Real estate, post level 4

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5896 posts

Uber Geek

#2750364 27-Jul-2021 08:52

tdgeek:

I assume thats because buyers can sign up for a fixed price, new, small, postage stamp section on the outskirts, as thats affordable (I'm assuming there is a good percentage of FHB's doing that)

This would be fine if there was an impetus for the government to actually connect these areas with transport options that aren't 90 minutes in congestion each day.

tdgeek

29740 posts

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#2750366 27-Jul-2021 08:55

GV27:

This would be fine if there was an impetus for the government to actually connect these areas with transport options that aren't 90 minutes in congestion each day.

Yep, its been needed for many, many years

GV27

5896 posts

Uber Geek

#2750370 27-Jul-2021 09:05

tdgeek:

GV27:

This would be fine if there was an impetus for the government to actually connect these areas with transport options that aren't 90 minutes in congestion each day.

Yep, its been needed for many, many years

Yea, and we're now past the point of trust anyone to actually *do* it.

We are very good at writing reports and making announcements, not so good at the 'making stuff happen' bit.

I can't see the situation changing as long as we're stuck on a three-term cycle for governments. We've been re-re-electing the same parties since 1999.

quickymart

13925 posts

Uber Geek

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#2750451 27-Jul-2021 10:42

https://www.stuff.co.nz/business/opinion-analysis/300366532/what-if-we-crashed-the-housing-market-on-purpose

tdgeek

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#2750452 27-Jul-2021 10:50

quickymart:

https://www.stuff.co.nz/business/opinion-analysis/300366532/what-if-we-crashed-the-housing-market-on-purpose

Skimmed that. I don't agree with the so called house affordability based on average wages and house price

Back in the day it was 3X yet interest was 15%+ Now it can be 10X but interest is 2.69%

Id like to see the mortgage repayments to house price for the past and now, for those on the average wage That's is a true affordability comparison. House prices double and interest drops by 60% = the same

mattwnz

20141 posts

Uber Geek

#2750708 27-Jul-2021 14:47

tdgeek:

mattwnz: Land is very heavily controlled and dip fed onto the market to keep prices high from my experience. So unless the governemnt were to bring in vacant land taxes or sell crown land, nothing much will change. Land prices have doubled in my town since the start of covid

Who is drip feeding it??

Here in ChCh, subdivisions pop up everywhere. There is one in Lincoln which I "think" the developers were assisted by Govt or the local Council

Land is scarce. Its farmed, market gardened, etc

Its flat here, land is freely available if you buy it from the farmer or market gardener. If land is not flat, there is less suitable land, and with a building boom, much more demand so higher prices

Land owners and property developers. In my town there is a lot of land that is privately owned that has been rezoned for urban, but a large part of it, the owners don't want to sell, and you can't force them to either. Another part of it, it is being developed in 5 section groups, and so each of those is sold off, before they will release more, and the process is taking years and drip fed. Then there is a good year delay before roads a built and titles are given out. In that time the land maybe resold a few times, each time bumping up the prices (add on agents fees too which increase prices even more), which then bumps up the prices on all other land. Each time there is a new high price, then the agent expects that other land will reach that same price as that is what the market will pay. Literally land prices have doubled since the beginning of 2020. Land that was under 300k, is now getting 600k. These are also towns that are surrounded in farmland that could be expanded to, and a lot of land is not really used, much is land banked for future developments, but the problem is infrastructure to service it. Unless the council zones it for residential use, then it can't be used, and it takes years for land to be rezoned.

Also building companies are buying up the land too, and then selling them as house and land packages. Infact most is probably sold to builders for house and land packages, and the builders have also been selling off land for the capital gains, because that is where the money is. Many people seem to have been buying land just for the potenial capaitals gains, as people have been making an each 100-200k in a year just from a small 800sqm or less section. But I have read today on redit that someone has been told that their new build will go up about 20% due to inflation on building materials even after signing up to a price. Because they don't own the land, the builder does, they can't just find another builder. They have to find land elsewhere.

mattwnz

20141 posts

Uber Geek

#2750717 27-Jul-2021 15:26

quickymart:

https://www.stuff.co.nz/business/opinion-analysis/300366532/what-if-we-crashed-the-housing-market-on-purpose

A crash is only 20% drop in price, which takes us back to prices near the end of last year when they were still considered to be insanely high.

It is expected that in about 25 years, more than half of all people retiring will not own a home, yet our universal super scheme relies on people owning their own home outright going into retirement. So we have a problem for the future coming.

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wellygary

8312 posts

Uber Geek

#2750718 27-Jul-2021 15:31

quickymart:

https://www.stuff.co.nz/business/opinion-analysis/300366532/what-if-we-crashed-the-housing-market-on-purpose

"Individual homeownership could be disincentivised through the taxation system and phased out over time in favour of collective forms of housing."

Yeah, nah, ain't gonna happen....

antonknee

1133 posts

Uber Geek

#2750720 27-Jul-2021 15:36

tdgeek:

antonknee:

I think people did start screaming around 20 years ago. Certainly by 15 years ago they had.

