Electoral Party most likely to do something about Auckland housing bubble?

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#1542670 27-Apr-2016 11:32

MikeAqua:

What would be nice is to have some investment opportunities available in NZ that compete with housing for security and growth.

Indeed. Imagine if all the capital pumped into a booming property market was instead put into PRODUCTIVE investments that actually stimulated the economy.

But I think the "security" of the housing market isn't what people think it is today. If it was truly secure, 100% finance, or close to it, would be commonplace.

Twitter: ajobbins

SJB

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#1542674 27-Apr-2016 11:42

surfisup1000:

There may be great unrest between the haves and have nots.

There are already 3 groupings in nearly every country.

The 'haves' are pretty comfortably off and generally have most things they can reasonably expect to acquire. The 'have nots' are getting by (just) and sometimes acquire some of the trappings of the 'haves' (eg cars, big flat screen TV's etc) if they are lucky. Most of society is split into these 2 groups.

The third group is the 'never haves'. They can never afford any of the trappings of the 'haves' unless they just take them. This group is getting larger.

surfisup1000

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#1542676 27-Apr-2016 11:44

Geektastic:

In what way would this be different from just about any other country on earth?

Which countries have 2 class societies?

sir1963

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#1542677 27-Apr-2016 11:48

ajobbins:

MikeAqua:

What would be nice is to have some investment opportunities available in NZ that compete with housing for security and growth.

Indeed. Imagine if all the capital pumped into a booming property market was instead put into PRODUCTIVE investments that actually stimulated the economy.

But I think the "security" of the housing market isn't what people think it is today. If it was truly secure, 100% finance, or close to it, would be commonplace.

Well I have 6 houses.

I understand them. I can maintain them in the main by myself.

I can afford to have them empty for months, so I can get better tenants , or at least avoid the bad ones.

I am in control to a large extent, I dont take million dollar salaries no matter how well or poorly things perform. Management can not lie to me as to how

well their companies are doing (lets look at all the finance companies that have closed up). and the reality is, SOMEONE has to invest in rental housing, it is

equally part of keeping the country productive: no houses -> no staff, no staff ->no production.

TeaLeaf

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#1542741 27-Apr-2016 13:14

Dont you mean consumption when referring to Auckland?

IMO housing shortage is a bit of a propaganda. non resident empty housing if it wasnt allowed would soak up a big chunk of that.

The point is those in it for the long haul and are well and truely positively geared a crash of 20-40% negative CG they will survive. Its the poor folk who got sucked in by 5 and even 10% deposits that will go bankrupt. Thats mostly what scares me, for them.

TeaLeaf

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#1542745 27-Apr-2016 13:20

ajobbins:

Indeed. Imagine if all the capital pumped into a booming property market was instead put into PRODUCTIVE investments that actually stimulated the economy.

But I think the "security" of the housing market isn't what people think it is today. If it was truly secure, 100% finance, or close to it, would be commonplace.

to go along with that the country, especially Auckland, producing something to invest in. no funny money. actually making things, whether they are tangible or intangible like switzerland. NZ needs to change its thinking on environmentally friendly mining imo. The very very large majority In Auckland polluting the Hauraki gulf by default who say nay is hippo-critically by default either ignorant or two faced (ie I want to sound environmentally friendly, as I carry 10x1 time use plastic bags home with my groceries). we cant rely on dairy and tourism solely for ever.

TeaLeaf

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#1542750 27-Apr-2016 13:25

sbiddle:

IMHO one of the biggest problems was that the GFC didn't affect NZ as we were so sheltered by the Australian banks which are so highly profitable. We probably needed that post GFC correction to occur, but it didn't.

yep i agree with last of this. our government shielded us and it felt like nothing was happening yet you would turn on the TV and world was in a "depression". nope not in NZ, turn a blind eye, lose 4% in real estate and then bang go 10x harder at investing afterward.

i agree we needed the correction to occur then, it could be too late now to stop a major one as the banks and government sound like from this forum will have very little control over it.

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Geektastic

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#1542825 27-Apr-2016 14:48

surfisup1000:

Geektastic:

In what way would this be different from just about any other country on earth?

Which countries have 2 class societies?

If it's rich and poor you're talking about, almost all of them I would think.

surfisup1000

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#1542857 27-Apr-2016 15:35

Geektastic:

surfisup1000:

Geektastic:

In what way would this be different from just about any other country on earth?

Which countries have 2 class societies?

If it's rich and poor you're talking about, almost all of them I would think.

Most countries have a middle class, making them 3 class societies.

Problems happen when most of the country are rich or poor and not much in the middle.

