Auckland housing market

[Bjauck]

Labour's CGT will catch many assets as well as residential property - shares, most businesses and farms for example.

As to incentives for residential property - what are they do you think? Not tax incentives, according to the IRD.
.

I agree... many promote CGT as a way of controlling house prices but it is a blunt instrument for that. A Capital Gains Tax (as applied in the UK and other countries) would only marginally alter the appeal of NZ residential housing as an investment destination. Owner occupied housing (most of the housing market) would be exempt (as otherwise would be political suicide!). So it would become more tax-advantageous to invest more heavily in your own home (as an extra private pension plan perhaps) especially since share and financial investments would become liable to the new capital gains tax unlike owner-occupied housing! There would be no new advantage for share investments...as they would be liable for CGT as well as rental housing investments.

[In4a$]

Labour's CGT will catch many assets as well as residential property - shares, most businesses and farms for example.

As to incentives for residential property - what are they do you think? Not tax incentives, according to the IRD.

Why should there be different rules for businesses owning rentals compared to businesses owning say commercial buildings?

As to the 20% LVR, it is clear that banks have been too restrictive and are now loosening up on this. And how do you know that investors paid premium prices in your street? Do you mean they paid more than others were prepared to pay? The vendor has skin in the game too - do you think they should be forced to sell more cheaply depending on the intention of the buyer? A very slippery slope. And surely you are aware that investors usually make their money when they buy, as they say, so they are not going to overspend unless they have other reasons to buy.

There has been a lot of hype politically and in the press about house prices mainly in Auckland, the rest of the country not so much. Suggest you don't buy uncritically into it.

When they are sold at auction and the only buyers left at the end are investors, its pretty obvious they can afford to pay more than the families they out bid. I was looking at buying one as a do up, sold way above what I was prepared to pay.

[Bjauck]

...
As to incentives for residential property - what are they do you think? Not tax incentives, according to the IRD.....

There is an explicit incentive to own your own home especially as you get older. If you need to apply for a subsidy for long-term residential care, the asset threshold if you do not own your own home is $215,132. Whereas if you own your own home, the threshold is $117,881 PLUS your home. As the value of the average home in Auckland is way more than $100,000, this government test is a way of encouraging people to keep as big and as expensive house as they can afford as a way of passing their wealth to their beneficiaries. http://www.health.govt.nz/our-work/l...sset-threshold

Another incentive to own your own home (as opposed to investing in rental housing) is the fact that the benefit you derive from it, accommodation, is untaxed. Whilst if you decide to invest in financial assets and live in rental accommodation, you need to find rent out of your taxed income.

[skid]

One things for sure -There are alot gunning for ole property owners-----Its still beyond me how the RBNZ could raise interest rates and still manage to talk down the currency--I personally dont think that they could successfully carry out their threats of controlling the currency by intervening in the market--but for now ,just the hint that they would has worked

[RTM]

Completely agree with respect to the LVR Moosie. It would only have taken a 10% decrease in house values to see many folk under water. Not to mention the exposure of the banking system. 20% is probably about the right number....for the whole country. Our young folk need to realise that getting into a house takes time effort and considerable saving. Just as it used to years ago. Nothing has changed there. As an aside...on our second house we had three mortgages...18, 21 and 24 %. Times were tough back in those days as well.

[Okebw]

Completely agree with respect to the LVR Moosie. It would only have taken a 10% decrease in house values to see many folk under water. Not to mention the exposure of the banking system. 20% is probably about the right number....for the whole country. Our young folk need to realise that getting into a house takes time effort and considerable saving. Just as it used to years ago. Nothing has changed there. As an aside...on our second house we had three mortgages...18, 21 and 24 %. Times were tough back in those days as well.

My parents enjoy regaling me with stories of their first mortgage at 24%. Though I too completely agree with the LVR restrictions. Younger people have gotten far used to credit and that is not an approach that should be taken towards housing. We touched briefly on the LVR in a few of my property/finance papers and I feel people are expecting results far sooner than changes like this generally take.

[Balance]

LVR is proving effective.

But to sting the banks, the RBNZ needs also to act on RAR - reserve asset ratio. Makes it more attractive to lend to businesses rather than houses.

Meanwhile, I will go on record by saying we do not have a housing bubble - what we have is horrendous under supply and strong demand.

What we also have is price inflation by councils who are increasing their charges without restraint - that is the single biggest problem.

[Whipmoney]

But to sting the banks, the RBNZ needs also to act on RAR - reserve asset ratio. Makes it more attractive to lend to businesses rather than houses.

What do you mean by this Balance?

If you force the banks to focus more of their lending towards business then you will end up with over-leveraging in this sector which would have potentially catastrophic long-term effects.

The goal of the LVR restrictions was to lower the aggregate leverage in the housing sector which in turn leads to a higher national savings base as a higher deposit is required. It wasn't intended to force banks to lend more heavily into other sectors (e.g. business/property/farming) as a substitution effect.

By reducing the leverage in the housing sector you reduce aggregate demand and therefore prices and the excessive returns. Lowering of the returns in turn leads to an incentive to 'invest' in other asset classes (e.g. shares or bonds) which is good for the countrys overall capital structure.

[vorno]

I tell you, I'm temped to move out of Auckland - I love the idea of buying a house in say Dunedin and being able to pay it off in 10 years.

[RTM]

Try the far north. Better weather. Real estate also well priced. Great lifestyle !
Kerikeri is great !

I tell you, I'm temped to move out of Auckland - I love the idea of buying a house in say Dunedin and being able to pay it off in 10 years.