Quote Originally Posted by JBmurc View Post
I watched an interview today on the US Markets talking about debt issues etc ... saying how the property bubble is back with House price-to-income multiples over 4 !!! here across NZ the average is around 6 Auckland 9 ---Queenstown the most out of balance with 13 !! (I'm sure Central Otago would be around Auckland rates)
and that's the real reason! If the US is talking of a housing bubble where it's a multiple of 4, what does that leave for NZ? What keeps NZ real estate going is the preferential tax treatment vs investing in other ventures (ie small business or shares). If houses in NZ had capital gains tax similar to abroad, then we would see as much speculation and the housing multiples would be much lower. Also part of the reason for the much higher multiple in NZ is taxation is much higher than in America, meaning it takes a lot more years ; or a higher multiple. But overall you simply can't compare US houses to NZ houses as it would be like comparing apples to oranges. In the US, house sizes are clearly massive. The middle class person in the US lives in a house that only maybe the 1% in NZ would afford in NZ (and that's if 5000 ft^2 McMansion size houses were a common thing in NZ which they are not). Furthermore, US house sizes are based on "livable space" vs in NZ house size is determined by basically the size of the slab foundation (no factor on the thickness of the walls, hallways, aspects that matter on the term "livable space". The garage space or balcony / decks are not livable spaces in the US but can be in NZ. So a 280m2 size house in NZ is really only a 2000 ft2 size house in America.

Don't believe the economists from various NZ banks as they're misleading like their Kiwi Saver funds NZ banks keep promoting. Well.. deceptive in that the full taxation of the funds and to the individuals are not spelled out clearly when investing NZ or foreign equities. They don't know the full impact of things on a global scale. So when a ban is set, the impact is it discourages OTHER forms of investments (trickle effect).

Close friend living in Vancouver keeps me up with the un-affordability of housing there. But after his visit to Auckland last year, he completely understands what I meant by comparing apples with oranges. The Auckland house doesn't have the central heating / home comfort as the Vancouver and all at a price tag where the Auckland house is more than in Vancouver, while being 40% smaller in size. Narrow streets, no back alley access.

One thing that will definitely hurt NZ is if migration goes the other way (more people leaving NZ and those coming in). Of course this is on to a different topic but the issue of brain drain is a concern. When NZ public hospitals get a low grade report because it's cheaper to use senior nurses to take care of patients when it should be a proper doctor (because most likely many of these doctors have left NZ). NZ gov't doesn't pay enough and each wave of strikes that happen, the Labour Gov't fixes it with raising more pay which in effect, loads up the productive class of NZ by making them pay more taxes.