Real estate, post level 4

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#2692391 14-Apr-2021 05:54

mattwnz:

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.

The problem is keeping it simple. In your example if we pretend the ten people in the cheaper house are renting then they are paying the rates (through their rent) and on paper are considerably less well off than the pensioner next door in the million dollar house.

I've read that argument before maybe in Gareth Morgan's Big Kahuna book, where we pay people universal superannuation despite the differences in wealth, say a pensioner in Devonport, vs a pensioner in Invercargill who both own their own homes.

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Handle9

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#2692393 14-Apr-2021 06:18

mattwnz:

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.

I disagree. Correlation does not equal causation. There was rampant house inflation in the early-mid 2000s before there were any estimation websites and houses were selling significantly over CV.

You don't really seem to understand what drives real estate prices.

tdgeek

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#2692398 14-Apr-2021 06:53

mattwnz:

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.

Maybe as you say we charge people. Doesnt matter if you own or rent, you pay the mortgage or rent or board or nothing if you live at home for free, but EVERYBODY gets a rates bill as well? Thats not a silly idea.

As for rates being based on what people use, how can you decide that per house? You would find that a flash house with 3 people will pay less than the low value house with 6 people, poor pay more, rich pay less

tdgeek

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#2692405 14-Apr-2021 07:29

mattwnz:

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.

Where is mine? Cheque lost in the mail? I'm a home owner, I never got any free money of the 100+ Billion that went to people who own houses. The form of helicopter payment went to support businesses. The QE that every country did dropped interest rates, thats the problem. The other problem is we shifted from a inflation environment to a low inflation and low wage economy. We had higher inflation, higher wage increases house price growth, all more or less in line. Now we have low inflation low wages but the low interest rates are the mis-aligned figure, they artificially created more demand than the wages deserved. Factor in more immigration, Kiwi's dont like building houses, Kiwisaver (more demand from many people that would never have been homeowners) and you have this mismatch. In the past, house price growth was normal, but wages grew too. It never got out of control. But the last 20 years has, and its been ignored.

You cant drop house prices artificially by 40% tomorrow, nor can you increase wages by 50% tomorrow. If you stemmed demand you lock out FHB's. So what you need to do is stem demand from everyone except FHB's. Remove residential investors, give FHB's low interest rates, subsidised by others paying higher interest rates. But if you build, you also get the low interest rates

Like Argentina? That's way glass half empty. Ignoring everything else, things are fine here, given Covid. So what if some prices are up, its been a pandemic situation. That wont last forever.

quickymart

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#2693492 15-Apr-2021 20:31

https://www.stuff.co.nz/business/124851267/standard--poors-predicts-an-orderly-unwinding-of-house-prices

How often do Standard and Poor's get this sort of thing right?

mattwnz

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#2693536 15-Apr-2021 23:38

tdgeek:
mattwnz:

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.

Where is mine? Cheque lost in the mail? I'm a home owner, I never got any free money of the 100+ Billion that went to people who own houses. The form of helicopter payment went to support businesses. The QE that every country did dropped interest rates, thats the problem. The other problem is we shifted from a inflation environment to a low inflation and low wage economy. We had higher inflation, higher wage increases house price growth, all more or less in line. Now we have low inflation low wages but the low interest rates are the mis-aligned figure, they artificially created more demand than the wages deserved. Factor in more immigration, Kiwi's dont like building houses, Kiwisaver (more demand from many people that would never have been homeowners) and you have this mismatch. In the past, house price growth was normal, but wages grew too. It never got out of control. But the last 20 years has, and its been ignored.

You cant drop house prices artificially by 40% tomorrow, nor can you increase wages by 50% tomorrow. If you stemmed demand you lock out FHB's. So what you need to do is stem demand from everyone except FHB's. Remove residential investors, give FHB's low interest rates, subsidised by others paying higher interest rates. But if you build, you also get the low interest rates

Like Argentina? That's way glass half empty. Ignoring everything else, things are fine here, given Covid. So what if some prices are up, its been a pandemic situation. That wont last forever.

But you did get it. Just because you didn't get it in folding cash doesn't mean you didn't get it. Your house is now likely worth a lot more in untaxed capital gains. So if you cashed out of the housing market, you will get it in cash from the increased house value. About 25 percent the last year on average.

mattwnz

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#2693537 15-Apr-2021 23:43

Handle9:
mattwnz:

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.

I disagree. Correlation does not equal causation. There was rampant house inflation in the early-mid 2000s before there were any estimation websites and houses were selling significantly over CV.

You don't really seem to understand what drives real estate prices.

