashing housing prices, they put all the cards in houses and make damn sure that it stays protected.

So what if interest rates go up. It just means people won't sell their houses and wait. I've seen that rising interest rates in NZ do not affect housing prices much compared to abroad. If that was a concerning model, then we would not see so many foreign banks operating in NZ to get their fingers into the NZ housing market pie.

You can elude to whatever you like: the bottom line is that prices are going down & that immediately gives the lie to your assertion that ‘NZ house prices have done nothing but go UP’.

it’s not ‘the rich’ that dictate a market, it is every other Joe Bloggs on a modest income that has borrowed an eye-popping amount and it now under the pump staring at surging inflation and interest rates. You take any market anywhere: once distressed sellers start to sell they dictate the market prices. You can be perfectly happy to ride out a storm, your house will still be valued according to what other houses are changing hands for.

It’s kind of an amazing attitude to say ‘so what’ about rising interest rates as if that applies to the population in general. All good if you are ‘rich’, but how many of these borrowers are genuinely rich and financially untouchable when it comes to rising costs? The issue is that there is currently a veneer of wealth which was created by rising house prices, but when those house prices are going in the other direction that veneer of wealth quickly disappears.

It’s brave of you to stay this optimistic (I won’t say deluded) in the face of a gathering storm. As I mentioned previously, a global recession seems likely and that will see job losses and a battening down of hatches. And you may well say ‘so what’ in regards to that as well, but will highly leveraged people on moderate incomes be saying ‘so what’ along with you?

You seem convinced that government (or maybe divine) intervention will swoop in and save everyone’s bacon. It’s an interesting idea (‘moral hazard’) but hard to know where the firepower could come from at this late stage of the game in an inflationary environment and with a plethora of global issues confronting us.

[kiora]

Which all points to the government/reserve bank will not be wanting interest rates to go any higher. Mud on their faces if the new owners can't afford their mortgages ?

[Logen Ninefingers]

Which all points to the government/reserve bank will not be wanting interest rates to go any higher. Mud on their faces if the new owners can't afford their mortgages ?

We move in lock step with the Federal Reserve. It happened on the way down and it was all good, if it doesn’t happen on the way back up then the NZD will tank and it’s purchasing power will evaporate, and we could see hyperinflation. We can’t set monetary policy in order to give these hand-outs and bail-outs to property market participants, and that is the way it should be. If people are happy to take a risk and borrow eye-popping sums of money then they can’t really whinge about it when economic circumstances change.

[Bjauck]

Which all points to the government/reserve bank will not be wanting interest rates to go any higher. Mud on their faces if the new owners can't afford their mortgages ?

Yep. It was madness to allow risky high LTV loans when interest rates fell in a pandemic with uncertain outcomes.

[Logen Ninefingers]

Ireland has a DTI limit of 3.5 times income. They learnt from their housing market crash, we didn’t learn from theirs or the one in the US.