good housing article

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tweake

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#311875 22-Feb-2024 18:25

its seams to have been buried pretty quickly.

https://www.stuff.co.nz/nz-news/350187327/its-national-belief-now-you-cant-afford-house

In the space of a generation, we’ve gone from telling people they can build their own lives, to telling them that their future is already pre-rewritten for them. And there’s not a damn thing they can do about it.

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#3198838 22-Feb-2024 18:41

Should be in Politics forum.

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eracode

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#3198842 22-Feb-2024 18:48

Maybe it has not gained traction because it seams the writer is more interested in trying to showcase her flamboyant but shallow writing style rather than providing a well-reasoned argument. It’s on Stuff, innit - so who is going to take her seriously with that style on that platform?

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tweake

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#3198859 22-Feb-2024 20:32

eracode:

Maybe it has not gained traction because it seams the writer is more interested in trying to showcase her flamboyant but shallow writing style rather than providing a well-reasoned argument. It’s on Stuff, innit - so who is going to take her seriously with that style on that platform?

not really. its pretty common for any anti-real-estate stories to disappear. i'll bet there is a whole line of pro real-estate stories around the corner.

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#3198861 22-Feb-2024 20:36

SaltyNZ:

Should be in Politics forum.

its not politics. its pretty devoid of politics, no political party was even mentioned. just a story on the current situation.

SaltyNZ

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#3198870 22-Feb-2024 21:15

tweake:

SaltyNZ:

Should be in Politics forum.

its not politics. its pretty devoid of politics, no political party was even mentioned. just a story on the current situation.

It is absolutely politics. Who do you think has created this situation? The policies of successive governments from both sides of the political spectrum* who setup the economy to ensure that the only viable way to make money was to buy lots of houses to trade and/or rent, thus taking them out of the market for people who might want to actually live in them.

And nothing but sustained political will can ever hope to reverse or even slow the situation: the last Labour government kinda-sorta fiddled around the edges by removing tax deductions on interest for landlords ... and then we voted in this clownshow who are going to rip the arm off what's left of the economy after COVID and beat it to death with the wet end so they can (retroactively) reinstate it again.

* And by "spectrum" I mean about the distance between the two sides of a piece of paper... Up till Luxon jumped the shark both Labour and National governments have been largely same boss, different suit.

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ockel

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#3198992 23-Feb-2024 10:34

SaltyNZ:

It is absolutely politics. Who do you think has created this situation? The policies of successive governments from both sides of the political spectrum* who setup the economy to ensure that the only viable way to make money was to buy lots of houses to trade and/or rent, thus taking them out of the market for people who might want to actually live in them.

And nothing but sustained political will can ever hope to reverse or even slow the situation: the last Labour government kinda-sorta fiddled around the edges by removing tax deductions on interest for landlords ... and then we voted in this clownshow who are going to rip the arm off what's left of the economy after COVID and beat it to death with the wet end so they can (retroactively) reinstate it again.

* And by "spectrum" I mean about the distance between the two sides of a piece of paper... Up till Luxon jumped the shark both Labour and National governments have been largely same boss, different suit.

I'd be very interested in your analysis that backs up the view point "that the only viable way to make money was to buy lots of houses to trade and/or rent".

There have been a few interesting articles in recent weeks noting the dollar returns and holding periods for housing stock in NZ. None of them seem to indicate the making of pots of money. Take this mornings article https://www.oneroof.co.nz/news/bright-line-rule-change-58-000-properties-could-dodge-65-000-tax-hit-45022

The average value gain for the 5 years from 2019 was $167k. But putting that in context for a median house price (assuming Dec 18/Jan19 purchase) of $560k means that the return was just 5.35% pa. Not exactly a huge capital gain.

CoreLogics Q4 report showed a median gain of $305k for the now average holding period of 8.5 years. The median house price 8.5 years ago was $450k. That means that the median return over that 8.5 years was 6.2%. Again not stellar. The NZX50 posted a CAGR of 8.8% for the same period. The median growth Kiwisaver fund returned around 8%.

