Real estate, post COVID-19 level 4 (since 2020)

Forums › Home Workshop DIY › Real estate, post COVID-19 level 4 (since 2020)

1 | ... | 149 | 150 | 151 | 152 | 153 | 154 | 155 | 156 | 157 | 158 | 159 | ... | 174

20520 posts

Uber Geek
+1 received by user: 4798

#3154486 1-Nov-2023 15:48

mudguard:

tdgeek:

Perhaps Kiwisaver should be limited to new builds.

I think it would result in Kiwisaver being relegated to an afterthought. I think people would start new jobs and the first thing people would do is opt out, or put contributions on hold.

As I mentioned earlier I put 8% in for a long time as I had a specific goal of buying a house. It took over a decade. But if it was locked in until 65 there's no way I'd contribute.

I mean if a government were to change the rules regarding a first home purchase, then perhaps it should be limited to new Kiwisaver accounts, not existing.

I went into Kiwisaver when the perks existed. eg the free initial $1000 kickstart which National more recently removed, as IMO in the longer term I think it will become compulsory once they remove all the perks, as I understand it is already in Oz. Oz seems to be many years ahead of NZ when it comes to retirement savings and taxation around property etc. If all of Australias policies came into NZ, many would be complaining a lot and wanting to vote the government out. Yet so many NZers want to move to Oz and Oz is seen as the greener pasture. But unlike NZ, they haven't have a house price crash from the peaks of 2021.

Also under National Kiwisaver will now be locked in until 67 for most under 50, unless they change the law, because it is tied to the age of super eligibility. So we will have less time to spend our Kiwisaver savings. I wrote to Mary Holm about Kiwisaver eligibility age being increased and she published my letter in the NZ Herald which you an read at https://maryholm.com/nz-herald-7-october-2023/

tdgeek

30048 posts

Uber Geek
+1 received by user: 9455

Trusted

Lifetime subscriber

#3154489 1-Nov-2023 16:01

mattwnz:

I went into Kiwisaver when the perks existed. eg the free initial $1000 kickstart which National more recently removed, as IMO in the longer term I think it will become compulsory once they remove all the perks, as I understand it is already in Oz. Oz seems to be many years ahead of NZ when it comes to retirement savings and taxation around property etc. If all of Australias policies came into NZ, many would be complaining a lot and wanting to vote the government out. Yet so many NZers want to move to Oz and Oz is seen as the greener pasture. But unlike NZ, they haven't have a house price crash from the peaks of 2021.

Also under National Kiwisaver will now be locked in until 67 for most under 50, unless they change the law, because it is tied to the age of super eligibility. So we will have less time to spend our Kiwisaver savings. I wrote to Mary Holm about Kiwisaver eligibility age being increased and she published my letter in the NZ Herald which you an read at https://maryholm.com/nz-herald-7-october-2023/

What I bolded is the essence of many issues we and other countries have. Rightfully we should be vocal about what needs fixing. But many don't want to pay for it, which invariably would be taxation.

Crash? I see it as an adjustment. Remove the 2020 to 2022 period and its pretty much BAU

wellygary

8826 posts

Uber Geek
+1 received by user: 5310

#3154490 1-Nov-2023 16:04

mattwnz:

I went into Kiwisaver when the perks existed. eg the free initial $1000 kickstart which National more recently removed, as IMO in the longer term I think it will become compulsory once they remove all the perks, as I understand it is already in Oz. Oz seems to be many years ahead of NZ when it comes to retirement savings and taxation around property etc.

But once you become eligible for superannuation , NZ has a much better system if you decide you want to keep working...(even part time) .

https://www.abc.net.au/news/2023-10-25/over-65-retire-work-pension-new-zealand-is-better-than-australia/103014000

In 2022 only 58% of Australians over 65 received the age pension from Centrelink

https://www.aihw.gov.au/reports/australias-welfare/income-support-older-australians

mattwnz

20520 posts

Uber Geek
+1 received by user: 4798

#3154608 1-Nov-2023 18:08

tdgeek:

Crash? I see it as an adjustment. Remove the 2020 to 2022 period and its pretty much BAU

Depends on how one spins it. But overseas media has has referred to the NZ housing market as a crash. eg for example https://www.nytimes.com/2023/06/19/business/new-zealand-housing-prices.html

Over 20% fall in Wellington from the peak. 18% overall, which when factoring in inflation very high as well, it would likely be over 20% . There will be many that purchased in the peak that will currently have a house worth a lot less now than they paid. for it.

