Gareth Morgan's new political party

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#1667764 11-Nov-2016 07:33

Geektastic:

I see no disbenefit however in giving New Zealanders a method of saving for retirement which rewards that saving by not taxing the money saved or the returns on it. After all, it will be taxed by GST when it is spent eventually and almost every country we would compare ourselves to does not tax retirement saving.

NZ has been given a method - invest in residential property. There's good reason why many people in my age/demographic own multiple rental properties. One of my siblings owns about 30 homes in Auckland, perhaps more. It was clever, but truly very easy to be "worth" tens of millions of $$$ starting from very little, over the space of about 15 years. Problem now is that everybody wants free money like that.

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#1667809 11-Nov-2016 09:11

Dratsab:

Scott3:

Tonga & Philippines style complete ban on sale of land to foreigners.

I quite like the system in Thailand where non-Thai (farang) can't buy land and houses. They can buy apartments though.

Many other countries too.

The difficulty I see is the laxness of NZ's trust laws. Maybe a foreigner can't buy a house, but they can set up a trust (or company) to buy the house and export the income.

I see the disappearance of profits overseas as a bigger problem than (and a large cause of) the housing shortage. I wonder, for example, how much of Spark's profits ($375M last year, $460M in 2015) went overseas?

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#1667941 11-Nov-2016 11:48

frankv: I see the disappearance of profits overseas as a bigger problem than (and a large cause of) the housing shortage. I wonder, for example, how much of Spark's profits ($375M last year, $460M in 2015) went overseas?

Funnily enough I was thinking about exactly this the other day. A profit export tax perhaps?

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#1668086 11-Nov-2016 14:16

Fred99:

Geektastic:

I see no disbenefit however in giving New Zealanders a method of saving for retirement which rewards that saving by not taxing the money saved or the returns on it. After all, it will be taxed by GST when it is spent eventually and almost every country we would compare ourselves to does not tax retirement saving.

NZ has been given a method - invest in residential property. There's good reason why many people in my age/demographic own multiple rental properties. One of my siblings owns about 30 homes in Auckland, perhaps more. It was clever, but truly very easy to be "worth" tens of millions of $$$ starting from very little, over the space of about 15 years. Problem now is that everybody wants free money like that.

I'll rephrase it then: Officially given a method which all NZers can partake in rather than only some and which is not likely to be a target for politicians to change the status of....

MikeB4

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#1668093 11-Nov-2016 14:36

There is no magic formula. To own a home one must save. So if one does not own a home then living in rental accommodation is vital. If we then make owning rental properties harder and not allow new New Zealanders to own a home the supply of rental homes diminishes and the demand for them goes up. As supply drops and demand rises the cost of rents rises thus making it harder to save for a home. This in turns forces folks to stay in rented accommodation longer further tightening the supply and putting upward pressure on rents, and so we have a vicious cycle.

Now we could reduce the deposits required but due to the high prices of homes already the mortgage servicing is out of reach of a majority of potential buyers. If the government legislates down the house prices we then have a large pool of negative equity mortgages and we all know what that situation caused.

Here is a crazy notion, lets give peace a chance.

Rikkitic

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#1668105 11-Nov-2016 14:47

My grasp of economics is basic, but would it be possible, and what would happen, if legislation put a cap on house prices, not forcing them down, but not allowing them to rise? With no prospect for capital gains, there would be little motive to buy for speculative purposes and with low inflation, existing home owners who wanted to sell would not lose out. I realise that legislating your way out of economic problems almost never works, but I'm curious to know what might happen in a case like this.

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#1668108 11-Nov-2016 14:49

Rikkitic:

My grasp of economics is basic, but would it be possible, and what would happen, if legislation put a cap on house prices, not forcing them down, but not allowing them to rise? With no prospect for capital gains, there would be little motive to buy for speculative purposes and with low inflation, existing home owners who wanted to sell would not lose out. I realise that legislating your way out of economic problems almost never works, but I'm curious to know what might happen in a case like this.

Price controls? Really?

That would be political suicide.

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#1668116 11-Nov-2016 15:00

Rikkitic:

My grasp of economics is basic, but would it be possible, and what would happen, if legislation put a cap on house prices, not forcing them down, but not allowing them to rise? With no prospect for capital gains, there would be little motive to buy for speculative purposes and with low inflation, existing home owners who wanted to sell would not lose out. I realise that legislating your way out of economic problems almost never works, but I'm curious to know what might happen in a case like this.

Dear God no, it took years to rid NZ of this kind of nonsense we do not want to start turning the clock back.

Here is a crazy notion, lets give peace a chance.

Geektastic

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#1668117 11-Nov-2016 15:00

MikeB4:

There is no magic formula. To own a home one must save. So if one does not own a home then living in rental accommodation is vital. If we then make owning rental properties harder and not allow new New Zealanders to own a home the supply of rental homes diminishes and the demand for them goes up. As supply drops and demand rises the cost of rents rises thus making it harder to save for a home. This in turns forces folks to stay in rented accommodation longer further tightening the supply and putting upward pressure on rents, and so we have a vicious cycle.

Now we could reduce the deposits required but due to the high prices of homes already the mortgage servicing is out of reach of a majority of potential buyers. If the government legislates down the house prices we then have a large pool of negative equity mortgages and we all know what that situation caused.

Someone will own the homes one way or the other - either they will get purchased by owner occupiers or landlords. They won't sit vacant because the price will fall until someone buys them.

