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mattwnz
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  #2607890 21-Nov-2020 01:38
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kingdragonfly:
mattwnz: IMO houses are basically being used as a vehicle for banks, to lend more and more freshly printed money at the moment.


I know it's pedantic, but most money is created by banks, not printed.

When a bank loans a million dollars that million is instantly created, almost like there's a poof of smoke and a pile of money appears.

The bank doesn't have money in the vault waiting to be spent, to cover every loan made. Hence the need for bank stress tests.

 

 

 

Lets just hope we don't have something similar to the US subprime mortgage crisis, as it is often an external shock, like covid, that can start a knockon effect. The GFC wasn't that long ago, and some NZs lost billions when finance companies collapse. 




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  #2607893 21-Nov-2020 06:37
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mattwnz:

 

Lets just hope we don't have something similar to the US subprime mortgage crisis, as it is often an external shock, like covid, that can start a knockon effect. The GFC wasn't that long ago, and some NZs lost billions when finance companies collapse

 

 

which exactly why they all invest in property after that


tdgeek
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  #2607901 21-Nov-2020 08:09
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mattwnz:

 

 

 

I don't blame him. He is often on the radio and I like some of what he says. He was infact saying that the whole reason people invest in property was due to the poor amounts of alternatives in New Zealand, such as our sharemarket being tiny and limited. But IMO there are too many people with vested interests in property, to make subjective decisions, to make the tough  calls over taxing it more fairly. It is a political football, larger than the superannuation football. Something no government wants to touch, as it will mean they are unlikely to be voted for. Labour have hamstrung themselves for 3 years. They can't do anything, except get taxpayers to fund FHBs with subsidies of some type, to allow them to get a larger deposit to cover the rising house prices.

 

There is a reason why so many National voters voted for Labour this time around. To make sure Labour ran with a majority, and so the greens couldn't get any of their wealth taxes in. Very clever of them to say that if you want to make sure wealth taxes wouldn't come in, make sure Labour gets a majority. IMO that is probably the main reason they did so well.

 

SO much for the 'housing crisis'. It was barely a topic at the debates.  They just keep kicking it down the road for another 3 years.

 

 

Agree. Im not sure what can be done, apart from building more houses quick, to remove the supply and demand mismatch. Anything else is an artificial means to solve an artificial problem. House have always doubles every 10 years that was the general property investment rule, but that was offset by high inflation and high wage increases. Affordability never really moved much, the benefit was its great to own your own home and feel secure and that inflation will reduce the mortage payments over time. Today there is no inflation, interest costs have been low for some time, and housing stocks are low. If we don't fix housing stocks I cannot see any other options that any Govt can take that will make a difference, except somehow build more houses. Plus, if you could magically reduce all house prices by 50% tomorrow, to get an affordability solution, you will kill many many homeowners who will be in massive negative equity, and banks who will technically be broke, asset wise.

 

To me it can only be about new builds being prioritised over existing homes. Then the pain will be spread over many years and be absorbed. 




quickymart
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  #2607938 21-Nov-2020 11:41
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Dumb question, but is NZ the only country this has ever happened in? And if it happened elsewhere, how did they get out of it?


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  #2607944 21-Nov-2020 12:09
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quickymart:

 

Dumb question, but is NZ the only country this has ever happened in? And if it happened elsewhere, how did they get out of it?

 

 

It's happening right now all over the place, particularly the West Coast of Canada and the US.
The average selling price of a detached home's now $1.7 million in the Lower BC Mainland. (Edit - that's up another 25% over last year)
Completely unaffordable for first time home buyers.

 

Here's a typical recent sale. They market it as a 'spacious bungalow' but it's a pretty average - though tidied up - detached house.

 

What are they doing about it?
Well luckily Covid's come along so the government's not facing as much public wrath over it as they were at the last election - where they introduced foreign buyer taxes, vacant house taxes and various other ways of trying to stop the madness.


quickymart
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  #2608019 21-Nov-2020 18:46
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Walking through Newmarket this afternoon, I was amazed to see the large number of empty shops on the main street (is it Broadway)? Then it got me to thinking, would it be easy to convert all these empty shops to apartments - or some form of housing, if possible? At least the landlord would get something for having the property there and occupied, as opposed to the nothing they're getting at the moment.

 

Just a thought...


 
 
 

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tdgeek
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  #2608031 21-Nov-2020 19:10
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quickymart:

 

https://www.stuff.co.nz/business/opinion-analysis/300162200/twenty-years-of-inaction-have-led-to-a-toxic-nz-housing-market

 

 

 

 

Yep, not new. If lawnmowers were scarce, and for every lawnmower 20 people want it, what then? Lawnmowers are expensive. Might be CPU's might be dishwashers, doesn't matter, if demand is WELL ahead of supply this is what you get.

