Negative gearing question?

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Networkn
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#1224798 29-Jan-2015 16:18

surfisup1000:
nathan: some loon?

you want to negative gear against your salary because you don't want to pay tax? Tax that pays for hospitals, schools, police, dole bludgers and defence? who's going to protect you when the plebs with no money and houses need food and come raid you property? Build bigger gated walled communities to hide behind and pay for private police.

You mean like microsoft nz ?

http://www.stuff.co.nz/business/industries/65499276/microsoft-nz-ownership-transferred-from-us-to-luxembourg

LOLOL that made my day.

I notice the two ranters never came back to follow up :)

Batman

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#1224799 29-Jan-2015 16:20

networkn: Bottom line is that if houses prices were really too high, people couldn't buy them and prices would fall to meet the market. They only sell for these high prices because people are prepared to buy them.

We got an offer on our house over xmas for 250k more than it's new valuation and considerably more than we paid for it 8 years ago, and it's not even on the market nor had we expressed interest with any agents.

thát is true in a closed market.

but i reckon there are external forces. people in auckland cannot technically afford houses. how can they, when the average house price is more than 10x the average income.

so either people with undeclared income are buying them, or the money does not originate in Auckland (NZ)

networkn

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#1224802 29-Jan-2015 16:22

joker97:
networkn: Bottom line is that if houses prices were really too high, people couldn't buy them and prices would fall to meet the market. They only sell for these high prices because people are prepared to buy them.

We got an offer on our house over xmas for 250k more than it's new valuation and considerably more than we paid for it 8 years ago, and it's not even on the market nor had we expressed interest with any agents.

thát is true in a closed market.

but i reckon there are external forces. people in auckland cannot technically afford houses. how can they, when the average house price is more than 10x the average income.

so either people with undeclared income are buying them, or the money does not originate in Auckland (NZ)

Uhh what? Usually there are 2 incomes at least partially involved, mortages are usually for more than 10 years, and I know at least 20 people who's houses in Auckland came from income earned in Auckland.

Batman

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#1224804 29-Jan-2015 16:30

i don't understand how if you need a 20% deposit (say 700k house, slightly below the average house price) that's 140,000 ....

how many couples earning 35k a year x2 have 140k in their bank?

ajobbins

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#1224806 29-Jan-2015 16:31

networkn: Bottom line is that if houses prices were really too high, people couldn't buy them and prices would fall to meet the market. They only sell for these high prices because people are prepared to buy them.

We got an offer on our house over xmas for 250k more than it's new valuation and considerably more than we paid for it 8 years ago, and it's not even on the market nor had we expressed interest with any agents.

Except no. There is much speculation going on given rising prices, and people are borrowing against existing equity with the expectation that the price will rise regardless. They aren't using real money.

And therefore, they are opposed to intervention, because if there is a price correction, many may find themselves with houses worth less than they have in equity.

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alasta

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#1224807 29-Jan-2015 16:35

If no new housing stock is being created then house prices can theoretically increase indefinitely because people are buying and selling in the same market. However if new stock comes on stream then the argument is valid that prices will have to reflect what new market participants can afford to pay. This is why I believe that we could see some significant downward pressure on the market as building activity increases.

richms

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#1224809 29-Jan-2015 16:38

Loss of value of an asset is a risk you take when buying one. If those people didnt want the risk they didnt have to buy one. noone forced them into home ownership.

Richard rich.ms

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networkn

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#1224811 29-Jan-2015 16:41

ajobbins:
networkn: Bottom line is that if houses prices were really too high, people couldn't buy them and prices would fall to meet the market. They only sell for these high prices because people are prepared to buy them.

We got an offer on our house over xmas for 250k more than it's new valuation and considerably more than we paid for it 8 years ago, and it's not even on the market nor had we expressed interest with any agents.

Except no. There is much speculation going on given rising prices, and people are borrowing against existing equity with the expectation that the price will rise regardless. They aren't using real money.

And therefore, they are opposed to intervention, because if there is a price correction, many may find themselves with houses worth less than they have in equity.

Sorry but what evidence do you have to support claims that people are only buying houses using existing equity? No-one I know buying houses right now is doing this, unless they are "upgrading" to a bigger place, but ultimately the same rules apply,
if they couldn't afford it, they couldn't afford it, simple.

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#1224812 29-Jan-2015 16:44

richms: Loss of value of an asset is a risk you take when buying one. If those people didnt want the risk they didnt have to buy one. noone forced them into home ownership.

i wonder how many of you live in AKL. (i don't)

i am guessing the fear of house prices going higher and beyond their reach is enough to make them buy a house. it could go either way. up or down, and there is no way of telling unless you have a crystal ball.

hairy1

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#1224815 29-Jan-2015 16:52

A bunch of people I know in Pukekohe are house hopping. Build and sell, build and sell.

My views (except when I am looking out their windows) are not those of my employer.

networkn

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#1224816 29-Jan-2015 16:53

hairy1: A bunch of people I know in Pukekohe are house hopping. Build and sell, build and sell.

How many is a bunch? I'll bet that still makes it the tiniest of minorities.

richms

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#1224817 29-Jan-2015 16:58

The problem is that they are all still building stupid low density housing. We were going to get the options for higher density in Auckland in the new plans but all the old whiners were out in force saying they dont want to have towering apartments everywhere and that they dont want to live in an apartment.

Only way we can get decent services like public transport that doesnt suck, more harbour crossings and things that make a big city nice to live in is to actually build like a big city, not a really large spreadout small town with each house on its own stupid bit of land you have to maintain with no density to support the services that people want.

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#1224820 29-Jan-2015 17:04

OK. We built in our street 8 years ago (2005) and are the only people left in the street except for one other couple. That is two houses out of 20. The other couple still in the street bought a spec house which was built by a developer.

Our next door neighbors have built twice, two houses down have built twice, three houses down have built twice.

These people I know about as we "saw" them around and they had kids. The rest I have no idea about but I doubt they sold to go renting.

So yeah. I stand by my "bunch" statement.

My views (except when I am looking out their windows) are not those of my employer.

ajobbins

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#1224826 29-Jan-2015 17:23

networkn:

Sorry but what evidence do you have to support claims that people are only buying houses using existing equity? No-one I know buying houses right now is doing this, unless they are "upgrading" to a bigger place, but ultimately the same rules apply,
if they couldn't afford it, they couldn't afford it, simple.

Property investors do this all the time. They don't front up real cash to buy their next investment property, and if they have 3 houses worth $333,000 each last year that each grew by 10% (Which, buy the way, is less than the average in Auckland last year), that's an extra $99,000 in "equity" they have on paper they can use as a deposit on the next investment property, or a 20% deposit on a $495,000 house.

As long as the rent they can get at least can cover the interest on the loan and any maintenance etc, they can just sit on interest only and wait for the value to increase. Rince and repeat. I know a number of people who have done exactly this.

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ajobbins

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#1224828 29-Jan-2015 17:26

I've been playing around with some Stats NZ and Real Estate data.

Between 1998 and 2014 the average household income in Auckland grew by 72%, but in the same period, Auckland house prices grew 155%. That's an increase of income to house price ratio from 4.2 to 6.2. Anything over 3 is considered unaffordable.

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