Real estate, post COVID-19 level 4 (since 2020)

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#2739757 6-Jul-2021 15:33

https://thespinoff.co.nz/money/06-07-2021/from-1992-to-2021-heres-how-much-you-needed-to-earn-to-afford-a-nz-house/

Pity the past is just that...the past. I would have been able to afford a house in Auckland today, using 1992 prices. Mind you, everything else was quite different back then.

antonknee

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#2739834 6-Jul-2021 17:13

tdgeek:

I didn't make any assumptions. I did suggest that many may be individuals. Im no expert but ChCh house prices are better than elsewhere, thats probably a reasonable correlation. Maybe a Govt can force buy many many hectares in AKL and elsewhere, suffer the indignation of the occupants, then release multiple subdivisions?

Of course, I was just poking fun at it with the “assumptions” :)

I think you’re quite right - supply in Chch has been much better than elsewhere post-quake, and I suspect a lot of that is to do with the efforts of the government at the time to open up supply and builders/developers actually building at scale I also think the same model could be put to good use in Akl, and that yes indeed the government should do exactly what you’ve said.

To be fair, they went a little way down this track in Tamaki and Northcote by bowling state houses and using the land for townhouses and apartments Northcote seems to have a lot of construction still but Tamaki feels like not much progress has been made of late, and the only houses available on that land are well over a million dollars.

Then again I read articles that say we are taking market gardeners land. I get that, coming from a farming upbringing, but urban sprawl is urban sprawl, rural neds also to move further away. OR we decide to set NZ population at 5.1 million, aim to house that, and ban immigrants. Thats not a facetious comment, but it asks the question, do we want more people here or not? Id suggest we do, for economies of scale. Many products we import than manufacture as our economy is too small. Thats another question.

Which is exactly why they need to do what you’ve said - buy up hectares in existing urban areas and put more houses on it. We can’t expand our cities infinitely for a variety of reasons, not the least of which is the loss fertile growing soils, and so we need to make more efficient use of the land we have already.

antonknee

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#2739838 6-Jul-2021 17:18

Handle9:

Apartments don't have to be slums. Apartments in Europe, the US and Asia are often lovely buildings surrounded by amenities.

There are definitely slums but if you want affordable housing that supports high quality public transport then it's a great way to get there.

Historically apartments in NZ have been poorly built shoe boxes whic has really hurt the market.

I have lived in lots of apartments, and still do. Not every apartment development is a slum and there are some excellent buildings around. I would point to the fantastic work done by Ockham Residential or NZ Living in Auckland as good examples. 3-6 stories, not massive numbers, well designed and constructed, good amenities.

I would point to most of what Conrad Properites spew out (like Zest or most of Hobson Street) as exactly what we don’t want. Small, cheaply built, extremely dense, lower quality.

I rather think medium density housing (townhouses, 3 story walk-up apartment blocks) in existing central suburbs (Mt, Eden, Epsom, Greenlane, Ellerslie, Grey Lynn in Auckland) is exactly the solution. Just like it is in most other cities around the world.

mattwnz

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#2740205 6-Jul-2021 23:39

IMO there are a number of issues with buying apartments in NZ. Especially in Wellington, where you have increasing earthquake standards that buildings must meet. Even some relatively new buildings. This can be very expensive as was shown on One News a week or so ago. You don't really own land and much of the capital gain in a house, is in the land value increase, where as the building largely depreciates over time. Then you have body corporate fees.

Handle9

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#2740266 7-Jul-2021 01:05

mattwnz:

IMO there are a number of issues with buying apartments in NZ. Especially in Wellington, where you have increasing earthquake standards that buildings must meet. Even some relatively new buildings. This can be very expensive as was shown on One News a week or so ago. You don't really own land and much of the capital gain in a house, is in the land value increase, where as the building largely depreciates over time. Then you have body corporate fees.

