Real estate, post level 4

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1133 posts

Uber Geek

#2679008 23-Mar-2021 09:30

Some announcements this morning:

brightline test doubled to 10 years
$3.8b put into a Housing Acceleration Fund aimed at enabling thousands of new homes by footing the bill for pipes and new roads to support housing development
Kainga Ora to borrow $2b
interest no longer deductible for residential property investors
changes to first home buyer grant caps

engedib

254 posts

Ultimate Geek

#2679027 23-Mar-2021 10:01

Basically the rental market got killed...

MCSE+M/S, MCITP

wellygary

8312 posts

Uber Geek

#2679030 23-Mar-2021 10:09

engedib:

Basically the rental market got killed...

Interest deductibility is the kicker here, and removing for all existing investors over a 4 year period, will likely cause a rush for the door to get out while the market is good...

tdgeek

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#2679038 23-Mar-2021 10:21

If that did happen and if there are a lot of FHB's out there, that may soak that up. Recent articles still show that open homes are full of FHB's and investors. But in general, even if its rickety ride till this new news settles down, the excess demand for too few homes should ease somewhat

Zeon

3916 posts

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#2679048 23-Mar-2021 10:39

So I just did a calculation for my partner who owns a rental property. With the interest deductability removed she will need to pay another $7,000 per year on tax. Guess who will be getting a big rent rise to cover that......

Speedtest 2019-10-14

esawers

551 posts

Ultimate Geek

#2679056 23-Mar-2021 10:53

Zeon:

So I just did a calculation for my partner who owns a rental property. With the interest deductability removed she will need to pay another $7,000 per year on tax. Guess who will be getting a big rent rise to cover that......

Wait until Interest rates go up...

Batman

Mad Scientist
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#2679104 23-Mar-2021 11:14

antonknee:
Some announcements this morning:

brightline test doubled to 10 years

$3.8b put into a Housing Acceleration Fund aimed at enabling thousands of new homes by footing the bill for pipes and new roads to support housing development

Kainga Ora to borrow $2b

interest no longer deductible for residential property investors

changes to first home buyer grant caps

When is this effective from?

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Batman

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#2679105 23-Mar-2021 11:15

engedib:
Basically the rental market got killed...

You mean those darn landlords will raise the rental price?

antonknee

1133 posts

Uber Geek

#2679116 23-Mar-2021 11:31

Batman:

When is this effective from?

The brightline and interest deduction rules apply to all sales from this weekend (!) from 1 October. Existing will be phased in over 4 years - according to Stuff, although I've not read the details in the actual legislation.

networkn

Networkn
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#2679117 23-Mar-2021 11:32

antonknee:

It's all very well to say get people to move there but it's a hard sell - people want to live where the jobs are, where their friends and families are. It would be asking an awful lot to get all of this to move, and I'm not sure there's the political will or capacity.

I find this type of attitude pretty average to be honest. People make compromises to improve their situations all the time for the longer-term benefit. We simply cannot have everyone living in 3-4 places and the rest of the areas being empty, and expect everyone can live in a comfortable well built home at a price the average earner can afford. It just doesn't work like that unless you regulate house pricing.

People will need to start making hard choices.. Can't afford a free-standing quarter-acre house in the middle of town, then buy something you can afford, either smaller or further out. My wife and I made pretty big compromises to buy our first home. We had a humble wedding compared to our friends and family, we spent 2.5 years, including 7 months of our first year of marriage apart most of the time, so we could throw a bunch of money at our mortgage and get over the hump as quickly as possible, which then allowed my wife to take time off without financial pressure, to start our family.

We bought the nicest house in the worst street much further out of the main area than we wanted to live in.

A friend of mines parents are in Auckland, She has purchased in Hastings because it's what she could afford, she flies up very regularly to see them, and financially she is significantly better off even taking into account the amount she spends on travel.

It's like Climate change, people want the benefit of making changes, without having to make sacrifices. There is no magic fix for housing.

antonknee

1133 posts

Uber Geek

#2679122 23-Mar-2021 11:36

Zeon:

So I just did a calculation for my partner who owns a rental property. With the interest deductability removed she will need to pay another $7,000 per year on tax. Guess who will be getting a big rent rise to cover that......

