Real estate, post level 4

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Networkn
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#2679146 23-Mar-2021 11:45

GV27:

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.

Well, with respect, it doesn't matter how much you stamp your feet about it, we have a greater population, slow-building of infrastructure, little appetite for high-density living, and the change to higher density living is happening so slowly it's not meaningful to solve the issue today or the next 5 years even, so like it or not, people are going to have to decide on their priorities.

I mean, you can rail online about in as many forums as you like, but the world has changed from 50 years ago. Expecting the same thing as then isn't going to make it so.

GV27

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#2679161 23-Mar-2021 11:57

networkn:

Well, with respect, it doesn't matter how much you stamp your feet about it, we have a greater population, slow-building of infrastructure, little appetite for high-density living, and the change to higher density living is happening so slowly it's not meaningful to solve the issue today or the next 5 years even, so like it or not, people are going to have to decide on their priorities.

I mean, you can rail online about in as many forums as you like, but the world has changed from 50 years ago. Expecting the same thing as then isn't going to make it so.

And you can arrogantly dismiss any criticism of your attitude towards what younger people have to deal with all you like. The current path is not sustainable.

One day the music will stop, and all the unrest and deep-seated resentment that comes with it will blow through this country like nothing we've ever seen before.

antonknee

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#2679168 23-Mar-2021 12:07

networkn:

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.

Not to be rude - but I find the attitude that people need to upend their entire lives just to buy a box to live in very average to be honest.

Not to discount the sacrifices you/your wife or your parents' friend have made, but please justify why someone should need to make such wholesale changes to their reality (and I would note not everybody would be in a position to do so) just so they can buy a property to live in? I'm not sure that "I had to do it, so should you" is a fair argument (although I'm not sure that's the point you're making, it is a point of view that comes up a lot).

To your point that people should just move, I would say that things are pretty dire in places like Rotorua and Hastings. My mother lives in a very average 2 bedroom 70s unit in Rotorua that is now worth well over half a million dollars. The average income in these places is much lower, so it's actually not much more affordable.

A (very) cheeky response to your point about climate change, perhaps your parents' friend who flies Hastings-Auckland very regularly ought to consider her impact on the climate?

Where do you draw the line on sacrifice? I've been saving ~ 50% of my income for nearly 10 years (while paying 30% odd of it on rent) and just scraped together a deposit, which now sees nearly 50% of my income go towards a mortgage (plus rates, insurance, etc).

tdgeek

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#2679171 23-Mar-2021 12:15

antonknee:

Not to be rude - but I find the attitude that people need to upend their entire lives just to buy a box to live in very average to be honest.

Not to discount the sacrifices you/your wife or your parents' friend have made, but please justify why someone should need to make such wholesale changes to their reality (and I would note not everybody would be in a position to do so) just so they can buy a property to live in? I'm not sure that "I had to do it, so should you" is a fair argument (although I'm not sure that's the point you're making, it is a point of view that comes up a lot).

To your point that people should just move, I would say that things are pretty dire in places like Rotorua and Hastings. My mother lives in a very average 2 bedroom 70s unit in Rotorua that is now worth well over half a million dollars. The average income in these places is much lower, so it's actually not much more affordable.

A (very) cheeky response to your point about climate change, perhaps your parents' friend who flies Hastings-Auckland very regularly ought to consider her impact on the climate?

Where do you draw the line on sacrifice? I've been saving ~ 50% of my income for nearly 10 years (while paying 30% odd of it on rent) and just scraped together a deposit, which now sees nearly 50% of my income go towards a mortgage (plus rates, insurance, etc).

To be fair, he's not saying everyone has to move to another town or island. Smaller, further out, yes maybe another town is an option. I can add in a DIY special reno. Mathematically, we can't all live in the same place at the same time. Irregardless of anyone's suggestions, with what has happened in recent years, a lot of these choices have been cut off for many of us.

networkn

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#2679218 23-Mar-2021 12:28

GV27:

The current path is not sustainable.

Right, so people will have to accept a change in their expectations. It's like those who want to live by the coast, sure, you can live by the coast as the oceans come to swallow you due to climate change, and you can shake your hand at the masses for contributing to it with their cars and trucks and high carbon lifestyles, but that won't change the fact the oceans are rising.

People immigrate across the entire *world* to make a better life for themselves, moving to a different part of the country, or further out from your preferred city isn't as big of an ask I'd argue.

If people move, infrastructure and jobs will follow. Supermarkets will open, Shopping centers.

The change you want to happen, won't happen in your lifetime if ever. You can talk about the music stopping and the governments being overthrown, but that won't happen.

GV27

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#2679227 23-Mar-2021 12:40

networkn:

GV27:

The current path is not sustainable.

Right, so people will have to accept a change in their expectations.

You seem pretty convinced it will be FHBs who have to do that.

Maybe it will be investment property holders who face big haircuts in the inflated value of their assets.