If you switch to a system where a 10 year residential lease is available with good security of tenure etc then being 'stuck' in rental accommodation is not that bad and will suit those unable to raise significant deposits. There's no shame in renting, we just don't do it very well here.

MikeB4

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#1668119 11-Nov-2016 15:02

Geektastic:

MikeB4:

There is no magic formula. To own a home one must save. So if one does not own a home then living in rental accommodation is vital. If we then make owning rental properties harder and not allow new New Zealanders to own a home the supply of rental homes diminishes and the demand for them goes up. As supply drops and demand rises the cost of rents rises thus making it harder to save for a home. This in turns forces folks to stay in rented accommodation longer further tightening the supply and putting upward pressure on rents, and so we have a vicious cycle.

Now we could reduce the deposits required but due to the high prices of homes already the mortgage servicing is out of reach of a majority of potential buyers. If the government legislates down the house prices we then have a large pool of negative equity mortgages and we all know what that situation caused.

Someone will own the homes one way or the other - either they will get purchased by owner occupiers or landlords. They won't sit vacant because the price will fall until someone buys them.

If you switch to a system where a 10 year residential lease is available with good security of tenure etc then being 'stuck' in rental accommodation is not that bad and will suit those unable to raise significant deposits. There's no shame in renting, we just don't do it very well here.

You make a good point.

Here is a crazy notion, lets give peace a chance.

eracode

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#1668140 11-Nov-2016 16:09

History shows that you can't control markets through legislated price controls - and particularly not a large and important market like housing. Muldoon tried this years ago and it didn't work. All that happens is that you introduce massive distortions into the economy and grey/black markets spring up to illegally work around the restrictions.

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#1668159 11-Nov-2016 16:36

MikeB4:

To own a home one must save. So if one does not own a home then living in rental accommodation is vital. If we then make owning rental properties harder and not allow new New Zealanders to own a home the supply of rental homes diminishes and the demand for them goes up. As supply drops and demand rises the cost of rents rises thus making it harder to save for a home. This in turns forces folks to stay in rented accommodation longer further tightening the supply and putting upward pressure on rents, and so we have a vicious cycle.

Where you're going wrong is "and not allow new New Zealanders to own a home". The answer is to make it possible for NZers to own their own home. If a person has a choice between owning and renting, then if the rent goes up, they'll (if they can) buy their own home.

There are a more-or-less fixed number of houses, and a more-or-less fixed population. A reduction in supply of rentals is an increase in supply of own-your-own... after all, a reduction in rental supply will see an increase in home owners, and a corresponding decrease in the number of renters. So there's no pressure on rental prices from reduction in numbers of rentals (unless the houses are demolished or empty).

MikeB4

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#1668165 11-Nov-2016 16:48

frankv:

MikeB4:

To own a home one must save. So if one does not own a home then living in rental accommodation is vital. If we then make owning rental properties harder and not allow new New Zealanders to own a home the supply of rental homes diminishes and the demand for them goes up. As supply drops and demand rises the cost of rents rises thus making it harder to save for a home. This in turns forces folks to stay in rented accommodation longer further tightening the supply and putting upward pressure on rents, and so we have a vicious cycle.

Where you're going wrong is "and not allow new New Zealanders to own a home". The answer is to make it possible for NZers to own their own home. If a person has a choice between owning and renting, then if the rent goes up, they'll (if they can) buy their own home.

There are a more-or-less fixed number of houses, and a more-or-less fixed population. A reduction in supply of rentals is an increase in supply of own-your-own... after all, a reduction in rental supply will see an increase in home owners, and a corresponding decrease in the number of renters. So there's no pressure on rental prices from reduction in numbers of rentals (unless the houses are demolished or empty).

Our population is not fixed and it should not be as we are under populated.

"If a person has a choice between owning and renting, then if the rent goes up, they'll (if they can) buy their own home." yeah right. if that were the case this whole discussion would not taking place.

Here is a crazy notion, lets give peace a chance.

Fred99

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#1668183 11-Nov-2016 17:17

MikeB4:

Our population is not fixed and it should not be as we are under populated.

That's an opinion only.

What is "adequately populated" then?

An appropriate maximum population in my opinion would surely be one that doesn't stress resources to the point that life is only sustainable long-term with compromise to quality of life. That moreso than an equation based on a "scale of economies" argument for population level to be set based economic competitiveness against "bigger". There's much more to life and quality of life than money. Average quality of life "livability" is actually is extremely good in NZ. One of the reasons for that is our relatively low population.

MikeB4

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#1668191 11-Nov-2016 17:34

Fred99:

MikeB4:

Our population is not fixed and it should not be as we are under populated.

That's an opinion only.

What is "adequately populated" then?

An appropriate maximum population in my opinion would surely be one that doesn't stress resources to the point that life is only sustainable long-term with compromise to quality of life. That moreso than an equation based on a "scale of economies" argument for population level to be set based economic competitiveness against "bigger". There's much more to life and quality of life than money. Average quality of life "livability" is actually is extremely good in NZ. One of the reasons for that is our relatively low population.

Our birth rate is too low so we need to build our population by immigration. I read numerous studies at work regarding our population projections. To try and balance and correct age skew as a result of the baby boom era we need a good growth to (from memory) at least 7 million. If this does not happen we are going to have a lot of problems. Our lifestyle will plunge due to reducing incomes, tax take and greater burden on social services.

Also if we grow our population we can afford better infrastructure due to increase economic activity.

Here is a crazy notion, lets give peace a chance.

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