While this is definitely unfortunate for renters - it's a symptom of how unhealthy our housing market is. Rents are already incredibly expensive and obviously this will get worse in the short term. I don't see how this can be navigated around.

I expect a lot of cases in front of the Tenancy Tribunal in the next little while exploring whether a rent increase was acceptable/in line with the market. $7k a year implies $130 a week - I can easily see the TT saying $130 a week is too much of an increase. (Not specifically having a go about your partner's situation, just using it to illustrate the wider point).

tdgeek

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#2679125 23-Mar-2021 11:39

networkn:

antonknee:

It's all very well to say get people to move there but it's a hard sell - people want to live where the jobs are, where their friends and families are. It would be asking an awful lot to get all of this to move, and I'm not sure there's the political will or capacity.

I find this type of attitude pretty average to be honest. People make compromises to improve their situations all the time for the longer-term benefit. We simply cannot have everyone living in 3-4 places and the rest of the areas being empty, and expect everyone can live in a comfortable well built home at a price the average earner can afford. It just doesn't work like that unless you regulate house pricing.

People will need to start making hard choices.. Can't afford a free-standing quarter-acre house in the middle of town, then buy something you can afford, either smaller or further out. My wife and I made pretty big compromises to buy our first home. We had a humble wedding compared to our friends and family, we spent 2.5 years, including 7 months of our first year of marriage apart most of the time, so we could throw a bunch of money at our mortgage and get over the hump as quickly as possible, which then allowed my wife to take time off without financial pressure, to start our family.

We bought the nicest house in the worst street much further out of the main area than we wanted to live in.

A friend of mines parents are in Auckland, She has purchased in Hastings because it's what she could afford, she flies up very regularly to see them, and financially she is significantly better off even taking into account the amount she spends on travel.

It's like Climate change, people want the benefit of making changes, without having to make sacrifices. There is no magic fix for housing.

We disagree a lot it seems but that's a very good post

GV27

5896 posts

Uber Geek

#2679126 23-Mar-2021 11:40

networkn:

People will need to start making hard choices.. Can't afford a free-standing quarter-acre house in the middle of town, then buy something you can afford, either smaller or further out.

I need to push back on this, because we already have overseas-style mega-commutes and congestion in this country and a pathological inability to provide rapid transit to growing areas.

Literally no sane FHB is trying to buy a free-standing quarter acre section because 1) they don't exist, and when you do find one in the isthmus 2) they are now commanding millions of dollars.

"Lower your expectations, move further out" used to mean a first-home buying suburb like Howick; Now we have normalised commuting from another district - places in the Waikato, for instance - because aspiring Auckland home owners just get told to 'look further out'. No amount of strawman avocado on toast or "BUT IPHONES!!!!" changes the fact that a house used to be 3x household incomes, and now in Auckland it's about 11x.

GV27

5896 posts

Uber Geek

#2679140 23-Mar-2021 11:42

And frankly, sorry, I fail to see why Kiwis who have grown up in Auckland should be expected to leave Auckland if they want to buy a home, because no one wants to face the uncomfortable realities of unfettered migration and poor urban planning.

That's the definition of a failed city if ever I saw one. Maybe the ones who have profiteered from it should be the ones handed the bill for once.

wellygary

8312 posts

Uber Geek

#2679142 23-Mar-2021 11:44

antonknee:

Zeon:

So I just did a calculation for my partner who owns a rental property. With the interest deductability removed she will need to pay another $7,000 per year on tax. Guess who will be getting a big rent rise to cover that......

While this is definitely unfortunate for renters - it's a symptom of how unhealthy our housing market is. Rents are already incredibly expensive and obviously this will get worse in the short term. I don't see how this can be navigated around.

I expect a lot of cases in front of the Tenancy Tribunal in the next little while exploring whether a rent increase was acceptable/in line with the market. $7k a year implies $130 a week - I can easily see the TT saying $130 a week is too much of an increase. (Not specifically having a go about your partner's situation, just using it to illustrate the wider point).

But the implementation for existing properties is phased in over 4 years, (you lose 25% of the deduction each year(so in this case $1750 per year,)

So its a $35/week increase each year - on top of any other rise in costs - (Rates, Insurance, regular maintenance etc) - cant see the Tribunal having any issue with that...

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