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gzt

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  Reply # 2090343 13-Sep-2018 21:33
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What is the calculation for overvaluation column?

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  Reply # 2090444 14-Sep-2018 08:40
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gzt: What is the calculation for overvaluation column?

 

No details in that article, just stated that using a long-term average valuation of 100, present value is 179. 

 

It would have been better if they'd at least stated a start point.

 

Using RBNZ inflation calculator since 1990, then

 

General CPI + 77%

 

Wages        + 125%

 

Clothing      +9%

 

Transport    + 41%

 

Food           +72%

 

Housing       +335%

 

So, on average we're earning more - wages have outpaced inflation, food's a bit cheaper relative to earning, transport is a lot cheaper, clothing is much cheaper.  But housing is much more expensive.  

 

That housing cost index is based on valuation. (ie not what people are paying on average on a weekly basis - but what it costs to buy a house). I presume it's about right as a NZ average (ie not Auckland) as we bought the Chch house we're still living in 1990, RV increase based on RBNZ 335% increase since 1990 is more or less spot on WRT to current RV.  Prices were static or fell a bit in the early '90s. 

 

What's going to happen?  I don't know except to say that as housing is the major expense for most people, doubling in cost per decade when earnings increased at much less than half that rate is unsustainable.  If transport costs or clothing costs doubled, you'd still probably drive to the supermarket.  If housing costs doubled again over the next decade...  then what?  Ask the boss for more money - or government for a tax cut?


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  Reply # 2090458 14-Sep-2018 09:09
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Fred99:

 

gzt: What is the calculation for overvaluation column?

 

No details in that article, just stated that using a long-term average valuation of 100, present value is 179. 

 

It would have been better if they'd at least stated a start point.

 

Using RBNZ inflation calculator since 1990, then

 

General CPI + 77%

 

Wages        + 125%

 

Clothing      +9%

 

Transport    + 41%

 

Food           +72%

 

Housing       +335%

 

So, on average we're earning more - wages have outpaced inflation, food's a bit cheaper relative to earning, transport is a lot cheaper, clothing is much cheaper.  But housing is much more expensive.  

 

That housing cost index is based on valuation. (ie not what people are paying on average on a weekly basis - but what it costs to buy a house). I presume it's about right as a NZ average (ie not Auckland) as we bought the Chch house we're still living in 1990, RV increase based on RBNZ 335% increase since 1990 is more or less spot on WRT to current RV.  Prices were static or fell a bit in the early '90s. 

 

What's going to happen?  I don't know except to say that as housing is the major expense for most people, doubling in cost per decade when earnings increased at much less than half that rate is unsustainable.  If transport costs or clothing costs doubled, you'd still probably drive to the supermarket.  If housing costs doubled again over the next decade...  then what?  Ask the boss for more money - or government for a tax cut?

 

 

Is wages after tax? If not, you;d need to deduct the average marginal tax rate of the 125%. Still above CPI though

 

If houses became unaffordable for the masses, the the masses rent, so we have a rental economy and we all get used to that. The Kiwi 1/4 acre dream has gone except for the lucky few. Unlike a mortgage, rents are pegged to inflation. Maybe 60 year mortgages might happen? That way you buy, and it becomes a true family home as the next generation will still be paying. That depends on interest rates as well. Or we get used to small houses and a tiny piece pf grass, soem go to apartments enmasse

 

Whatever happens, everyone will be housed, just not the way ,many of us want. A home may just become a house, a commodity, its just todays location

 

 


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  Reply # 2090460 14-Sep-2018 09:14
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And, one day a house becomes a psuedo income, in that it doesnt need much of an income to use it, if its freehold. Retirees stuck with market rents will be another problem, if the vast majority of retired lost the benefit of zero rent and zero mortgage payments




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  Reply # 2090955 15-Sep-2018 08:39
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It's not a great picture, is it.


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  Reply # 2090956 15-Sep-2018 08:41
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There's one way, apply tax on land owned by non residents, encouraging them to sell to residents. But you need to win the election to do that.



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  Reply # 2090986 15-Sep-2018 10:16
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It still comes down to demand and supply.

 

You can have an undervalued phone, say a HTC with the same specs as say a Galaxy S9, but try to price it at half the S9's price - if nobody buys, then, nobody buys and you have to discount it further.

 

Take the iphone XS Max. half the specs of say the Galaxy S9 again. But charge twice the price. 

 

What happens? Everybody buys and there is no stock, and you see the XS Max selling on trademe for even higher than the retail price. (Trust me, just watch trademe on 21 Sept).

 

Moral: Iphone overvalued, goes higher. HTC undervalued, needs further discount.

 

Bottom line:

 

It depends on how may people want to buy your Auckland houses, and how many are available.

 

Solution:

 

Either have more houses or have fewer buyers


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  Reply # 2090990 15-Sep-2018 10:25
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tdgeek:

 

If houses became unaffordable for the masses, the the masses rent, so we have a rental economy and we all get used to that. The Kiwi 1/4 acre dream has gone except for the lucky few. Unlike a mortgage, rents are pegged to inflation. Maybe 60 year mortgages might happen? That way you buy, and it becomes a true family home as the next generation will still be paying. That depends on interest rates as well. Or we get used to small houses and a tiny piece pf grass, soem go to apartments enmasse

 

Whatever happens, everyone will be housed, just not the way ,many of us want. A home may just become a house, a commodity, its just todays location

 

 

What makes you so sure that everyone will be housed? It is widely believed that we have a housing shortage, so economic fundamentals would suggest that house prices and rents will rise to a level where a certain proportion of the population go homeless or live in improvised accommodation.

