New Zealand housing market (particularly Auckland)

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#2082590 1-Sep-2018 21:19

Sam91: I think there was a figure a few months back showing that 20% of Auckland Central properties for the quarter had been sold to foreign buyers. I think that's far higher than it should be allowed to be.

It's a misleading figure in some ways. Many of those 'properties' will be apartments occupying a tiny fraction of shared land. It's common for investors to buy or sell several. Similar for the Auckland percentage figures.

quickymart

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#2082593 1-Sep-2018 21:40

Another reason I'm frustrated is I'm in the market for a new place but even looking at rentals around Birkdale/Beach Haven/Birkenhead there seems to be bugger all going. Unfortunately the property owner of the house I'm in now has decided he wants to move into his house himself (fair enough I guess, after all it is his) but there's a time limit and I only have until early October :(

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#2082596 1-Sep-2018 22:38

MichaelNZ:

Batman:

Could buy a house in a more affordable place (Christchurch for example) and rent that out?

That's an option for those in the $400k + category?

Here, a house and section could be had for under $200k. Well under.

Where is "here"?

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#2082598 1-Sep-2018 23:07

I think he said he was in Dannevirke.

mattwnz

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#2082621 2-Sep-2018 00:56

quickymart:

When exactly did the housing market in NZ (and more specifically Auckland) turn to such crap?

Note that I'm not trying to point the finger at anyone at all for this situation, just trying to understand how on Earth things got to this point.

I think you can partly point the finger at successive governments for inaction . There are so many factors. Part of it is the red tape to build. Then very little competition in building materials. Cheap credit means people can afford to service a large mortgage. Lots of immigration creating a high demand for property. Overseas buyers buying NZ houses as investment properties. etc. There are also many other factors involved, including poor bank interest rates for savings, and people seem to see houses as being a safe investment. It has been a perfect storm.

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#2082634 2-Sep-2018 07:17

There was the suggestion a while ago that some golf courses in Auckland could be closed in order to make way for housing/green spaces. Apparently few people play golf but there seems to be a tonne of golf courses around. I wonder if that would help with the housing situation?

mudguard

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#2082637 2-Sep-2018 07:29

quickymart:

There was the suggestion a while ago that some golf courses in Auckland could be closed in order to make way for housing/green spaces. Apparently few people play golf but there seems to be a tonne of golf courses around. I wonder if that would help with the housing situation?

I'm a little biased as I play a lot of golf. But I don't think that's necessarily the answer, no more so than paving over sports fields. I still think Auckland in particular has too many courses for the number of spaces, and if a course isn't being used and it's on council land, then sure. Remuera Golf Course comes up a lot in this argument as does Chamberlain Park, the latter in particular is being carved up, yet it is one of the few courses in the country that you can just rock up and play.

As for the rest of the debate, foreign ownership is tricky and probably under reported. A colleague of mine stills sees it, he works at a second tier lender. Home is child's name, who has PR, $300K mortgage required, $700k deposit, child has very low income, but can service the small mortgage. I guess it's recorded as a domestic sale, but most of that money arrives from overseas into the solicitor's account.

As for home ownership, I don't, I'm lucky in that my rent is very low, I travel for work so my costs are minimal. I'm saving nearly 50% of my net income, but can't do that forever, my problem I suppose is whilst I can save a lot, and my deposit is decent, it will be tricky to service the mortgage on one income (single) without moving elsewhere, which is still a possibility.

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#2082638 2-Sep-2018 08:07

I don't think you can totally blame previous governments.

Yes it is the "perfect storm" created by a myriad of factors.

To my way of thinking there's two main parts to the problem, house prices and wages.

House prices have been driven by supply and demand with demand exceeding supply. Supply has been restricted to some extent by legislation some of which is well intended knee-jerk reactions caused by poor oversight of previous regulations, plus there is other legislation like the RMA. Prices prices gave also been increased through extra costs imposed by these extra regulations. Another factor restricting supply is a lack of tradesmen, for too long we have ignored trades qualifications and favoured tertiary education and ended up with a lot of over qualified workers.

Demand has been partly fuelled by an immigration bubble. However demand cannot exist without the ability for potential purchasers to pay. Many of the immigrants have significantly more money than the average kiwi, the money they bring with them is part of the key for unlocking the door to their entry. They are able to pay top dollar to get what they want. Cheap interest rates have also helped fuel demand. As a result prices increase.

