Real estate, post level 4

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#2716712 1-Jun-2021 14:13

mattwnz:
Fred99:

Or not returning, but buying "back home" as a capital gains tax free investment.

But wouldn’t it be subject to capital gains if not living in it, as most would likely rent it out to keep it maintained and cover costs?
Or Another ghost home if not renting it out? If people are doing that it shows we need a vacant house tax. We really need to stop people using houses as investments.

There's probably a shortage of low value rental property, and oversupply of high value property. IOW you'll end up paying $500 / week for pretty basic 3 brm house in a very average area in Chch, but a quick look on TM, there are 4 bedroom 3 bathroom homes in desirable locations for rent in the $800-$1k / week range.

I'm guessing that the $500/week house would have a market value of $500k, the $875/week house probably in the $2 million range.

I doubt a "vacant home tax" is workable - and reasonable. It'll target the wrong end of the market and have too many complications that are (genuinely) "unfair".

quickymart

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#2718508 5-Jun-2021 08:57

https://thespinoff.co.nz/business/05-06-2021/a-bizarre-afternoon-at-a-central-auckland-auction-house/?fbclid=IwAR0POGkMJMisf6W6OzpnlVss1v7b4xcTPVz0NAAK8xJxXZykoLviC9D54kY

tdgeek

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#2718743 5-Jun-2021 18:49

Westpac increasing longer term home loan interest rates on 'improved economic outlook'

https://www.stuff.co.nz/business/money/125360509/westpac-increasing-longer-term-home-loan-interest-rates-on-improved-economic-outlook

Enjoy while it lasts as it won't. Its helped the economy as money spent in interest has not been spent, spent in the economy which is good. Back to normal in the future

That will possibly cool demand and thus prices

mattwnz

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#2718746 5-Jun-2021 18:59

tdgeek:

Westpac increasing longer term home loan interest rates on 'improved economic outlook'

https://www.stuff.co.nz/business/money/125360509/westpac-increasing-longer-term-home-loan-interest-rates-on-improved-economic-outlook

Enjoy while it lasts as it won't. Its helped the economy as money spent in interest has not been spent, spent in the economy which is good. Back to normal in the future

That will possibly cool demand and thus prices

Banks are still offering record low 1 year rates. Went to a new low a few days ago. There is still far too much demand, and hardly any new houses being listed. The latest property press in my area was only a few pages this time. Partly due to winter, but also people aren't selling. I heard Tony A. saying as few days ago that retired people wanting to cash out of the housing market aren't selling because in the old days they could sell and then live off the interest by putting their money in the bank. They now can't do this, so they aren't selling. They may rent them out and get an okay return, and also benefit from capital gains. It is a knockon effect of the low interest rates.

I am now seeing some houses getting listed for some truly crazy high prices. Some are probably trying it on and speculating. The problem is you just need one or two of these selling at those crazy prices, for agents to use it as a benchmark and new market price, and this is what has happened.

tdgeek

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#2718748 5-Jun-2021 19:12

mattwnz:

Banks are still offering record low 1 year rates. Went to a new low a few days ago. There is still far too much demand, and hardly any new houses being listed. The latest property press in my area was only a few pages this time. Partly due to winter, but also people aren't selling. I heard Tony A. saying as few days ago that retired people wanting to cash out of the housing market aren't selling because in the old days they could sell and then live off the interest by putting their money in the bank. They now can't do this, so they aren't selling. They may rent them out and get an okay return, and also benefit from capital gains. It is a knockon effect of the low interest rates.

I am now seeing some houses getting listed for some truly crazy high prices. Some are probably trying it on and speculating. The problem is you just need one or two of these selling at those crazy prices, for agents to use it as a benchmark and new market price, and this is what has happened.

Yep, fair points, but at the end of the day the low inter rates are a shorter term glitch due to covid, normal transmission will occur in due course. Those that bought in a heated market will off course know that, and will cope with the expected resumption of interest rates.

quickymart

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#2718849 6-Jun-2021 07:59

https://www.rnz.co.nz/news/business/444047/housing-market-risk-of-sharp-correction-rising-bnz-economists

"Consenting" doesn't always translate into a new house being built once consent is granted, right?

quickymart

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#2718875 6-Jun-2021 09:35

Also what is this "building boom" they speak of during 2004? Was that related to anything in particular, or just lots of people wanted to build properties?

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Fred99

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#2718876 6-Jun-2021 10:06

quickymart:

https://www.rnz.co.nz/news/business/444047/housing-market-risk-of-sharp-correction-rising-bnz-economists

"Consenting" doesn't always translate into a new house being built once consent is granted, right?

No. But there's a considerable cost for applying and a limited time window from when consent is issued to completion and issuing code compliance.

There's no point getting building consent, then sitting the paperwork on the shelf. It's reasonable to assume that most building consents applied for will be completed, exceptions would probably be multi-unit projects where the developer goes bust.

