Real estate, post level 4

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20157 posts

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#2691791 12-Apr-2021 22:53

Handle9:
quickymart:
I have a question, what is (or was) the point of a Government Valuation (or might be CV) - at least I think that's what they're called?
I've seen places with "GV = $345,000" but it will sell for nearly double that price. Is it a pricing guideline of some sort? If so it doesn't seem to be a particularly useful one.

It's used to calculate the rates. That's all it's good for.

No, it is also important for other things. I understand It has also been used by the government as the price to buy a property back from the owner if required to. Eg. As what happened to Red Zone owners in Christchurch. It is the home owners responsibility to make sure the RV is accurate when it is issued. As per the QV site it is the expected price it would sell for less chattels at the time it is done. I fear Some people could be significantly out of pocket if there is an earthquake etc and land is damaged and can't be lived on. IMO RVs should be done monthly so they are more upto date. Eg similar to all these estimation websites

tdgeek

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#2691856 13-Apr-2021 06:33

mattwnz:

No, it is also important for other things. I understand It has also been used by the government as the price to buy a property back from the owner if required to. Eg. As what happened to Red Zone owners in Christchurch. It is the home owners responsibility to make sure the RV is accurate when it is issued. As per the QV site it is the expected price it would sell for less chattels at the time it is done. I fear Some people could be significantly out of pocket if there is an earthquake etc and land is damaged and can't be lived on. IMO RVs should be done monthly so they are more upto date. Eg similar to all these estimation websites

RV is ratings valuation. if you want a sale valuation, get it valued or go to the estimation sites which also have past sales. You have commented that these estimation sites push the prices up, now you want Government to join that frenzy? RV is an estimation at one point in time, used to calculate the division of rates.

GV27

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#2691859 13-Apr-2021 06:54

quickymart:

Sounds good to me but I think the economy would suffer a lot if that happened.

Hell, even 2011 prices (only 10 years ago) would be awesome.

Awesome for people who wanted to buy a house, but for many home owner's they'd end up underwater, unable to sell, move and likely to stop almost all discretionary spending. The economy would implode.

If house prices were to be wound back, you'd need a way of making sure that people were still willing to spend money on things other than power, water and groceries.

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#2691861 13-Apr-2021 07:08

This says the govt caused the house price issue

I'm not an economist

https://i.stuff.co.nz/opinion/124810915/how-grant-robertson-got-our-economic-recovery-wrong

tdgeek

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#2691865 13-Apr-2021 07:26

Batman: This says the govt caused the house price issue

I'm not an economist

https://i.stuff.co.nz/opinion/124810915/how-grant-robertson-got-our-economic-recovery-wrong

Like most of your posts there is a Politics section

Clark and Key talked about the housing prices years and years ago, not sure that Robertson was a thing back then.

Helicopter payments would have been cool. Xbox for me and a set of mags for the car, sorted. Then its gone in a week. For good. Its probably more fruitful to look at past National and Labour governments and ask them what they did, or move to another country as I guess nowhere else has this issue... /s

GV27

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#2691875 13-Apr-2021 07:44

tdgeek:

Helicopter payments would have been cool. Xbox for me and a set of mags for the car, sorted. Then its gone in a week. For good. Its probably more fruitful to look at past National and Labour governments and ask them what they did, or move to another country as I guess nowhere else has this issue... /s

Past Labour or National governments aren't going to be much use to us in terms of getting out of this mess. Best to ask current or aspiring ones 😁

E: I should note that that at one point, someone asked Sir Michael Cullen in parliament what he would say to New Zealanders who looked at Australia, with then lower taxes, better wages and lower living costs compared to NZ.

His response was "they should just leave then" or words to that effect.

I'm glad we have governments who are least prepared to accept we have a problem, even if it takes them forever to do anything about it.

tdgeek

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#2691879 13-Apr-2021 08:02

GV27:

Past Labour or National governments aren't going to be much use to us in terms of getting out of this mess. Best to ask current or aspiring ones 😁

E: I should note that that at one point, someone asked Sir Michael Cullen in parliament what he would say to New Zealanders who looked at Australia, with then lower taxes, better wages and lower living costs compared to NZ.

His response was "they should just leave then" or words to that effect.

I'm glad we have governments who are least prepared to accept we have a problem, even if it takes them forever to do anything about it.

His post was about the cause, the cause is the past, the untouched past. But do we have Govts who accept we have a problem? The Key/Clark comments were around 2001. Since then we have "there is no housing crisis", so I'm not so sure. Now, its very front and centre so now every Government/party is on the bandwagon to fix what seems to be a recent crisis. Its on the news front and centre, so on the bandwagon everyone goes. So, I'm not so sure.

It can't be fixed. It can only be tapered down over a period of time as you cant regulate that houses all drop by 30% next week, and we all love the low inflation low wage economy, so those two parts of house:salary ratio are as they are now. Maybe a medium goal of 7X is perhaps workable if residential housing is removed as a business proposition.