I don’t really ‘blame’ individuals for benefitting from it. People make the choice that benefits them the most, even if that’s the worse choice for society. Such is economics. I do blame people who resist change because they don’t see the problem, or because it doesn’t personally impact them.

I never saw anyone screaming 20 years ago or 15. People made choices to buy a house they liked. I dont think they thought that was bad for society. Im not sure who are resisting change, most would like house prices to stabilise. But we voted in Govts who were happy to let the gradual trend continue to slide, and when it became an issue it was too late. Simple economics has been working away over time, now we want it fixed quickly, it cannot be. Measures are in place for investors, Govt will now fund infrastructure, reform RMA which I read is a few years, all that will take time. But there is building boom on, I assume thats because buyers can sign up for a fixed price, new, small, postage stamp section on the outskirts, as thats affordable (I'm assuming there is a good percentage of FHB's doing that)

So you can say that the house price issue is being targeted, many changes, which is good. But it will take time

Here’s an example of John Key speaking about the “home affordability crisis” in 2007: https://www.nzpif.org.nz/news/view/53038

People buying a house they liked isn’t necessarily the problem - the problem was people buying a house, hoping it would appreciate in value, leveraging, trading up to the next one, or using it to buy an investment property (ie the property ladder). Good on an individual level, not so good on a societal level. But that’s the tragedy of the commons.

wellygary

8312 posts

Uber Geek

#2750727 27-Jul-2021 16:00

One issue is that it is not simply an NZ problem, It's basically only going to come to an end when global central banks hike rates, and central governments stop pouring in COVID support...

"Australian house prices are set to soar by as much as 16% this year, driven by government support and stronger than expected economic growth, the ratings agency Fitch predicts.
https://www.theguardian.com/australia-news/2021/jul/16/australian-house-prices-to-soar-by-up-to-16-in-2021-ratings-agency-says

And..

Royal LePage report on Canadian home prices is predicting that the price of homes in Greater Vancouver — including single-detached homes, townhouses and condos — will be 15 per cent higher by the end of the year compared to the end of 2020, jumping to a median of $1.265 million from $1.1 million.

The region has already posted double-digit gains in the spring when prices rose nearly 20 per cent in the second quarter of 2021 compared to the same time period last year.

Nationally, the housing prices in Canada are expected to rise 16 per cent to $771,500 by the end of the year over the same time last year.

The largest year-over-year gain is forecast for Greater Montreal at 17.5 per cent, followed by Ottawa at 17 per cent and Greater Vancouver, which has the highest aggregate prices in the country, according to the report.

https://www.theguardian.com/australia-news/2021/jul/16/australian-house-prices-to-soar-by-up-to-16-in-2021-ratings-agency-says

mattwnz

20141 posts

Uber Geek

#2750751 27-Jul-2021 16:26

antonknee:

tdgeek:

I never saw anyone screaming 20 years ago or 15. People made choices to buy a house they liked. I dont think they thought that was bad for society. Im not sure who are resisting change, most would like house prices to stabilise. But we voted in Govts who were happy to let the gradual trend continue to slide, and when it became an issue it was too late. Simple economics has been working away over time, now we want it fixed quickly, it cannot be. Measures are in place for investors, Govt will now fund infrastructure, reform RMA which I read is a few years, all that will take time. But there is building boom on, I assume thats because buyers can sign up for a fixed price, new, small, postage stamp section on the outskirts, as thats affordable (I'm assuming there is a good percentage of FHB's doing that)

So you can say that the house price issue is being targeted, many changes, which is good. But it will take time

Here’s an example of John Key speaking about the “home affordability crisis” in 2007: https://www.nzpif.org.nz/news/view/53038

People buying a house they liked isn’t necessarily the problem - the problem was people buying a house, hoping it would appreciate in value, leveraging, trading up to the next one, or using it to buy an investment property (ie the property ladder). Good on an individual level, not so good on a societal level. But that’s the tragedy of the commons.

NZ has become a country of everyone looking after themselves and in their own best interests, to gain a lot of wealth by retirement.

Renting out houses is slowly being professionalized, but obviously there is a lot of push back from property investors. Many investors seem to think they are doing people a huge service, when infact if these houses were sold on the market, then many renters could afford to buy, and it wouldn't have pushed up house prices as high, especially at the lower end of the market.. Many landlords are buying for the capital gains when they eventually sell, so they don't want changes that could effect this. Then houses can give people leverage to borrow even more at low interest rates, to buy more houses etc. It is become normal for someone who owns one house, to own a second house as a rental or weekended. Infact it is now seen as normal.

