Real estate, post level 4

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#2595592 31-Oct-2020 18:57

mattwnz:

Housing is not really less affordable now. The problem is the housing prices. Affordability is based on what mortgage someone can afford to service. As interest rates have continued to drop, it allows house prices to artificially rise, as people can afford to service a larger mortgage. The main issue now is getting the deposit which is now huge due to the high price houses cost. But because people are now relying on low interest rates it is going to be difficult to raise then again. I see the US is looking at raising theirs but they don't have a housing crisis like NZ.
The government had promised no new taxes, and they have no motivation to fix the housing crisis. So they won't be doing too much because they don't want house prices to drop. They broke their promise with kiwibuild which was seriously flawed. Kiwibuild could have partly helped with the housing crisis but not in its current format which is developer driven and with no government funding .

The sales that are happening indicate that housing is affordable for many FHB's. Yes interest rates help that, but these high levels of FHB's seem to indicate that have the deposit.

Does the Govt have no motivation to fix it? Not seen that. Kiwibuild was the fix but affordability was already ruined. As Bill said on debate 2, there is no housing crisis.

Kiwibuild was flawed, I agree, but not in the format it had, affordability was already ruined, no *Build would have worked.

"which is developer driven and with no government funding " NZ does not have a Govt builder, so off course it was developer driven. And no, we can't give free money to home builders. We can subsidise them as Ive often mentioned by taxing existing home purchases, but we are not allowed to have more taxes are we?

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#2595613 31-Oct-2020 20:04

I agree - I think the starting price of $650,000 for Kiwibuild was far too high. Closer to $500,000 would have put it much closer to the reach of more families.

mattwnz

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#2595779 1-Nov-2020 01:09

tdgeek:

mattwnz:

Housing is not really less affordable now. The problem is the housing prices. Affordability is based on what mortgage someone can afford to service. As interest rates have continued to drop, it allows house prices to artificially rise, as people can afford to service a larger mortgage. The main issue now is getting the deposit which is now huge due to the high price houses cost. But because people are now relying on low interest rates it is going to be difficult to raise then again. I see the US is looking at raising theirs but they don't have a housing crisis like NZ.
The government had promised no new taxes, and they have no motivation to fix the housing crisis. So they won't be doing too much because they don't want house prices to drop. They broke their promise with kiwibuild which was seriously flawed. Kiwibuild could have partly helped with the housing crisis but not in its current format which is developer driven and with no government funding .

The sales that are happening indicate that housing is affordable for many FHB's. Yes interest rates help that, but these high levels of FHB's seem to indicate that have the deposit.

Does the Govt have no motivation to fix it? Not seen that. Kiwibuild was the fix but affordability was already ruined. As Bill said on debate 2, there is no housing crisis.

Kiwibuild was flawed, I agree, but not in the format it had, affordability was already ruined, no *Build would have worked.

"which is developer driven and with no government funding " NZ does not have a Govt builder, so off course it was developer driven. And no, we can't give free money to home builders. We can subsidise them as Ive often mentioned by taxing existing home purchases, but we are not allowed to have more taxes are we?

The reason why there are possibly more FHB than normal, is because people are now not going overseas to do their OEs. With the cheap money the banks are giving away, it is possibly seen by many as a get rich quick scheme.

I suspect the bank of mum and dad is also helping them cover their deposits. But I am also not sure what deposits banks are requiring these days. Kiwisaver has also helped with people saving for a deposit, and arguably has also helped in house prices rising.

I was discussing with someone today about them buying a home they had seen, and they were saying that they may buy and hold it unoccupied. They don't want to have to deal with tenants, and the house may not be up to the level required in terms of insulation and heating etc. They don't want to have to deal with potential damage on what looks to be a nice house. After costs (rates, insurance, tax etc) they are probably gong to be lucky to get 12k in rent per year. But on a 660k house, the capital gain over the last few years has been over 10% per year. So you are talking a large amount of capital growth per year. I do wonder how many people are just buying and sitting on them. Air BNB maybe a better option for them, but that can also be a hassle, and lack of international visitors may not help them. Each person that does this means that another new house needs to be built to take it's place.

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#2595800 1-Nov-2020 08:18

mattwnz:

The reason why there are possibly more FHB than normal, is because people are now not going overseas to do their OEs. With the cheap money the banks are giving away, it is possibly seen by many as a get rich quick scheme.

I suspect the bank of mum and dad is also helping them cover their deposits. But I am also not sure what deposits banks are requiring these days. Kiwisaver has also helped with people saving for a deposit, and arguably has also helped in house prices rising.

I was discussing with someone today about them buying a home they had seen, and they were saying that they may buy and hold it unoccupied. They don't want to have to deal with tenants, and the house may not be up to the level required in terms of insulation and heating etc. They don't want to have to deal with potential damage on what looks to be a nice house. After costs (rates, insurance, tax etc) they are probably gong to be lucky to get 12k in rent per year. But on a 660k house, the capital gain over the last few years has been over 10% per year. So you are talking a large amount of capital growth per year. I do wonder how many people are just buying and sitting on them. Air BNB maybe a better option for them, but that can also be a hassle, and lack of international visitors may not help them. Each person that does this means that another new house needs to be built to take it's place.

Yes, all of that are contributors. But until we resolve the housing stocks, the demand will still be there. Incentivise builds, penalise existing sales, that will push more purchasers to go the build way and increase housing stock. While we are many thousands of houses light, you will always have 10 buyers chasing 6 houses.