 

It is a horrible thought, but that appears to be the reality of the situation we're now in.


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  Reply # 2091042 15-Sep-2018 11:36
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alasta:

 

tdgeek:

 

If houses became unaffordable for the masses, the the masses rent, so we have a rental economy and we all get used to that. The Kiwi 1/4 acre dream has gone except for the lucky few. Unlike a mortgage, rents are pegged to inflation. Maybe 60 year mortgages might happen? That way you buy, and it becomes a true family home as the next generation will still be paying. That depends on interest rates as well. Or we get used to small houses and a tiny piece pf grass, soem go to apartments enmasse

 

Whatever happens, everyone will be housed, just not the way ,many of us want. A home may just become a house, a commodity, its just todays location

 

 

What makes you so sure that everyone will be housed? It is widely believed that we have a housing shortage, so economic fundamentals would suggest that house prices and rents will rise to a level where a certain proportion of the population go homeless or live in improvised accommodation.

 

It is a horrible thought, but that appears to be the reality of the situation we're now in.

 

 

everyone will be "housed".

 

https://www.businessinsider.com/crazy-pictures-of-micro-apartments-around-hong-kong-2018-1/?r=AU&IR=T/#even-if-they-might-want-or-need-more-space-residents-are-often-within-arms-reach-of-the-things-they-treasure-most-11


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  Reply # 2091065 15-Sep-2018 12:50
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Batman: There's one way, apply tax on land owned by non residents, encouraging them to sell to residents. But you need to win the election to do that.

 

I thought the current Govt is owner of all things taxation?. The old Govt stated that there is no housing crisis (now, in the campaign). No housing crisis means no action needed


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  Reply # 2091067 15-Sep-2018 12:56
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alasta:

 

tdgeek:

 

If houses became unaffordable for the masses, the the masses rent, so we have a rental economy and we all get used to that. The Kiwi 1/4 acre dream has gone except for the lucky few. Unlike a mortgage, rents are pegged to inflation. Maybe 60 year mortgages might happen? That way you buy, and it becomes a true family home as the next generation will still be paying. That depends on interest rates as well. Or we get used to small houses and a tiny piece pf grass, soem go to apartments enmasse

 

Whatever happens, everyone will be housed, just not the way ,many of us want. A home may just become a house, a commodity, its just todays location

 

 

What makes you so sure that everyone will be housed? It is widely believed that we have a housing shortage, so economic fundamentals would suggest that house prices and rents will rise to a level where a certain proportion of the population go homeless or live in improvised accommodation.

 

It is a horrible thought, but that appears to be the reality of the situation we're now in.

 

 

Tonight, almost everyone will be housed. We dont have a housing crisis with not enough houses, its about the houses that people want to buy, newer, upper market. That filters down. So, IMHO, there is no housing shortage. There is shortage of cool expensive houses that those that can afford, want. But we dont have 50,000 families sleeping in parks.

 

Rents may rise, but when there is a need, but no one who can pay that rent, there is no rental income, so rents would reduce. Landlords may bail. They may do up the rentals and sell them (good idea for the masses) House prices tight now are stable as those that can afford repayments are much fewer, lower demand. Should rents rise too much, the Govt will need to increase accommodation supplements, or build state housing units. If bad, the Govt may need to become the main home owner in NZ


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  Reply # 2091068 15-Sep-2018 12:57
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tdgeek:

 

Batman: There's one way, apply tax on land owned by non residents, encouraging them to sell to residents. But you need to win the election to do that.

 

I thought the current Govt is owner of all things taxation?. The old Govt stated that there is no housing crisis (now, in the campaign). No housing crisis means no action needed

 

 

Winston Peters is the current Govt. And we do what he wants. And he doesn't state that he wants to apply land tax to non residents.


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  Reply # 2091070 15-Sep-2018 13:01
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alasta:

 

 

 

It is a horrible thought, but that appears to be the reality of the situation we're now in.

 

 

It is. Here is what I see in the short to medium term. House prices have stabilised, due to less demand due to high prices. Rents I assume are stable now? If so, it's met a plateau. People will pay more for a house but they can't afford repayments, they would pay more for rent but they cant afford the rent. The blood has now been squeezed from the stone, so landlords can't ask for more rent as the supply of those that can pay is lower. 

 

I'd like the Govt to drive around and buy up en masse, fixer uppers. There are heaps off them. Fix them up, sell back. There must be a lot of houses that are there but no one will buy or rent. Best to mop that lot up first I believe. Doesn't need new land. Two side by side might allow a new build to get 2 turning into 3.


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  Reply # 2091072 15-Sep-2018 13:04
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Batman:

 

tdgeek:

 

Batman: There's one way, apply tax on land owned by non residents, encouraging them to sell to residents. But you need to win the election to do that.

 

I thought the current Govt is owner of all things taxation?. The old Govt stated that there is no housing crisis (now, in the campaign). No housing crisis means no action needed

 

 

Winston Peters is the current Govt. And we do what he wants. And he doesn't state that he wants to apply land tax to non residents.

 

 

:-) What you mean is that in a coalition, only the main party has any say, and if the partner wants a say, they have taken over. This is the first coalition Govt I believe since MMP. Heard that just the other day. 


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