There was a peak in consents issued in 2004. 2 year fixed rates dropped to 6.5% before rising again until the GFC.

wellygary

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#2718917 6-Jun-2021 11:14

quickymart:

https://www.rnz.co.nz/news/business/444047/housing-market-risk-of-sharp-correction-rising-bnz-economists

"Consenting" doesn't always translate into a new house being built once consent is granted, right?

Pretty much all do,

This analysis in 2018 showed 98% completion in Auckland over 5 years .. A year ago you could have argued COVID might have raised that, but now pretty much every big project “shelved” in 2020 has been restarted ....

https://www.interest.co.nz/property/95188/auckland-council-figures-suggest-around-98-new-dwellings-consented-region-actually

mattwnz

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#2718996 6-Jun-2021 18:19

tdgeek:

mattwnz:

Banks are still offering record low 1 year rates. Went to a new low a few days ago. There is still far too much demand, and hardly any new houses being listed. The latest property press in my area was only a few pages this time. Partly due to winter, but also people aren't selling. I heard Tony A. saying as few days ago that retired people wanting to cash out of the housing market aren't selling because in the old days they could sell and then live off the interest by putting their money in the bank. They now can't do this, so they aren't selling. They may rent them out and get an okay return, and also benefit from capital gains. It is a knockon effect of the low interest rates.

I am now seeing some houses getting listed for some truly crazy high prices. Some are probably trying it on and speculating. The problem is you just need one or two of these selling at those crazy prices, for agents to use it as a benchmark and new market price, and this is what has happened.

Yep, fair points, but at the end of the day the low inter rates are a shorter term glitch due to covid, normal transmission will occur in due course. Those that bought in a heated market will off course know that, and will cope with the expected resumption of interest rates.

We had low rates before Covid, not quite as low, but the trend was still downwards since the GFC, and other countries were already down to what NZ is now. It is very easy to drop them, far more difficult to then move them up. We could risk going negative if we have another long lockdown. NZ is also largely hamstrung by what the rest of the world does. If we move them up when other countries aren't moving them up, it potentially could push the dollar up and exporters earn less money. Infact we have a whole generation of borrowers who have never had mortgage rates increase. I am hoping they won't be shocked by the extra amounts they have to pay on their mortgages

This is a timely article on this topic today https://www.interest.co.nz/opinion/110725/bnzs-stephen-toplis-says-house-price-inflation-must-fall-and-house-prices-could-too

mattwnz

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#2719000 6-Jun-2021 18:28

I heard an interesting stat yesterday. That was that since covid, house values in NZ have gone up 1/4 trillion dollars, or 250 billion dolalrs. That is scary. That is money from nowhere.

mattwnz

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#2719006 6-Jun-2021 18:50

tdgeek:

Those that bought in a heated market will of course know that, and will cope with the expected resumption of interest rates.

That would make a good Tui Billboard.

tdgeek

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#2720071 7-Jun-2021 08:39

mattwnz:

tdgeek:

Those that bought in a heated market will of course know that, and will cope with the expected resumption of interest rates.

That would make a good Tui Billboard.

Did all buyers know prices are rising? Did they all expect low interest rates are forever?

tdgeek

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#2720072 7-Jun-2021 08:45

mattwnz:

We had low rates before Covid, not quite as low, but the trend was still downwards since the GFC, and other countries were already down to what NZ is now. It is very easy to drop them, far more difficult to then move them up. We could risk going negative if we have another long lockdown. NZ is also largely hamstrung by what the rest of the world does. If we move them up when other countries aren't moving them up, it potentially could push the dollar up and exporters earn less money. Infact we have a whole generation of borrowers who have never had mortgage rates increase. I am hoping they won't be shocked by the extra amounts they have to pay on their mortgages

This is a timely article on this topic today https://www.interest.co.nz/opinion/110725/bnzs-stephen-toplis-says-house-price-inflation-must-fall-and-house-prices-could-too

What were interest rates before covid? 5.5%? Now they are 2.3% Not much but as we all know, mortgage payments are mainly interest

We can easily play with rates without affecting exports and the dollar. Banks can operate a revenue neutral adjustment to mortgage rates. Add interest onto existing house purchases, use that to subsidise interest on new builds. Easy to operate. The extra interest goes into the Balance Sheet, the subsidised interest also goes to the Balance Sheet. You just adjust the rates annually to match the asset and the liability balance sheet items. Builds increase, existing homes ease in price.

quickymart

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#2720132 7-Jun-2021 12:12

I don't normally read this moron's drivel, but...

https://www.oneroof.co.nz/news/39554

And then something happens. The young couple finally find a house and have their offer accepted. And guess what happens? The day they take possession of the property their entire worldview changes. The capital growth in their home – which now belongs to them – is a great thing! The system works, they’ll tell you! Don’t change a thing!

Yes because that happens every single day, on every offer made, on every single house you make an offer for. Seriously, when was the last time this clown even tried buying a house, to add to the 10 others he already owns?

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