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quickymart

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#2691895 13-Apr-2021 08:43

7 X my salary? I could work with that.

mudguard

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#2692233 13-Apr-2021 19:31

quickymart:

7 X my salary? I could work with that.

I'm not sure at 8% interest rates that would be much fun :(

dafman

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#2692237 13-Apr-2021 19:35

mudguard:

quickymart:

7 X my salary? I could work with that.

I'm not sure at 8% interest rates that would be much fun :(

When I bought my first house, I locked in five years fixed at 8% because it was such a low rate.

Different times.

mudguard

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#2692269 13-Apr-2021 20:41

dafman:

When I bought my first house, I locked in five years fixed at 8% because it was such a low rate.

Different times.

From memory 8% has been the historical average and should be the number in the back of everyone's minds.

But I'd need to look it up to see if it's correct.

mattwnz

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#2692386 14-Apr-2021 00:45

tdgeek:

mattwnz:

No, it is also important for other things. I understand It has also been used by the government as the price to buy a property back from the owner if required to. Eg. As what happened to Red Zone owners in Christchurch. It is the home owners responsibility to make sure the RV is accurate when it is issued. As per the QV site it is the expected price it would sell for less chattels at the time it is done. I fear Some people could be significantly out of pocket if there is an earthquake etc and land is damaged and can't be lived on. IMO RVs should be done monthly so they are more upto date. Eg similar to all these estimation websites

RV is ratings valuation. if you want a sale valuation, get it valued or go to the estimation sites which also have past sales. You have commented that these estimation sites push the prices up, now you want Government to join that frenzy? RV is an estimation at one point in time, used to calculate the division of rates.

I don't think too many people will disagree that these estimation websites are a factor that is pushing up property prices. Especially as people used to base it off the CV, as that was the only figure they used to have to base pricing off. Now you see people quoting these estimation websites when selling their house, and expecting a figure over that. If the CV was calculated monthly, it would be more accurate, and could help bring prices down, as it doesn't include chattels. It could also go up, and it could go down. But it couldn't be any worse than what is currently happening.

Not all local councils rate based on the CV / RV. Some will rate based on the land value, and improvement value doesn't come into it. So a rateable / capital value has little relevance in some areas. But why should rates be based on what a property is worth anyway, as rates shouldn't be a wealth tax. Why isn't it based on the resources a property uses? Eg why not a flat fee per property? Or based on how many people live in the house. You could have 10 people living in a 400k house paying $3k in rates per year, and using lots of council resources. Then you could have a single elderly person living in a 1 million dollar house paying $6k in rates, and they would be using less council resources.

mattwnz

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#2692387 14-Apr-2021 00:50

mudguard:

quickymart:

7 X my salary? I could work with that.

I'm not sure at 8% interest rates that would be much fun :(

If interest rates hadn't gone lower than 8%, and had stayed that level for decades, then people would still likely be paying about the same amount per week as they do now. This is because house prices wouldn't have risen inline with the interest rate drops.

The problem is these low interest rates, because they are now going to be difficult to increase, because some people who purchased more recently are going to potentially have to pay a lot more each week. But people have been warned about this. I think banks have been stress testing peoples ability to service a mortgage at around 7%, but heard of one bank that had dropped their test down to about 5%. But even 7% is low.

mattwnz

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#2692388 14-Apr-2021 00:58

tdgeek:

It can't be fixed. It can only be tapered down over a period of time as you cant regulate that houses all drop by 30% next week, and we all love the low inflation low wage economy, so those two parts of house:salary ratio are as they are now. Maybe a medium goal of 7X is perhaps workable if residential housing is removed as a business proposition.

The government could introduce policies that could have a similar effect. Potentially this recent change has the ability to decrease prices. Although unlikely due to the lack of supply being sold, and FOMO. But if prices can increase 20+% in a year, they could also drop 20% in a year. That would likely only affect people who have purchased in the last year.

Everyone I have spoken to who owns a house actually doesn't want their house increasing this much in value so quickly. It just has too many knock-on effects and one of the major ones will likely be lot of inflation which is already occurring. It has largely been caused by all the money printing and increasing the value of more wealthy people assets, and it is happening all over the world. But NZ is one of the worst examples, especially as we already had some of the most unaffordable houses in the world before all of this.

mattwnz

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#2692389 14-Apr-2021 01:04

GV27:

tdgeek:

Helicopter payments would have been cool. Xbox for me and a set of mags for the car, sorted. Then its gone in a week. For good. Its probably more fruitful to look at past National and Labour governments and ask them what they did, or move to another country as I guess nowhere else has this issue... /s

Past Labour or National governments aren't going to be much use to us in terms of getting out of this mess. Best to ask current or aspiring ones 😁

E: I should note that that at one point, someone asked Sir Michael Cullen in parliament what he would say to New Zealanders who looked at Australia, with then lower taxes, better wages and lower living costs compared to NZ.

His response was "they should just leave then" or words to that effect.

And that is what happened with the brain drain. Nationals solution after MC and labour were voted out was to increase immigration significantly, which is now causing major problems with a lack of available housing supply and infrastructure for the larger population.

We have had a form of helicopter payment, with the 100+ billion that was printed, but this went to people who own houses, as it has inflated their values, making them feel wealthier. When it has just decreased the value of our money, and is now causing prices on goods to rise. The government were warned that printing all this money would have this affect. We are now in a sticky mess. I hope we don't end up like Argentina.

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