You also have a lot of advantages to apartments and higher density housing. If you want things to change you need to do things differently.

quickymart

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#2741939 9-Jul-2021 17:39

https://thespinoff.co.nz/business/09-07-2021/bernard-hickey-the-1-trillion-housing-wealth-crime-of-the-century/

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mattwnz

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#2741953 9-Jul-2021 18:02

Handle9:

mattwnz:

IMO there are a number of issues with buying apartments in NZ. Especially in Wellington, where you have increasing earthquake standards that buildings must meet. Even some relatively new buildings. This can be very expensive as was shown on One News a week or so ago. You don't really own land and much of the capital gain in a house, is in the land value increase, where as the building largely depreciates over time. Then you have body corporate fees.

You also have a lot of advantages to apartments and higher density housing. If you want things to change you need to do things differently.

It is down to the government to implement polices that don't just benefit current homeowners, who are their major voter base, and creating this intergeneration wealth gap. Part of the problem is that lack of spending on infrastructure, despite the high immigration growth and it is new buildings that are paying for it. A huge percentage of the cost of subdividing land is in infrastructure. This then means home buyers of these apartments are paying for the new infrastructure investment, but existing home owners haven't had to pay. But existing owners benefit from the rise in house values from new house sales pushing up the prices of all houses. Apparently a land tax on all property would help with this

antonknee

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#2741973 9-Jul-2021 19:08

mattwnz:

IMO there are a number of issues with buying apartments in NZ. Especially in Wellington, where you have increasing earthquake standards that buildings must meet. Even some relatively new buildings. This can be very expensive as was shown on One News a week or so ago. You don't really own land and much of the capital gain in a house, is in the land value increase, where as the building largely depreciates over time. Then you have body corporate fees.

While that’s true, maybe capital gain isn’t the be all and end all. Maybe a home should be a place to live and not just an investment vehicle. I really don’t think this ponzi scheme where we trade the same land backwards and forwards is healthy for us.

Earthquakes are an issue, but Christchurch tells us earthquakes don’t discriminate between building types. Wellington is maybe a special case in terms of earthquake risk (and to be fair, Wellington is in a stupid spot to build a city but that ship has sailed)

What are the other issues you see with buying apartments in NZ?

quickymart

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#2741982 9-Jul-2021 19:58

I still think whatever was done in Christchurch after the earthquakes could be applied in a lot more places as quickly as it was, which (I feel) would do a lot for (a) supply and (b) prices.

mattwnz

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#2741997 10-Jul-2021 00:24

antonknee:

mattwnz:

IMO there are a number of issues with buying apartments in NZ. Especially in Wellington, where you have increasing earthquake standards that buildings must meet. Even some relatively new buildings. This can be very expensive as was shown on One News a week or so ago. You don't really own land and much of the capital gain in a house, is in the land value increase, where as the building largely depreciates over time. Then you have body corporate fees.

While that’s true, maybe capital gain isn’t the be all and end all. Maybe a home should be a place to live and not just an investment vehicle. I really don’t think this ponzi scheme where we trade the same land backwards and forwards is healthy for us.

Earthquakes are an issue, but Christchurch tells us earthquakes don’t discriminate between building types. Wellington is maybe a special case in terms of earthquake risk (and to be fair, Wellington is in a stupid spot to build a city but that ship has sailed)

What are the other issues you see with buying apartments in NZ?

Body corporates. Build quality. In 20 -30 years many could look very shabby and dated, and many will need a lot of money spending on them to get them updated. My father has seen it all before when growing up and living in the UK and they can become ghettos, and may not be somewhere that people want to spend they whole life living in. How many developers and rich people want to live in them?

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#2742005 10-Jul-2021 06:27

mattwnz:

It is down to the government to implement polices that don't just benefit current homeowners, who are their major voter base, and creating this intergeneration wealth gap. Part of the problem is that lack of spending on infrastructure, despite the high immigration growth and it is new buildings that are paying for it. A huge percentage of the cost of subdividing land is in infrastructure. This then means home buyers of these apartments are paying for the new infrastructure investment, but existing home owners haven't had to pay. But existing owners benefit from the rise in house values from new house sales pushing up the prices of all houses. Apparently a land tax on all property would help with this

The trouble is govts around the world every time they they to redistribute wealth they end up taking money from the middle class and handing it to the upper class. The poor remain poor bit very fed and housed as the rich get richer all thanks to the hard work of the middle class.