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#2595802 1-Nov-2020 08:33

https://www.stuff.co.nz/business/property/123261225/absolutely-fed-up-nzs-property-market-will-take-more-than-lvrs-to-fix

tdgeek

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#2595807 1-Nov-2020 08:43

quickymart:

https://www.stuff.co.nz/business/property/123261225/absolutely-fed-up-nzs-property-market-will-take-more-than-lvrs-to-fix

Yay, the daily housing crisis article finally had two sentences about the lack of housing stocks, but no solution. Instead the focus is on various artificial means to manage loans. :-(

alasta

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#2595812 1-Nov-2020 09:28

mattwnz:
alasta:

I have been living in Porirua for the last year and it's been great. I will miss it when I return to Wellington in a couple of months.

The express trains that run at peak times get me to Wellington station from Plimmerton in about half an hour.

Apparently the rents are the highest in NZ

The average advertised rent on TradeMe is a pretty crude measure. To measure affordability you would need some sort of price index weighted according to the age, features and size of each property.

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alasta

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#2595813 1-Nov-2020 09:34

mattwnz:

I was discussing with someone today about them buying a home they had seen, and they were saying that they may buy and hold it unoccupied. They don't want to have to deal with tenants, and the house may not be up to the level required in terms of insulation and heating etc. They don't want to have to deal with potential damage on what looks to be a nice house.

That is entirely understandable. Last year I had the misfortune of experiencing what happens when tenants go berserk and, as a neighbour, it was pretty damn unpleasant.

It makes me wonder how anti-social tenants are influencing the wider rental market. If landlords know that there is a risk of ending up with rogue tenants then they naturally demand higher rents to compensate for that risk, which imposes a cost on all the responsible tenants.

The other thing I've been thinking about lately is what's going to happen when landlords start getting rid of high risk tenants in advance of the changes to the residential tenancies act in February. The waiting list for state houses is already out of control, so the homelessness problem could be about to get a whole lot worse.

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#2595818 1-Nov-2020 10:02

Never, never rent to university students. Young males tend to be worse than you females, but not by much.

In Wellington, a neighbor rented to young white clean-cut males going to Victoria University to a place near Courtenay Place.

Even though it was a crowded urban public street with no assigned spaces, they'd tear the mirrors off any car parked in front of their house.

They'd sit on the front porch and cat-call any female walking on the sidewalk.

They left on the taps in the kitchen when they left. I guess they were unhappy about losing their deposit, so they returned about a week later, and broke out all the windows.

My guess they were the kids of some politician.

In a different story, a group of young female students decided to turn their house's unfinished basement into a bar, including putting a huge sign on the front of the house advertising the fact. They tore out a wall to enlarge the space, of course without permission. Luckily it was a non-structural wall. One of the dads fixed it, which is actually enabling his daughter's bad decision.

quickymart

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#2595983 1-Nov-2020 20:04

I've rented all my life and always been a good tenant. Sounds like I might be in the minority though.

Also:

https://www.oneroof.co.nz/news/38601

For once, an article not by Ashley frikken' Church saying "high house prices are a wonderful thing".

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#2596084 2-Nov-2020 08:23

quickymart:

I've rented all my life and always been a good tenant. Sounds like I might be in the minority though.

I'm not convinced you are the minority - you're not newsworthy.

I know plenty of lifetime-renters and they are living in their homes as they would if they were paying the bank for the privilege.

It's about having some self respect and pride in your home...it doesn't matter whether someone else owns the home or you do...either way, treat it like your home, not some place to be abused and destroyed.

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Handsome Dan does not currently have a side hustle as the mascot for Yale

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quickymart

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#2596633 2-Nov-2020 21:46

Which is exactly what I do. I'd just like one of my own (one day).

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#2597212 3-Nov-2020 18:38

Good to see she's concerned, but are there many plans in place to increase housing stocks in this country?

https://www.nzherald.co.nz/business/i-am-never-not-worried-about-housing-pm-jacinda-ardern-on-rising-house-prices/BTYLMZZ5TMTNIHJ6MKYSPAXQFI/

mattwnz

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#2597224 3-Nov-2020 19:02

quickymart:

Good to see she's concerned, but are there many plans in place to increase housing stocks in this country?

https://www.nzherald.co.nz/business/i-am-never-not-worried-about-housing-pm-jacinda-ardern-on-rising-house-prices/BTYLMZZ5TMTNIHJ6MKYSPAXQFI/

No there aren't. They expect the market to solve it. but there is an incentive to drip feed land and houses to keep prices high. It is hard to find a good piece of land, that doesn't require you to sign a new house contract with a particular building contractor, as a condition of buying the land. TM has adverts for land at a certain price, but when you enquire you find that you also have to build with a particular company.

tdgeek

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#2597234 3-Nov-2020 19:31

mattwnz:

quickymart:

Good to see she's concerned, but are there many plans in place to increase housing stocks in this country?

https://www.nzherald.co.nz/business/i-am-never-not-worried-about-housing-pm-jacinda-ardern-on-rising-house-prices/BTYLMZZ5TMTNIHJ6MKYSPAXQFI/

No there aren't. They expect the market to solve it. but there is an incentive to drip feed land and houses to keep prices high. It is hard to find a good piece of land, that doesn't require you to sign a new house contract with a particular building contractor, as a condition of buying the land. TM has adverts for land at a certain price, but when you enquire you find that you also have to build with a particular company.

Do you have a link for that?

Last I heard was that social housing builds was going very well. Kiwibuild is no more, but RMA is on the way out, thats not leaving it to the market. Now, the issue now is supply exceeds demand, you cannot fix that unless you build build build, but people, i.e. the markers aren't building, they are buying. I exit some form on intervention but it won't be radical. Im hoping for a build incentive, paid for by penalising existing home purchases, same principle as the EV subsidy.

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