Maybe it will be pensioners who no longer get a tax-payer funded prize for turning a certain age.

These things always seem to be off-limits. In the right circumstances, everyone gets the reality check. You might find the sympathy for those who just expected young people to keep copping it while they pocketed the gains of a lifestyle they pushed out of reach to be pretty thin on the ground.

networkn

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#2679233 23-Mar-2021 12:46

antonknee:

Not to be rude - but I find the attitude that people need to upend their entire lives just to buy a box to live in very average to be honest.

Not to discount the sacrifices you/your wife or your parents' friend have made, but please justify why someone should need to make such wholesale changes to their reality (and I would note not everybody would be in a position to do so) just so they can buy a property to live in? I'm not sure that "I had to do it, so should you" is a fair argument (although I'm not sure that's the point you're making, it is a point of view that comes up a lot).

To your point that people should just move, I would say that things are pretty dire in places like Rotorua and Hastings. My mother lives in a very average 2 bedroom 70s unit in Rotorua that is now worth well over half a million dollars. The average income in these places is much lower, so it's actually not much more affordable.

A (very) cheeky response to your point about climate change, perhaps your parents' friend who flies Hastings-Auckland very regularly ought to consider her impact on the climate?

Where do you draw the line on sacrifice? I've been saving ~ 50% of my income for nearly 10 years (while paying 30% odd of it on rent) and just scraped together a deposit, which now sees nearly 50% of my income go towards a mortgage (plus rates, insurance, etc).

Well, the unfortunate answer to those questions is this. We have a housing affordability issue. It's not singular in cause, it's been happening for a long time, and it's not going away any time soon. You either complain about it, or you make a different choice.

We can back and forwards over it, and I can try and put it more nicely, but that's the basic crux of it. Fair? Probably not, but I know what I had to do to buy a home, and I know what my In-laws had to sacrifice to buy a home, and I was the first homeowner in my family in I think three generations, so it's always been hard and sacrifices have always been required.

When buying a house in a different, less expensive region, there are other benefits to consider as well. It's not simply that it's more affordable, there are other potential lifestyle benefits to consider, if those don't appeal to you, then I guess try and buy where you can.

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networkn

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#2679235 23-Mar-2021 12:55

GV27:

You seem pretty convinced it will be FHBs who have to do that.

Maybe it will be investment property holders who face big haircuts in the inflated value of their assets.

Maybe it will be pensioners who no longer get a tax-payer funded prize for turning a certain age.

These things always seem to be off-limits. In the right circumstances, everyone gets the reality check. You might find the sympathy for those who just expected young people to keep copping it while they pocketed the gains of a lifestyle they pushed out of reach to be pretty thin on the ground.

Maybe. I guess we will see. I have my doubts. What happens in the meantime? Do you complain, or make necessary different choices? I have always been one for making the choices and sacrifices that were necessary. If I couldn't find work in my chosen profession for some reason, I'd milk cows, deliver newspapers or whatever it took to take the best care of my family I could. Would I love it, probably not, but I'd still do it (and have done it).

If it sounds like I am unsympathetic, it's not meant to be, I do have some sympathy for the difficulty, my own kids will go through it too, it will probably be worse by then.

No matter what happens, not even one will own a house and not everyone will be able to live in a big city, or in their first choice of location.

GV27

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#2679239 23-Mar-2021 13:02

networkn:

Fair? Probably not, but I know what I had to do to buy a home, and I know what my In-laws had to sacrifice to buy a home, and I was the first homeowner in my family in I think three generations, so it's always been hard and sacrifices have always been required.

At this rate, aspiring FHBs are better off resorting to ritualistic sacrifice, unless they can somehow cut out 200 flat whites a day.

Deposits are increasing faster than people can earn money, no amount of 'cutting back' can help you then.

GV27

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#2679241 23-Mar-2021 13:05

networkn:

No matter what happens, not even one will own a house and not everyone will be able to live in a big city, or in their first choice of location.

I guess I'm quite defensive of the type of country I want New Zealand to be, not the one that it has become, which is merely one that facilitates one generation handing a massive bill to the one that follows it while telling them off for not working harder.

The reality is that for most people, on lower wages and facing higher living costs, if they are going to move away from family, they are better off in Australia than here. And I don't think that will hit home until we have a generation of grandparents who barely get to see their grandkids, and by then it will be too late.

We are not doomed to keep making the same mistakes over and over again - the reality is we can change anything we like - but as long as we just tell people to keep copping it and it's all about hard work and sacrifice when it's so obviously gotten beyond that, then that's where we'll end up. I think that's really sad, tbh.

tdgeek

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#2679253 23-Mar-2021 13:38

eracode:

Existing ‘what’ will be phased in over 4 years?

Media quote

No [interest] deductibility will be available for properties bought after March 27, and the amount that can be deducted will drop for other properties until it is phased out in four years’ time.

