Handle9: Sustainable pricing isn’t the same as accessible or affordable. It just means it’s unlikely to collapse.

Whatever you want to call it, the prices are still too frikken' expensive/high/unaffordable.

House prices are appropriate relative to rental income. The problem isn't high house prices, it's high rents. 

• 29% of salary goes to various taxes (US = 24.8%, Professional Kiwi = 29%, NZ median = 30%.)
• the median 2022 salary of $79,128
• the lowest new interest rate of 6.49% for 3 years, which is literally what every bank in New Zealand charges.

alasta:

 

House prices are appropriate relative to rental income. The problem isn't high house prices, it's high rents. 

 

And rents are subsidised by the taxpayer to the tune of several billion dollars per year. What a rort. 

They are? That's news to me, why hasn't my rent gone down accordingly?

quickymart:

 

They are? That's news to me, why hasn't my rent gone down accordingly?

 

Because the accommodation supplement drives up market rents, hence shifting the burden of rent from those receiving the supplement to those who don't. 

quickymart:

 

They are? That's news to me, why hasn't my rent gone down accordingly?

 

You can apply here if you are eligible. https://www.workandincome.govt.nz/products/a-z-benefits/accommodation-supplement.html

alasta:

 

House prices are appropriate relative to rental income. The problem isn't high house prices, it's high rents. 

 

That is potentially what it should be, but a lot of people buy rentals for the future potential of the land and potential future capital gains, and often those rentals are old run down houses. Investors dont' seem to like new builds as much, even though they can claim interest deductability on them, possibily beucase they don't have the same scope for capital gains and usually can't be subdivided in the future etc 
House prices are tied to interest rates...lower interest rates, higher house prices, as people can afford to service a larger mortgage. The thing is that many landlords will be mortgage free, or only have a small mortgage compared to todays value of the house, yet the rents they are charging maybe what they would be if they had an 80% mortgage on the house. This is because there are landlords who purchased recently who purchased in todays market who got an 80% mortgage, which they have to service from the rent they get. So that almost seems to set the market rent. Despite many old landlords saying they have increased rents due to the increased interest rates and higher mortgage servicing costs. They can get the higher rent prices due to incoming net migration numbers creating very high demands for housing and NZ has a housing crisis. Rents seem to have increased substantially more in Oz recently where migration is going through the roof. 

kingdragonfly: My quick calculations, based on NZ median.

Note magic 30% affordability mortgage payment is less affordable here than in the US, due to our higher tax burden. US = 24.8%, Professional Kiwi = 29%, NZ median = 30%.

It is over 50% in NZ according to this article https://www.stuff.co.nz/business/property/129681203/more-than-half-of-household-income-goes-on-the-mortgage-corelogic-says

But what do banks consider a comfortable percentage when lending for a new mortgage?. IMO US market is different as they are more a more  user pays economy  than NZ so they have to pay for things like health insurance or health care etc, which is one reason NZs taxes are higher.

alasta:

 

House prices are appropriate relative to rental income. The problem isn't high house prices, it's high rents. 

 

kinda.

one issue is people buying high priced houses then renting them out and of course have to charge high rents to cover the finance etc. so house prices dictate rent price to fair degree, so high house prices is a problem for renters.

then there is "market rates" which is simply what your mate charges. you can do a bit more than him, then he can do a bit more than you, then you can do a bit more than him ............. untill tenants run out of money.

just like housing, its all about squeezing as much as possible out people. 

then you want high house prices so you can sell for more than you paid and make untaxed profits.

kingdragonfly: My quick calculations, based on NZ median.

Note magic 30% affordability mortgage payment is less affordable here than in the US, due to our higher tax burden. US = 24.8%, Professional Kiwi = 29%, NZ median = 30%.

I'll use

 

• 29% of salary goes to various taxes (US = 24.8%, Professional Kiwi = 29%, NZ median = 30%.)
• the median 2022 salary of $79,128
• the lowest new interest rate of 6.49% for 3 years, which is literally what every bank in New Zealand charges.

If 30% of the after-tax salary went to the mortgage:
20 years = $189,000 loan
30 years = $222,000 loan

If 100% of the after-tax salary went to the mortgage:
20 years = $628,000 loan
30 years = $740,000 loan

now consider that in my local rural cheap cheap town here, a fhber house is now $400-500k range.