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antonknee

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#2742041 10-Jul-2021 10:35

mattwnz:

Body corporates. Build quality. In 20 -30 years many could look very shabby and dated, and many will need a lot of money spending on them to get them updated. My father has seen it all before when growing up and living in the UK and they can become ghettos, and may not be somewhere that people want to spend they whole life living in. How many developers and rich people want to live in them?

Sure body corporates - luck of the draw if (or rather research required to ensure) you get a well run one. Don’t forget, if you own an apartment you are the body corporate - it’s not a faceless entity. The laws around body corps do need updating however and there are some changes underway. What I would say is that HOAs and Residents Associations are quite common now, and plenty of suburban developments have caveats attached.

People think of body corps as a money suck, but the reality is that the body corp is paying for items you would pay for on a property anyway, like insurance, maintenance, repairs, building wash, garden maintenance, rubbish collection. The main difference I guess is that you wish to be a cheapskate, you have the ability to delay those costs if you aren’t in a body corp where a body corp will not necessarily do so to your same schedule.

Build quality can be an issue on anything, just look at the leaky homes crisis. It’s the reason buyers are encouraged to get a building inspection when they buy property, isn’t it?

With regards to looking shabby and dated in 20-30 years, well isn’t that all buildings? When I think about the house my mother lives in (from the 60s) it looks very shabby and dated and needs a lot of money spent updating. When I drive past the house in Auckland I grew up in (early 2000s build) it too looks shabby and outdated - hideous EIFS style cladding.

With regards to not spending your whole life there, is any property? I would say no - which is exactly why we have this ingrained concept of the property ladder. Because people like to change their home and upgrade it to a different one.

Plenty of developers and rich people live in apartments. Lots of very expensive penthouse suites, lots of apartment developments with $1-2 million apartments in them which are not going to be owned by someone who isn’t at least a little rich.

wellygary

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#2743895 14-Jul-2021 09:18

Well the tide just started to go out ... lets see how many people are out swimming naked....

it'll probably take a few more hikes to really bite, but it does now appear that the trend is up...

(likely tbc this afternoon at the RBNZ's MPR)

"ASB has raised its six month fixed rate by +30 bps to 3.29%

It has raised its one year fixed rate by +36 bps to 2.55%, and its two year rate by the same amount to 2.95%. It is these two rates hikes that are the significant ones.

Their new rates for three, four and five years are all up by +30 bps to 3.29%, 3.69% and 3.99% respectively."

https://www.interest.co.nz/personal-finance/111285/run-lower-and-lower-mortgage-rates-may-be-ending-major-asb-pushing-through

tdgeek

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#2743947 14-Jul-2021 09:58

Yep, always was going to happen, now its happened. Those that bought at artificially low rates should be fine, they "should" have known this will occur at some point, and off course, budgeted accordingly.

GV27

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#2743948 14-Jul-2021 09:59

antonknee:

With regards to looking shabby and dated in 20-30 years, well isn’t that all buildings? When I think about the house my mother lives in (from the 60s) it looks very shabby and dated and needs a lot of money spent updating. When I drive past the house in Auckland I grew up in (early 2000s build) it too looks shabby and outdated - hideous EIFS style cladding.

If my house gets shabby and run down then that's my problem that I've caused myself.

If an apartment gets shabby and run down because the body corporate majority-voted not to maintain it or invest in a long-term maintenance fund to keep costs down, then that becomes my problem.

Likewise said body-corp can then invoice you for the huge amount repairs cost because the previous owners put nothing away in a capital fund and you just happened to be there when it all unwound.

It's not an appealing proposition, given that apartments generally represent poor value (per sqm) to begin with in NZ, even compared with our garbage stand-alone housing costs.

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