Wages for the average kiwi have decreased in real terms in the last 30 to 40 years. Someone mentioned globalisation in an earlier post. New Zealand has signed up to various free trade agreements. This gave us access to many products at cheaper prices but also killed off a tremendous amount of local manufacturing causing loss of jobs. Basically New Zealand jobs were exported to countries where labour costs were cheaper. An over supply of labour depresses wages. So to some extent our wages are influenced by what is paid in these other countries. Countries like New Zealand haven't adapted well to the impact of free trade. I'm sure the average New Zealander was better off before all of this free trade.

New Zealand also suffers from the fact a significant proportion of our exporters are price takers not price makers. The free trade agreements don't help us much here in fact there are still barriers to our exporters success in many markets. This has a large impact on how well exporters do and how much money they have to spend within the domestic economy, thus indirectly impacting the wealth of the average New Zealander.

In essence there is no one answer to housing affordability. I think this government was very stupid or naive to think they could fix a problem that has been in the making for many years.

$600,000 affordable? I don't think so.

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#2082643 2-Sep-2018 08:32

One thing that people haven't mentioned, is money laundering.

If you make a lot of money and you don't want to pay tax. What to do? Take it to places like London, Melbourne, Auckland and put it in houses.

tdgeek

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#2082652 2-Sep-2018 09:08

mattwnz:

and people seem to see houses as being a safe investment. It has been a perfect storm.

Arguably, it still is. By your residential home, do it up, or enhance an already ok home, sell and trade up. As its the residential home you are banking tax free cash.

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#2082653 2-Sep-2018 09:09

quickymart:

There was the suggestion a while ago that some golf courses in Auckland could be closed in order to make way for housing/green spaces. Apparently few people play golf but there seems to be a tonne of golf courses around. I wonder if that would help with the housing situation?

About 20 racetracks are being shut down, including one of the Auckland ones as well

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#2082655 2-Sep-2018 09:18

Technofreak: I think this government was very stupid or naive to think they could fix a problem that has been in the making for many years.

$600,000 affordable? I don't think so.

I dont agree. They are doing something. Immigration has been tightened, but allowance for needed workers, so we wont get rich kids studying here so they can get PR, get parents in and not add value. The 100,000 houses win 10 years is a bit silly, but at least they are getting some built, that will ramp up somewhat over tome, that helps demand. RMA is being out forward by National in a bill, that should be a bipartisan thing. CGT reigned in a bit. There are many factors that cant be changed that you mention, but any effort wont do any harm. Id like to see immigrants as not having right to buy, but a right to build only. That would avoid immigration being a cause of reducing housing stock.

Geektastic

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#2082670 2-Sep-2018 10:05

Batman: One thing that people haven't mentioned, is money laundering.

If you make a lot of money and you don't want to pay tax. What to do? Take it to places like London, Melbourne, Auckland and put it in houses.

Hmm. I am sure the authorities haven't thought of that...

MichaelNZ

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#2082671 2-Sep-2018 10:08

Geektastic:

Hmm. I am sure the authorities haven't thought of that...

They have. The problem now is the banks and establishment now view all immigraints from Asian countries with suspiction. They cynically deny this until the cows come home, but they damn well do. The local banks are the worst.

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Geektastic

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#2082672 2-Sep-2018 10:10

tdgeek:

Geektastic: I thought recent figures suggested overseas buyers amounted to 3% of sales?

Not relevant. If you go to an auction and half are forego and Kiwi's can't compete, then thats the issue. Kiwis have a budget, some dont, so the standard price rises based on past sales.

3% is false. 3% of all sales, but the issue is up market homes, thats much more then 3%. Wealthy foreigners are not interested in average homes, but if the upmarket homes rise 50% so do the ones lower down too. Lovely house at 500, average house at 300, becomes lovely house at 1000k, average house at 750k

Then rents have to rise as the yield is too low. I know a couple here in ChCh that moved to AKL, so they rent their house here for 400 pw, which covers their mortgage. Sweet. Trouble is rent is now 800 pw in AKL

Clearly Kiwis CAN compete, since only 3% of sales were to overseas buyers, that means 97% of sales were to Kiwis.

I would expect house prices to be triggering a change in career choice at the school leaver end, with low pay blue collar jobs becoming much less attractive.

House prices are not likely to fall on any permanent basis - they may dip and indeed probably will, as they cyclically do, but I think the chances of a 25% fall in prices are somewhere between zero and SFA.

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