Probably you did not read or understand what I wrote.

mattwnz

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#1542868 27-Apr-2016 15:46

TeaLeaf:

Dont you mean consumption when referring to Auckland?

IMO housing shortage is a bit of a propaganda. non resident empty housing if it wasnt allowed would soak up a big chunk of that.

The point is those in it for the long haul and are well and truely positively geared a crash of 20-40% negative CG they will survive. Its the poor folk who got sucked in by 5 and even 10% deposits that will go bankrupt. Thats mostly what scares me, for them.

One of the big problems is that the government supports the housing boom, as they don't want to do anything that may cause house prices to go down. JK also says that first home buyers should be buying apartments instead. Which really only pumps up apartment prices. They don't want to introduce any taxes, such as land tax, because that supposedly will decrease house prices. But I would have thought council rates increases have the same effect, as rates and land tax are quite similar, as they are both wealth taxes. IMO they have left this all far too late. I can't see a big property crash, because it would destroy NZs economy, and cause banks huge stress. I think an external event though could also cause something major to happen, as NZ is a tiny country in the world economy. I think if they introduce restrictions on foreign buyers, which include land taxes for foreign buyers, then it will create more supply for NZ residents, and property prices will go sideways for the next decade. I can see a lot of poorly designed 'houses', I can see a repeat of the leaky building thing occurring with some of these big developments which are cost driven.

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#1542873 27-Apr-2016 15:53

Have we discussed only allowing foreign buyers to build new ( in this thread)?

mattwnz

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#1542876 27-Apr-2016 15:55

joker97: Have we discussed only allowing foreign buyers to build new ( in this thread)?

I think I suggested that earlier on. It make so much sense, and they do it in Oz as well. But not sure if it breaches the TPPA. It sounds like the only way to get around the TPPA is additional taxes, rather than restrictions.

The problem is that the media has made foreign ownership of houses into a race thing, when that couldn't be further from the truth.

MikeAqua

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#1542879 27-Apr-2016 15:57

Buying apartments can be difficult for first home buyers. Some banks require a higher deposit on an apartment (or other unit title or cross lease) than on a stand alone house. It's changing ... but can be a significant obstacle.

Mike

andrew027

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#1542880 27-Apr-2016 15:59

@ajobbins: There is a very simple metric that proves it's now harder than ever: The ratio of income to house prices, and it's never been higher.

A ratio of 3 or less is considered “affordable" but anything over 4 is considered “seriously unaffordable” and over 5 is considered “severely unaffordable”.

Back in the 80's the multiplier never got about about 2.5. In the 90's and through until the early 2000's it peaked at about 3.1. By the mid 2000's it was up around 5 (now “seriously unaffordable”) and as of March 2016 sits at a median of 5.83 for the country as a whole. So the median is now “severely unaffordable”.

But the median for Auckland is now 9.26 (Out of this world unaffordable?) and the North Shore and Central are over 10!

Based on these numbers it's statistically proven that it is now indeed much harder to buy than ever before.

Unfortunately, no matter how high the income to house price ratio gets, it's still not that hard to buy a house - minimal deposits and interest only loans see to that. The problem is paying off the house, but many people never intend to do this - they pay as little off their loan as possible, and expect to settle the debt when they eventually sell as the house's value (and therefore their equity) has increased.

If people actually had to pay a certain percentage of the principal on their loans as well as meeting interest payments, this might limit how much they could afford to borrow. This might help stabilise house prices a little, provided steps were taken to minimise foreign ownership with the resulting land banking and absentee landlords.

@sbiddle: IMHO one of the biggest problems was that the GFC didn't affect NZ as we were so sheltered by the Australian banks which are so highly profitable. We probably needed that post GFC correction to occur, but it didn't.

I see a whole lot of irony when people trash said banks - but in many ways we're very lucky they are so well resourced.

Well, the GFC certainly affected me - I got laid off and was out of work for nearly eight months. I was seriously financially impacted and it's only in the last couple of months that I am back to the level of financial security I enjoyed in late 2008.

And who laid me off? One of those sheltering Australian owned banks, who maintained their high profitability at the expense of me and many of my New Zealand co-workers...

mattwnz

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#1542883 27-Apr-2016 16:08

MikeAqua:

Buying apartments can be difficult for first home buyers. Some banks require a higher deposit on an apartment (or other unit title or cross lease) than on a stand alone house. It's changing ... but can be a significant obstacle.

There are so many other potential issues too, such as body corporate costs, maintenance costs and upgrading costs in the future, which you don't have control over. Also ones I have seen don't have the same sort of capital gain. Personally I probably wouldn't buy one in NZ. You can't go much better than a freehold property with actual land.

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