 

Yes, re houses we can fiddle with LVR, prioritise FHB, CGT, and many other things, but unless you match supply with demand, its just a game. 

 

You need to increase supply to equalise demand or you kill demand to equalise supply. 


mattwnz
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  #2608076 21-Nov-2020 19:28
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Handle9:

 

I’d expect to see prices initially drop but then increase, mainly fuelled by inflation. Most of the world will be quantitatively easing and with coupled low interest rates and poor returns house prices should grow, perhaps quite quickly.

 

I’m not an economist, banker or any kind of expert so take that as you will. I could very well be dead wrong.

 

In NZ if inflation rises over a certain amount, then interest rates have to rise. This may then put downward pressure on the housing market, as people won't be able to borrow as much. That could catch some people out who have paid too much for their house.


antonknee
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  #2608309 22-Nov-2020 10:28
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It seems to me the fundamental problem is supply side - we don’t built enough dwellings, and we build the wrong kind. The demand side only exacerbate the supply problem. Therefore seems to me that my permanent solutions can only be from the supply side, but that perhaps some solutions on the demand side may help to take some of the heat out, buy us time to sort the supply side, and reduce some short term damage and pain. 

 

But my economics papers are a little rusty at this point, so perhaps I’m wrong. 


tdgeek
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  #2608412 22-Nov-2020 13:22
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antonknee:

 

It seems to me the fundamental problem is supply side - we don’t built enough dwellings, and we build the wrong kind. The demand side only exacerbate the supply problem. Therefore seems to me that my permanent solutions can only be from the supply side, but that perhaps some solutions on the demand side may help to take some of the heat out, buy us time to sort the supply side, and reduce some short term damage and pain. 

 

But my economics papers are a little rusty at this point, so perhaps I’m wrong. 

 

 

Agree. Demand is actually a great thing to have as a home owning society is mote stable. We want that. We build the wrong kind? I guess you mean we need denser housing, but if I want to own  large modern house on a 1/4 acre section (umm, cough, cough) I will. (Although I believe that not allowed now) 

 

We don't build enough as its easier to buy existing, we need to incentive new builds and penalise existing, somehow. 


mattwnz
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  #2608438 22-Nov-2020 15:32
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Removing GST on new builds which works overseas is needed urgently imo. Helps to get rid of some of these old houses that aren't up to standard. Even if FHBS get an instant15% tax refund that can go to their deposit. Providing grants towards FHBs towards their deposit will just push up prices more, which is what Kiwisaver first home withdrawals did. The

mattwnz
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  #2608439 22-Nov-2020 15:36
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tdgeek:

antonknee:


It seems to me the fundamental problem is supply side - we don’t built enough dwellings, and we build the wrong kind. The demand side only exacerbate the supply problem. Therefore seems to me that my permanent solutions can only be from the supply side, but that perhaps some solutions on the demand side may help to take some of the heat out, buy us time to sort the supply side, and reduce some short term damage and pain. 


But my economics papers are a little rusty at this point, so perhaps I’m wrong. 



Agree. Demand is actually a great thing to have as a home owning society is mote stable. We want that. We build the wrong kind? I guess you mean we need denser housing, but if I want to own  large modern house on a 1/4 acre section (umm, cough, cough) I will. (Although I believe that not allowed now) 


We don't build enough as its easier to buy existing, we need to incentive new builds and penalise existing, somehow. 



Urban intensification can cause major problems when the infrastructure , eg roading, was never designed for it. Wellington is a prime example. Congested and heaps of money needing to be spent catching up on failing infrastructure.

tdgeek
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  #2608449 22-Nov-2020 16:27
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mattwnz: Removing GST on new builds which works overseas is needed urgently imo. Helps to get rid of some of these old houses that aren't up to standard. Even if FHBS get an instant15% tax refund that can go to their deposit. Providing grants towards FHBs towards their deposit will just push up prices more, which is what Kiwisaver first home withdrawals did. The

 

You mean GST that builders pay on the purchase of materials and sub contractors invoices?

 

Whether you give FHB a grant or whether its 15% off, its still cash that will increase demand?


tdgeek
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  #2608452 22-Nov-2020 16:32
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mattwnz:

Urban intensification can cause major problems when the infrastructure , eg roading, was never designed for it. Wellington is a prime example. Congested and heaps of money needing to be spent catching up on failing infrastructure.

 

Agree with that. A better idea is intensification but in new subdivisions. Do Councils/NZTA manage their roading plans based on new subdivisions? I suspect that and population growth is where they do when they have to, i.e. when its a problem, rather than catering for roading at the same time new subdivisions are planned


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