I did find this article interesting about NZs housing crisis from an overseas perspective. https://theconversation.com/as-nz-struggles-to-resolve-its-long-running-housing-crisis-investors-should-be-taxed-for-keeping-homes-empty-212356

My local council is also looking at bringing a surcharge for AirBNB owners and there are many property owners outraged about it. Wish more councils were looking into doing this. This is despite there being a lack of rentals or affordable houses to buy.

tweake

2653 posts

Uber Geek
+1 received by user: 1140

#3154609 1-Nov-2023 18:15

tdgeek:

Im fortunate to live in an upmarket house in an upmarket area in the Garden City. Yay on me. Its gone up 600k since 2017, sweet. Where is my 600k profit? We still have the same two cars, the same motorbike and the same lawnmower. Where is my profit???

your profit is stored in your house. you just have to release it by selling. of course its just paper wealth and not real wealth until you sell. the whole point of climbing the ladder is to store more and more until you finally sell and collect.

tweake

2653 posts

Uber Geek
+1 received by user: 1140

#3154610 1-Nov-2023 18:21

mattwnz:

What iscrazy in NZ is that most landlords / property investors buy for the capital gains over a long period of time,

well the good ones do, but i'll argue most do not. in fact i'm not against long term investment at all. its the short term ones that tend be the problem.

the catch here is what do you call a property investor, because most home owners are an investor in their own home. they are the single biggest group of investors and kiwis have a very short average hold time of 7 years. so we do very little "capital gains over a long period of time".

Dell

Shop now for Dell laptops and other devices (affiliate link).

tweake

2653 posts

Uber Geek
+1 received by user: 1140

#3154615 1-Nov-2023 18:35

tdgeek:

mattwnz:

So I would argue that Kiwisaver may have increased house prices even more than they would normally be, as the lower end of the market increased by those FHBs.

Fully agree. More buyers = more demand = higher prices. However, as stated, owning your home is a good social investment. Security, insulated from annual rent increases. Insulated from annual house price increases.

Perhaps Kiwisaver should be limited to new builds. Dampens demand on the current housing stock which is shared between owners and renters. New builds means that dampens the rental market as FHB's move from renting to ownership. I think NZ citizens build 40k or 60k houses over annum? Imagine if that doubled. You would be resolving the demand/supply house inflation in a few years.

Immigrants, maybe they are allowed to rent for 5 years max, then, under the status they were granted residency, they must build within 5 years or buy an existing house that is being sold as the owners are building. Thats probably a little messy, but that type of theme.

i'm not sure.

having a saving scheme for buying houses is a good thing. however taking from the retirement fund costs you a huge amount in the long run. retirements funds are about having it for a long time. emptying it out half way through means you have no time to build it back up.

a retirement fund should be just that and only for that. however i suspect they could quite easily run a separate fhbers house fund along side it thats is only used for a first home. the reason for having the two is any savings scheme that's not locked away for a set purpose becomes a target by the RE industry. which is why i put high probability they will open up kiwi saver so it can be exploited by housing.

mattwnz

20520 posts

Uber Geek
+1 received by user: 4798

#3154619 1-Nov-2023 18:43

tweake:

tdgeek:

Im fortunate to live in an upmarket house in an upmarket area in the Garden City. Yay on me. Its gone up 600k since 2017, sweet. Where is my 600k profit? We still have the same two cars, the same motorbike and the same lawnmower. Where is my profit???

your profit is stored in your house. you just have to release it by selling. of course its just paper wealth and not real wealth until you sell. the whole point of climbing the ladder is to store more and more until you finally sell and collect.

Or if NZ had voted for a wealth tax, or even possibly a land tax, people may have to pay a % of that property value each year in tax. So if the value increases each year, then the tax amount may also increases if it is done as a % of the value. But people won't necessarily have the income to pay that tax, because the property may not generate income or create any cash apart from a paper gain. IMO that is worse than having a CGT, which you only pay when you have cash after selling the house. Home owners do already do pay a form of wealth tax in the form of council rates, so higher value properties often pay more in rates, which IMO isn't very fair, although some councils are now moving to a fixed fee per house for some things. Councils justify this by saying that those with higher value properties usually also have higher incomes and can therefore usually afford to pay higher rates. Even though that is often not the case. Landlords however benefit from council rates, because they may rent out a house to 3 lots of couples all sharing that house. That is 6 people, and the landlord only pays normal residential rates even though they are running it as a business, and the house is using more council services for those 6 people renting it.

mattwnz

20520 posts

Uber Geek
+1 received by user: 4798

#3154623 1-Nov-2023 18:58

tweake:

mattwnz:

What iscrazy in NZ is that most landlords / property investors buy for the capital gains over a long period of time,

well the good ones do, but i'll argue most do not. in fact i'm not against long term investment at all. its the short term ones that tend be the problem.

the catch here is what do you call a property investor, because most home owners are an investor in their own home. they are the single biggest group of investors and kiwis have a very short average hold time of 7 years. so we do very little "capital gains over a long period of time".

I would consider a home you live in as not an investment and it doesn't generate any income, and it does have a lot of ongoing costs. Maybe one expects it to increase in value over time, but you have to buy another home if you sell it. Or if you cash out and move into a rest home, the buy in cost of that rest home is likely to be similar to the price you sell you house for, as they often increase in price in line with house price growth. So I wouldn't bank on the home one lives in always increasing in value. Also natural disasters, flooding and sea level rises could negatively affect the house and land value, especially if people find they can't get insurance.

I was listening to a property investor expert on the radio recently, and she was saying that she didn't think FHBs first home should necessarily be a home they live in, but rather it should be an investment property that generates income, if they want to grow wealth from property. Although my understanding is that that would then prevent them later buying a first home and using their Kiwisaver to buy it. But i makes me wonder how many FHBs are incorrectly using kiwisaver to buy their first investment property.

