NZ 1st homebuyers are ScReWeD...

[Aaron]

Not sure if capital gains tax would be a thing or necessary with 0% inflation.

I guess the only capital gains would be from providing actual value, rather than just borrowing, holding assets and waiting for the central bank to boost your rents and decrease your debt.

[blackcap]

I guess the only capital gains would be from providing actual value, rather than just borrowing, holding assets and waiting for the central bank to boost your rents and decrease your debt.

That would be the case, and then I would argue that a tax is not necessary.

Then again, I am biased against tax, I am of the opinion that tax is theft. (State sanctioned theft, but theft none theless)

[Aaron]

That would be the case, and then I would argue that a tax is not necessary.

Then again, I am biased against tax, I am of the opinion that tax is theft. (State sanctioned theft, but theft none theless)

Your abhorrence to all taxes aside we tax productive labour, why not productive capital?

Also a capital gains tax would get the rentiers contributing a bit more to society, even if they are not adding value.

No one likes paying tax but it would appear what we might consider the more successful countries tend to have higher taxation and stronger public institutions.

[JBmurc]

RBNZ guarantees at least a 1-3% rise each year although as unhuman points out the RBNZ has spectacularly out performed their inflation targets with asset prices. Although assets do not form a big part of the CPI so maybe they do not measure it.

Interest deductibility will return soon thanks to Chris and the team. I agree with it though, it is inflation targeting that seems to be what distorts things.

This guy has an interesting take on things although he is talking about Australia.

"The rental property sector in Australia is not a net tax payer. The deductions actually exceed the income.

and that is with a capital gains tax.

https://www.abc.net.au/news/2024-02-...ears/103465044

Hopefully Chris can get the rental market back in order so landlords can get back to contributing very little to the nation. Guaranteed 2% tax free capital gains probably more like 7% and with Adrian at the helm mortgages are 6-7% easier to pay off each year, although the current return of interest rates has many moaning.

the assets aren't going up in value ... the NZD is dropping in value ..it's heading southwards and will continue to unless interest rates go high enough to make that NZD value higher say we had 10-15% interest rates etc

Just think of the value lost in the NZD.. if I had a million NZD 25 years ago in Queenstown I'd be so rich could buy a nice property in a great location and a couple of Queenstown rental homes earning 7-8% return(I recall it well as I had a contract on a property for 3bd freehold house for $173k in sunshine bay in year 2000)..and still have enough funds to invest in the market and pick up great stock for peanuts ...

Fast forward to the present mass dilution of the value of the NZD YOY...

that same NZD $1mill today in Qtn wouldn't get me home anywhere in Qtn ... but a 1-2 bed shoebox unit that would return 3-4%

[Aaron]

Yep inflation is the devaluing of dollars.

Looking back this thread was started by crypto crude back in 2007 when he was 22, now he is 38. With a name like crypto crude I would hope he has made millions in oil or crypto so housing is not a problem. I guess that was just before the GFC so hopefully he bought a house a few years later in the aftermath. That would have been his best chance as central bank largess has probably pushed house prices even higher cf wages.

Good to see rents rising though. Labour and National governments (OUR GOVTs) have been pouring immigrants into NZ for many years now to push down wages and push up rents. I do not think that will assist young NZers onto the property ladder but then who does our govt represent?

https://www.newshub.co.nz/home/money...s-to-soar.html

Rising rents and cheaper and more varied places to dine out as well as the security of more care workers for the elderly, sounds like utopia for a retired/retiring boomer with no debt and a couple of rentals.

I am a bit hard on the boomers of the last three prime ministers only John Key is a boomer. Jacinda and Chris are GenX, Jacinda was nearly a millenial.

[Aaron]

I may not like his ideology but Sir John Key is a clever guy. He thinks house prices should double over the next 10 years and interest rates will be going down by next year. He is probably right.

https://www.newshub.co.nz/home/new-z...e%20to%20blame.

Obviously if interest rates are going down then house prices should go up. But Sir John also gave immigration, rising costs and higher salaries as reasons for his prediction. He doesn't say if salaries will keep pace with house price rises. Funnily enough he did not mention land constraint being a big issue. From some quarters this appears to be the main reason for rising house prices. I think sir john is smarter than those people.

Interesting that while house prices are doubling in 10 years that is a rate of 7%pa and if wages are rising, CPI inflation will be within 1-3%? Something does not add up in my head. Maybe cheap imports from Asia will get even cheaper.

Interesting also that national prefers to index some benefits to CPI inflation (not national super of course don't s*it on your voter base).

What does CPI really measure? Is it fit for purpose?

An interesting note in the article.

Inflation and rising mortgage costs saw median house prices dip from their $925,000 peak in November 2021 to $760,000 in January this year, according to data from the Real Estate Institute of New Zealand.

That is an 18% drop in 18 months with inflation running at 6%-7% maybe we need to buy the dip. I wonder how Max's property development company is going.

Probably good news for retirement villages share prices. Poor ValueNZ is getting a hard time on the OCA thread.

[Aaron]

Following on from yesterdays post I see an opinion piece pointing out that land restriction is the cause of all housing issues. Too much govt.

https://newsroom.co.nz/2024/02/27/nz...sing-problems/

From Dr Eric Crampton he must be smart so I guess land restriction might be part of the problem, but I have seen how developers like to cut up land flog it off quick and leave the ratepayers to fix up all the corners they cut. So lumping the costs on the developers and buyers versus spreading a lot of the costs over new and existing ratepayers.