There is an obsession that housing stock makes you rich. Its just another asset class.

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#3199004 23-Feb-2024 11:00

ockel:

There is an obsession that housing stock makes you rich. Its just another asset class.

I didn't say I thought it would make you rich; I said lots of other people think it will - just like you just did - and that that obsession with housing stock is a big contributor to the massive unaffordability of houses for people who want to live in them vs. people who want to rent them to people who want to live in them. I personally don't have any direct property investments but my wife is convinced we should - and that comes from her family background where the firm belief was that the only way to guarantee a retirement nest egg was to own rental properties.

It's worth noting that the RBNZ's most recent outlook was that this should decline (page 11) due in part to the elimination of interest tax deductibility and the extension of the bright line test. ... Both of which NAFT are rolling back again.

In their conclusion, they state, in part:

This Note explains the rationale behind New Zealanders’ preferences for investing in housing. In hindsight, high returns (in a favourable tax environment), low volatility, and minimal correlation with other major asset groups have made housing an attract investment option to date.

...

The large role of residential property investment has come at the expense of diversification in household’s balance sheets. For many New Zealand families, housing is the largest — if not the sole — investment asset. That intensifies the exposure to both individual property and housing market risks of unfavourable events eroding the value of lifetime savings.

So, I stand by my position on this issue. :-)

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ockel

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#3199021 23-Feb-2024 11:48

SaltyNZ:

I didn't say I thought it would make you rich; I said lots of other people think it will - just like you just did - and that that obsession with housing stock is a big contributor to the massive unaffordability of houses for people who want to live in them vs. people who want to rent them to people who want to live in them. I personally don't have any direct property investments but my wife is convinced we should - and that comes from her family background where the firm belief was that the only way to guarantee a retirement nest egg was to own rental properties.

It's worth noting that the RBNZ's most recent outlook was that this should decline (page 11) due in part to the elimination of interest tax deductibility and the extension of the bright line test. ... Both of which NAFT are rolling back again.

In their conclusion, they state, in part:

This Note explains the rationale behind New Zealanders’ preferences for investing in housing. In hindsight, high returns (in a favourable tax environment), low volatility, and minimal correlation with other major asset groups have made housing an attract investment option to date.

...

The large role of residential property investment has come at the expense of diversification in household’s balance sheets. For many New Zealand families, housing is the largest — if not the sole — investment asset. That intensifies the exposure to both individual property and housing market risks of unfavourable events eroding the value of lifetime savings.

So, I stand by my position on this issue. :-)

But you didnt say that at all. You said this is political (which the OP argues it isnt) . And you stated:

"Who do you think has created this situation? The policies of successive governments from both sides of the political spectrum* who setup the economy to ensure that the only viable way to make money was to buy lots of houses to trade and/or rent, thus taking them out of the market for people who might want to actually live in them."

Nothing there about the perception of becoming rich or the obsession with housing stock. Your posts in other discussions are clear that you think that there have been massive capital gains in housing that should be taxed. But the reality of returns is completely at odds with your perception.

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#3199031 23-Feb-2024 12:09

ockel:

But you didnt say that at all. You said this is political (which the OP argues it isnt) . And you stated:

"Who do you think has created this situation? The policies of successive governments from both sides of the political spectrum* who setup the economy to ensure that the only viable way to make money was to buy lots of houses to trade and/or rent, thus taking them out of the market for people who might want to actually live in them."

Nothing there about the perception of becoming rich or the obsession with housing stock. Your posts in other discussions are clear that you think that there have been massive capital gains in housing that should be taxed. But the reality of returns is completely at odds with your perception.

Governments responded to what the public wanted.

Neither party has the political will to resist the property investment lobby. Labour made a half-arsed attempt with the interest rate tax deduction and the bright line test move. Then we voted them out and NAFT are going to retroactively roll them back.