I said it was one of the factors, not the only factor. People are using these estimation sites to justify the crazy high prices they are offering. They used to only have the CV to work from, which was often several years out of date, so often a lot lower. House price inflation over this last year is at record levels. 46,000 increase in March alone. Over 80,000 in the last 2 months. That is damaging on so many levels and is bubble territory imo.

tdgeek

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#2693542 16-Apr-2021 07:18

mattwnz:

But you did get it. Just because you didn't get it in folding cash doesn't mean you didn't get it. Your house is now likely worth a lot more in untaxed capital gains. So if you cashed out of the housing market, you will get it in cash from the increased house value. About 25 percent the last year on average.

If I cashed it out I'm homeless. If I re bought, I'm buying in the same market. I guess I could sell our 283 sqm 5 BR on a 1/4 acre section and buy a 2BR unit in Gore, but I'll most likely not do that!

My point is, most people own one house, you trade in the same market, its a number. I could borrow on it, but I could do that before, but then I have to pay it back. Financially, most of us just see it on paper. If I sold now and rebought in a year, that will cost me whatever the prices rose in that year.

There isn't much of a free ride for the majority of us who own one home. Inheritance? No, thats the same, its one house, whether its 350,000 or 1,350,000 the kids get one house that looks the same now as it did when it was built in 2011, as do every other house. Its only been an investors paradise and they are rightly being pushed out

tdgeek

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#2693543 16-Apr-2021 07:24

quickymart:

https://www.stuff.co.nz/business/124851267/standard--poors-predicts-an-orderly-unwinding-of-house-prices

How often do Standard and Poor's get this sort of thing right?

A few factors.

The new rules have shown an instant change, open homes are attracting far less viewers, less investors. Many investors will leave the market for other markets.

Interest rates are low due to Covid economic responses, that wont last forever, expect interest rates to creep up in a year or two, that also may be a future policy to roll back this low interest = can pay more frenzy

Building may and should get more policy boosts, we can see that in the news, less demand to buy.

If all this moves steadily, it may well have an effect. More likely stable prices than overflowing prices that we have now.

tdgeek

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#2693544 16-Apr-2021 07:29

mattwnz:

I said it was one of the factors, not the only factor. People are using these estimation sites to justify the crazy high prices they are offering. They used to only have the CV to work from, which was often several years out of date, so often a lot lower. House price inflation over this last year is at record levels. 46,000 increase in March alone. Over 80,000 in the last 2 months. That is damaging on so many levels and is bubble territory imo.

Before these sites prices rose, it was normal. At any one time, prices may be similar to the recent GV, or x% higher than the 3yo GV etc. People buy what the mortgage repayment calculator tells them they can pay. The last year = Covid = QE = almost zero interest rates, you can pay a higher price as the repayments are the same so they sign up.

Bubble burst won't happen. Houses are assets, not sharemarket hopes and dreams, nor fudged lending as per the GFC.

tdgeek

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#2693546 16-Apr-2021 07:35

A little perspective. In this thread housing prices are big news. Its in the media as well, obviously. While we feel for FHB's, the number of home owners that are recent FHB's is low, so most of us home owners arent really that affected. The rest of the economy is going well all things considered. Its not like all of us are front and centre and being affected, we aren't

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#2693550 16-Apr-2021 08:04

mattwnz: They used to only have the CV to work from, which was often several years out of date, so often a lot lower.

Wrong again. Before the estimate websites you got the real estate agent to pull the recent sales in your area. You could then use that that to benchmark the market.

That's exactly what the estimate websites do now, they just automate it.

Beccara

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#2693658 16-Apr-2021 10:04

Recent sales news letters from RA's and valuation websites have been around 20 years now. It's just free now and in a pretty website. QV.co.nz has been around since 99

Most problems are the result of previous solutions...

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quickymart

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#2694019 16-Apr-2021 21:47

tdgeek:

quickymart:

https://www.stuff.co.nz/business/124851267/standard--poors-predicts-an-orderly-unwinding-of-house-prices

How often do Standard and Poor's get this sort of thing right?

A few factors.

The new rules have shown an instant change, open homes are attracting far less viewers, less investors. Many investors will leave the market for other markets.

Interest rates are low due to Covid economic responses, that wont last forever, expect interest rates to creep up in a year or two, that also may be a future policy to roll back this low interest = can pay more frenzy

Building may and should get more policy boosts, we can see that in the news, less demand to buy.

If all this moves steadily, it may well have an effect. More likely stable prices than overflowing prices that we have now.

Prices stabilising - while not a drop - would be better than nothing, as opposed to prices just heading (unrestrained) for the moon.

mattwnz

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#2694052 17-Apr-2021 01:50

Beccara:

Recent sales news letters from RA's and valuation websites have been around 20 years now. It's just free now and in a pretty website. QV.co.nz has been around since 99

Yes that is the difference, it is far more accessible now to everyone, and everyone is aware of it.. QV had an e-estimate that you had to pay for, and think they still charge for it, and not everyone was aware of this. But that wasn't always available for all properties , as I remember trying to get one years ago, and it wasn't available on the property I was looking at.

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