I assume "other properties" means Pre March 27? Seems that ultimately the no deduction will be on ALL rental residential properties, with the existing being on a 4 year phase out, while new will be from Mar 27

eracode

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#2679263 23-Mar-2021 13:49

tdgeek:

eracode:

Existing ‘what’ will be phased in over 4 years?

Media quote

No [interest] deductibility will be available for properties bought after March 27, and the amount that can be deducted will drop for other properties until it is phased out in four years’ time.

I assume "other properties" means Pre March 27? Seems that ultimately the no deduction will be on ALL rental residential properties, with the existing being on a 4 year phase out, while new will be from Mar 27

Thanks. I posted then saw the answer further down in the thread - so I deleted my question.

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networkn

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#2679265 23-Mar-2021 13:49

GV27:

I guess I'm quite defensive of the type of country I want New Zealand to be, not the one that it has become, which is merely one that facilitates one generation handing a massive bill to the one that follows it while telling them off for not working harder.

I don't consider that a reflection of reality, rather an emotional response to a situation that people don't like or want to accept. There is some element of truth to it, but we find ourselves in today's situation off the back of many many factors, which include ballooning population and demand.

I doubt many people would have been prepared to do what it took my inlaws to do, to get started into their first home. They are comfortable now, but I don't begrudge them that.

The reality is that for most people, on lower wages and facing higher living costs, if they are going to move away from family, they are better off in Australia than here. And I don't think that will hit home until we have a generation of grandparents who barely get to see their grandkids, and by then it will be too late.

We are not doomed to keep making the same mistakes over and over again - the reality is we can change anything we like - but as long as we just tell people to keep copping it and it's all about hard work and sacrifice when it's so obviously gotten beyond that, then that's where we'll end up. I think that's really sad, tbh.

Have you tried to buy property in Australia? Last time I was there, the month before Covid, in Melbourne, the talk of a housing crisis was literally all anyone talked about, every news cycle, posters everywhere, protests, the whole works I was shocked. Perhaps, though, if lots of people move to Australia, demand for property here will drop and prices will correct themselves. Reality is though, that would just make Australia even harder to buy property in. I'd rather stay here thanks :)

I understand what you are saying though, I admire it to a degree, but unless you are going to start a revolution (Which I think wouldn't really go far), you need to live in the situation we are all in now, and make the most of it. You can vote for a party that will do what you want, but radical changes are years away at best, even if they could get the votes, and in the meantime, do you sit on your hands hoping and waiting for change, or make the best of what you can get ?

I was disappointed and surprised that the Government did nothing to incentivise FHB building, just disincentivised buying rentals. I don't see that having much effect, it's certainly not going to drop the price of houses to what some people consider reasonable.

eracode

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#2679275 23-Mar-2021 14:02

tdgeek:

Media quote

No [interest] deductibility will be available for properties bought after March 27, and the amount that can be deducted will drop for other properties until it is phased out in four years’ time.

I assume "other properties" means Pre March 27? Seems that ultimately the no deduction will be on ALL rental residential properties, with the existing being on a 4 year phase out, while new will be from Mar 27

So, if you contracted recently to buy a house that you are going to rent out, with the purchase being settled on, say, 29 March (27 is Saturday) - you would have based your investment decision on one set of rules (interest deductibility) only to find the carpet whipped out from under your feet by a new set of rules (interest non-deductibility) and you’re stuck with a very different regime.

Surely some period of lead-time could have been allowed.

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esawers

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#2679279 23-Mar-2021 14:16

eracode:

tdgeek:

Media quote

No [interest] deductibility will be available for properties bought after March 27, and the amount that can be deducted will drop for other properties until it is phased out in four years’ time.

I assume "other properties" means Pre March 27? Seems that ultimately the no deduction will be on ALL rental residential properties, with the existing being on a 4 year phase out, while new will be from Mar 27

So, if you contracted recently to buy a house that you are going to rent out, with the purchase being settled on, say, 29 March (27 is Saturday) - you would have based your investment decision on one set of rules (interest deductibility) only to find the carpet whipped out from under your feet by a new set of rules (interest non-deductibility) and you’re stuck with a very different regime.

Surely some period of lead-time could have been allowed.

When a property is acquired

For tax purposes, a property is generally acquired on the date a binding sale and purchase agreement is entered into
(even if some standard conditions like getting finance or a building report still need to be met). Full information on
when a property is acquired is found in QB 17/02 on taxtechnical.ird.govt.nz

For the purposes of the changes outlined in this factsheet, a property acquired on or after 27 March 2021 will be
treated as having been acquired before 27 March 2021, if the purchase was the result of an offer the purchaser made
on or before 23 March 2021 that cannot be withdrawn before 27 March 2021.

The date you acquire property determines whether the bright-line period is 5 or 10 years. This will also determine
which set of rules relating to the main home exclusion and change of use will apply to your property. In either case,
the period is then counted from the date the land is transferred to you (generally the settlement date).

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