Also see that it is from the NZ Initiative, a group that do not even understand that GST is a regressive tax.

More interesting was Matthew Hooton's opinion piece this morning. To quote.

Bishop cites a 2007 paper, which he says suggests doubling a city’s population might increase its productivity or per-capita GDP by 15 per cent.

If so, doubling Auckland’s population to 3.4 million over the 36 years to 2060 would increase Aucklanders’ average earnings by 0.4 per cent a year.

https://www.nzherald.co.nz/business/...KACSHBJX4KBIY/

So Chris Bishop and National are wanting to double our population and the policies they promote only discourage young NZers from having a family and encourage them to leave the country so that just leaves immigration from the third world. I guess it is easier and cheaper than investing in the younger generation.

This is just sad especially as Matthew points out some real life cities that appear to prove the productivity bs wrong. When did townies wrest control of this nation. It almost makes me want to return to First Past the Post.

National appears to be set to make NZ another crowded s*ithole in Asia. At least the young people leaving won't feel like coming back to raise a family like they used to.

It makes you wonder why Luxon wants to be PM.

https://www.msn.com/en-nz/news/natio...1ccb101b&ei=11

It says he is the first PM to claim this in 34 years. All legitimate Bill English sorted this.

Hooton also points out that Labour flooded NZ with immigrants just prior to the election in the hope that it would boost GDP and help their chances at re-election. All these politicians are starting to come across as self centred scum bags much like myself. I would have hoped for better from our leaders but I guess we are the ones that vote them in.

[Lego_Man]

I may not like his ideology but Sir John Key is a clever guy. He thinks house prices should double over the next 10 years and interest rates will be going down by next year. He is probably right.

https://www.newshub.co.nz/home/new-z...e%20to%20blame.

Obviously if interest rates are going down then house prices should go up. But Sir John also gave immigration, rising costs and higher salaries as reasons for his prediction. He doesn't say if salaries will keep pace with house price rises. Funnily enough he did not mention land constraint being a big issue. From some quarters this appears to be the main reason for rising house prices. I think sir john is smarter than those people.

Interesting that while house prices are doubling in 10 years that is a rate of 7%pa and if wages are rising, CPI inflation will be within 1-3%? Something does not add up in my head. Maybe cheap imports from Asia will get even cheaper.

Interesting also that national prefers to index some benefits to CPI inflation (not national super of course don't s*it on your voter base).

What does CPI really measure? Is it fit for purpose?

An interesting note in the article.

Inflation and rising mortgage costs saw median house prices dip from their $925,000 peak in November 2021 to $760,000 in January this year, according to data from the Real Estate Institute of New Zealand.

That is an 18% drop in 18 months with inflation running at 6%-7% maybe we need to buy the dip. I wonder how Max's property development company is going.

Probably good news for retirement villages share prices. Poor ValueNZ is getting a hard time on the OCA thread.

So you're talking average Auckland house pushing $2m in 10 years. What does wage growth have to be to justify those valuations? Factoring in DTI limits of 6x.

[Aaron]

So you're talking average Auckland house pushing $2m in 10 years. What does wage growth have to be to justify those valuations? Factoring in DTI limits of 6x.

Don't know why you are asking me the maths question as you are better at it than me, but assuming a 10% deposit of $200,000 on a $2mill house that is $1.8mill divide by 6 equals $300,000. With an average income of $100,000 now that is only a 200% increase over the next 10 years. I guess if your income isn't rising by 20% pa(200%/10yrs) you are going backwards?

John is probably not talking about the average NZer I imagine with the rise in asset values he and his family will have sufficient equity so that the income limits are not a problem. That is why targeted inflation works so well. It boosts asset prices.

On the theme of Auckland house prices, the front page of the herald had a story about a woman whose son was not enrolled in Auckland Grammar even though he lives in zone. Apparently she had to fly all the way from Hong Kong where she lives and works to sort it out.

https://www.nzherald.co.nz/nz/auckla...GUHG6GSEQYJC4/

She owns a house in the grammar zone and her father looks after the boys here in NZ.

To me the interesting story would be the the family, with my xenophobic, glass half empty view of the world I would like to know if she has an import/export business helping sell NZ products to the world, or if she lives and works and pays tax in Hong Kong contributing nothing here in NZ, while her Dad collects the pension in NZ and her boys get free schooling all courtesy of the NZ taxpayer.

If that were the case she is pretty ballsey and shameless going to the papers to complain.

The other issue is crowding at schools due to excessive immigration.

[Aaron]

Renters are "grateful" for interest deductibility for landlords says Chris Luxon. Yeah right get me a Tui's. I would laugh but I think Chris probably genuinely believes this.

https://www.msn.com/en-nz/news/natio...d50d26ee8&ei=8

I wonder if first home buyers are grateful?

I was against penalising residential housing with the removal of interest deductibility as it was not consistent with other investments and seemed overly complicated. I guess the woke Labour liberals did not see housing as an investment.

I thought the interest deductibility for new homes was a good add on though to encourage new builds, but I guess rentiers prefer to own existing assets and take rents rather than building something new. They can get capital gain by pushing up rents each year which seems less risky than actually building a house.

Adrian Orr should help keep house prices rising with his out of control inflation (cost of living crisis) and the NZ taxpayer is helping to the tune of $1.5billion a year in accommodation supplements.

Who wants to bet that the accommodation supplement is one area of welfare spending that the govt does not cut back on? Because it directly helps the poor, wink wink nudge nudge