Healthy homes is the start and requirements will no doubt keep increasing, to professionalize rentals. IMO many of these houses are not up to the largest insulation requirements when building a house, so are damp. Even NZs current insulation standards are not great. So it means a lot of lower social economic groups are living in poor rental conditions, and this in some case has the potential to affect their health for the rest of their life.

mudguard

2113 posts

Uber Geek

#2750757 27-Jul-2021 16:26

tdgeek:

quickymart:

https://www.stuff.co.nz/business/opinion-analysis/300366532/what-if-we-crashed-the-housing-market-on-purpose

Skimmed that. I don't agree with the so called house affordability based on average wages and house price

Back in the day it was 3X yet interest was 15%+ Now it can be 10X but interest is 2.69%

Id like to see the mortgage repayments to house price for the past and now, for those on the average wage That's is a true affordability comparison. House prices double and interest drops by 60% = the same

Shouldn't be too hard to work out. Use someone like a school teacher. Like my folks. Historic average interest rate is 8% (that used to be the old bank stress figure I thought)

1997

$220,000, $44,000 deposit, over 30 years at 8% is $1292pm. 32% of gross income

Same house is now worth

$900,000, $180,000 deposit, over 30 years at 3.29% is $3150pm. 42% of gross income

Top Scale Salary for teachers in 1997

$47,100

Top Scale Salary 2021 (requires Masters or PhD)

$90,000

1987 interest rates 20.5%

Average house price was $88,900, $17,780 at 20.5% is $1218 pm

Salary was $39,105 for teachers

37% of gross income

mattwnz

20141 posts

Uber Geek

#2750765 27-Jul-2021 16:28

wellygary:

One issue is that it is not simply an NZ problem, It's basically only going to come to an end when global central banks hike rates, and central governments stop pouring in COVID support...

"Australian house prices are set to soar by as much as 16% this year, driven by government support and stronger than expected economic growth, the ratings agency Fitch predicts.
https://www.theguardian.com/australia-news/2021/jul/16/australian-house-prices-to-soar-by-up-to-16-in-2021-ratings-agency-says

And..

Royal LePage report on Canadian home prices is predicting that the price of homes in Greater Vancouver — including single-detached homes, townhouses and condos — will be 15 per cent higher by the end of the year compared to the end of 2020, jumping to a median of $1.265 million from $1.1 million.

The region has already posted double-digit gains in the spring when prices rose nearly 20 per cent in the second quarter of 2021 compared to the same time period last year.

Nationally, the housing prices in Canada are expected to rise 16 per cent to $771,500 by the end of the year over the same time last year.

The largest year-over-year gain is forecast for Greater Montreal at 17.5 per cent, followed by Ottawa at 17 per cent and Greater Vancouver, which has the highest aggregate prices in the country, according to the report.

https://www.theguardian.com/australia-news/2021/jul/16/australian-house-prices-to-soar-by-up-to-16-in-2021-ratings-agency-says

They haven't risen as much as NZs house prices. But NZ now has an inflation problem, which means we maybe the first to raise interest rates. But I am sure they will do everything they can to justify not raising them. Interest rate rises may mean that people won't be able to borrow as much as they were borrowing. I hope some people are also fearful of overpaying.

irpegg

142 posts

Master Geek

#2750773 27-Jul-2021 16:56

mudguard:

Shouldn't be too hard to work out. Use someone like a school teacher. Like my folks. Historic average interest rate is 8% (that used to be the old bank stress figure I thought)

1997

$220,000, $44,000 deposit, over 30 years at 8% is $1292pm. 32% of gross income

Same house is now worth

$900,000, $180,000 deposit, over 30 years at 3.29% is $3150pm. 42% of gross income

Top Scale Salary for teachers in 1997

$47,100

Top Scale Salary 2021 (requires Masters or PhD)

$90,000

1987 interest rates 20.5%

Average house price was $88,900, $17,780 at 20.5% is $1218 pm

Salary was $39,105 for teachers

37% of gross income

Yeah, I always find it concerning when people just write it off being like "Well back in my day when interest was 15% the buying power was just as hard!!!" yet they bought a house being a milkman or other low-skilled jobs. It's often my parent's friends who are completely out of touch with reality that are now upset that their overly inflated house they did nothing to for 20 years isn't really getting them the massive mansions they believe they deserve because everywhere else has had the same magical value gains. I'm equally disappointed at the market and look forward to a crash so I can upgrade my house, however even a 20% crash would just take us back to 2020 house prices :\

mattwnz

20141 posts

Uber Geek

#2750869 27-Jul-2021 17:01

mudguard:

Shouldn't be too hard to work out. Use someone like a school teacher. Like my folks. Historic average interest rate is 8% (that used to be the old bank stress figure I thought)

1997

$220,000, $44,000 deposit, over 30 years at 8% is $1292pm. 32% of gross income

Same house is now worth

$900,000, $180,000 deposit, over 30 years at 3.29% is $3150pm. 42% of gross income

Top Scale Salary for teachers in 1997

$47,100

Top Scale Salary 2021 (requires Masters or PhD)

$90,000

1987 interest rates 20.5%

Average house price was $88,900, $17,780 at 20.5% is $1218 pm

Salary was $39,105 for teachers

37% of gross income

Affordability is surprisingly far worse, even with the record low rates. The scarey thing is that the deposit now needed is almost as much as the full house purchase back then!

The thing is that the current interest rates are at emergency low levels. Even the RB Governor recently said they people need to look at what rates could be in the future when borrowing a lot of money, rather than these low rates today. Even 8% is historically a low rate. Do people buying at these low rates and getting Mega mortgages, and pushing themselves think the government is going to bail them out if interest rates rise too much?

These high house prices are going to be terrible for the economy when interest rates rise, as people will have less money to spend in the economy.

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