The problem is political. The politicians are reinforcing NZ's received wisdom that you should invest in property above all else. Only the politicians can really break that by putting their thumb on the scale, but now we know for sure they won't.

EDIT: I guess what I'm trying to say is that there is a feedback loop here, with the public responding to favourable conditions created by the political policy, and the political policy being set according to what the parties believe people will vote for. Only political policy can break it.

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gzt

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#3199150 23-Feb-2024 13:59

The median house price

Median house price is just irrelevant to so many cases it's just not useful. People don't live in a portfolio of multiple houses.

gzt

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#3199167 23-Feb-2024 14:49

tweake: good housing article
its seams to have been buried pretty quickly.

https://www.stuff.co.nz/nz-news/350187327/its-national-belief-now-you-cant-afford-house

In the space of a generation, we’ve gone from telling people they can build their own lives, to telling them that their future is already pre-rewritten for them. And there’s not a damn thing they can do about it.

The article has two things to say. The unaffordability of home ownership is bad & the belief home ownership is unaffordable is also bad. It's aspirational I think. Ie; people should aspire to more. Did you find it inspiring?

sen8or

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#3199170 23-Feb-2024 15:00

Where housing will always trump investments is not necessarily the absolute rate of return (which as demonstrated above, 5.5 - 6.2%PA which is hardly world-beating), it is the rate for risk.

I can't remember the exact numbers, but something like 50% of all businesses fail within the first 5 years and the 10 year failure rate is astronomically high. Compare that against housing where your chances of actually losing money (even in the short term) is relatively slim and in the long term is negligible.

How many of the businesses in the NZX Top 50 were there 10 years ago (or, how many from 10 years ago are there now?). With millions wiped off investors funds at the push of a button, mom and pop investors have to have either a very long term view to investment, or extremely lucky timing to actually make a return.

Not everyone can or will own a house, its not some absolute right, but everyone should be able to be housed in a clean, healthy and dignified manner. Owner/occupiers will never buy enough housing stock so its up to investors to provide housing for those unable (or unwilling) to buy one for themselves and yet we quite happily throw these people under the bus at every opportunity when they are (for personal gain) help meet a need.

tweake

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#3199227 23-Feb-2024 17:44

gzt:
The article has two things to say. The unaffordability of home ownership is bad & the belief home ownership is unaffordable is also bad. It's aspirational I think. Ie; people should aspire to more. Did you find it inspiring?

no. i think it simply states the situation. a lot of people won't try to buy a home. those sort of numbers is so unbelievably high that its now something thats never going to happen. i've been there done that. you might as well just buy a few toys and enjoy life a bit. in fact at todays prices i couldn't afford to buy my own house.

tweake

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#3199228 23-Feb-2024 17:54

ockel:

The average value gain for the 5 years from 2019 was $167k. But putting that in context for a median house price (assuming Dec 18/Jan19 purchase) of $560k means that the return was just 5.35% pa. Not exactly a huge capital gain.

CoreLogics Q4 report showed a median gain of $305k for the now average holding period of 8.5 years. The median house price 8.5 years ago was $450k. That means that the median return over that 8.5 years was 6.2%. Again not stellar. The NZX50 posted a CAGR of 8.8% for the same period. The median growth Kiwisaver fund returned around 8%.

There is an obsession that housing stock makes you rich. Its just another asset class.

but keep in mind its not 0%.

making something on money thats otherwise tied up doing nothing. $300k per 8 years for doing nothing with something thats is otherwise a huge expense and getting old and worn (ie it should be loosing value), is winning the lottery for most people.

neb

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#3199236 23-Feb-2024 18:25

eracode:
Maybe it has not gained traction because it seams the writer is more interested in trying to showcase her flamboyant but shallow writing style rather than providing a well-reasoned argument. It’s on Stuff, innit - so who is going to take her seriously with that style on that platform?

It's an opinion piece, on Stuff, written like a teenager's diary ("See, last week, I was at three separate parties and the same thing happened") by someone called Verity. What were you expecting?

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