NZ 1st homebuyers are ScReWeD...

[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