Handle9

11930 posts

Uber Geek
+1 received by user: 9690

Trusted

Lifetime subscriber

#3154624 1-Nov-2023 19:04

Creating new taxes doesn’t increase supply of housing which is the fundamental problem.

You’ve referenced Australia a number of time and their property market is exploding again.

logo

659 posts

Ultimate Geek
+1 received by user: 255

Trusted

#3154625 1-Nov-2023 19:12

tdgeek:

Im fortunate to live in an upmarket house in an upmarket area in the Garden City. Yay on me. Its gone up 600k since 2017, sweet. Where is my 600k profit? We still have the same two cars, the same motorbike and the same lawnmower. Where is my profit???

You will be able to leverage against that "profit".

Want to borrow money to buy another rental property - leverage off the increased value of your home

Want to borrow money to buy a business? Good luck trying to get an unsecured business loan. Using the equity in your home you increase your chances (the bank now has collateral) and get lending at a lower interest rate

Want to put solar panels on your house or buy a new EV? Get a 0 or 1% home loan from the bank

Geekzone support

Support Geekzone with one-off or recurring donations Donate via PressPatron.

tweake

2653 posts

Uber Geek
+1 received by user: 1140

#3154627 1-Nov-2023 19:15

mattwnz:

I would consider a home you live in as not an investment and it doesn't generate any income, and it does have a lot of ongoing costs. Maybe one expects it to increase in value over time, but you have to buy another home if you sell it. Or if you cash out and move into a rest home, the buy in cost of that rest home is likely to be similar to the price you sell you house for, as they often increase in price in line with house price growth. So I wouldn't bank on the home one lives in always increasing in value.

we have been told for a very long time to "invest in your home", "your home is your biggest investment", now your trying to say its not an investment ?????

wither its a net profit to you depends on many things. this is just gross profit, difference between buy and sell. after all that is what effects the cost to the next guy.

as far as any tax goes imho the best is to tax the profit, the difference between buy and sell price. then use that tax money to build more houses.

mattwnz

20520 posts

Uber Geek
+1 received by user: 4798

#3154629 1-Nov-2023 19:21

It is usually your biggest asset, but that doesn't mean it should be treated as investment. Isnt that one reason it isn't subject to capital gains tax in countries like Australia. If it was an investment, then shouldn't the owner be paying tax if sold for a profit, as the intention to buy was to make a profit.

tdgeek

30048 posts

Uber Geek
+1 received by user: 9455

Trusted

Lifetime subscriber

#3154630 1-Nov-2023 19:24

mattwnz:

Depends on how one spins it. But overseas media has has referred to the NZ housing market as a crash. eg for example https://www.nytimes.com/2023/06/19/business/new-zealand-housing-prices.html

Over 20% fall in Wellington from the peak. 18% overall, which when factoring in inflation very high as well, it would likely be over 20% . There will be many that purchased in the peak that will currently have a house worth a lot less now than they paid. for it.

I did find this article interesting about NZs housing crisis from an overseas perspective. https://theconversation.com/as-nz-struggles-to-resolve-its-long-running-housing-crisis-investors-should-be-taxed-for-keeping-homes-empty-212356

My local council is also looking at bringing a surcharge for AirBNB owners and there are many property owners outraged about it. Wish more councils were looking into doing this. This is despite there being a lack of rentals or affordable houses to buy.

Yep Matt. I feel that 20% is the threshold for a crash, I get that. If there was a crash it would be on the news all night, its not. If Covid and its support mechanisms never happened, prices are likely to be as they are now. One off extraordinary event then the adjustment. As my graph showed. If anyone bought then, with 2% interest rates, expecting them to last forever, I have no sympathy. Those that already had mortgages, which then dropped to 2% and are now a lot higher are in general, no worse off. Normal rates, then cheap rates then higher rates. Over the past few years, its likely to have evened out.

tdgeek

30048 posts

Uber Geek
+1 received by user: 9455

Trusted

Lifetime subscriber

#3154631 1-Nov-2023 19:31

tweake:

tdgeek:

Im fortunate to live in an upmarket house in an upmarket area in the Garden City. Yay on me. Its gone up 600k since 2017, sweet. Where is my 600k profit? We still have the same two cars, the same motorbike and the same lawnmower. Where is my profit???

your profit is stored in your house. you just have to release it by selling. of course its just paper wealth and not real wealth until you sell. the whole point of climbing the ladder is to store more and more until you finally sell and collect.

Correct as bolded

Most people in NZ own one house, so they cannot sell to realise the "profit"

LADDER

Buy a 50k 3bedder way back
Sell the 3 bedder for 150k and buy the same equivalent house elsewhere , 150k No profit.
And so on

Now when they sell at retirement and downgrade to a 2 bedder, then get cash. Nothing wrong with that. Its a personal Kiwisaver. Sell the V8 to get a 1300cc 3 door, get the cash (yes I know car analogies suck!)

1 | ... | 149 | 150 | 151 | 152 | 153 | 154 | 155 | 156 | 157 | 158 | 159 | ... | 174