How I propose to fix the property market.

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#1600051 28-Jul-2016 10:23

I think its a good start. Council would have done nothing without a nudge from the government.

Also house prices have to stop going up. We got landlords complaining about tennants not being paying rent, which means we are starting to hit the ceiling.

A house for $865,000 in auckland is being rented out at $540 per week. So getting in now, once you have sank 40% of that as a deposit which is close to $350K and borrow another $520k, even at a low interest rate of close to 4% the $550 per week is not gonna cover it. I haven't even bothered adding in insurance & rates.

The boom has come and gone, if you were on the boat at the time you made a great ROI, but jumping in now I am not so convinced, even with the tax return.

I am not saying its gonna crash, but Auckland is the most overvalues property market in the world behind only Hong Kong. I do think things will level out over the next 2-7 years. And in the next 15 years, yes prices will increase.

Personally if I had a spare $350K I would invest it somewhere else that has a better ROI and doesn't rely on the capital gain. It also sounds like the government are starting to pull levers left right and centre to win votes, so that makes investing in property right now even more off putting.

kobiak

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#1600082 28-Jul-2016 10:30

RUKI:

With the introduction of the new Unitary Plan (draft has been released yesterday and you and me have absolutely no say :-() Government is about to make a huge mistake - i.e. prices for existing and new homes will rocket up again as the new plan allows for such density you had never seen in Auckland suburbs before. Many current houses would be demolished and 3-storey mini-towers being built blocking sunlight.

The price of the newly built 3-story mini-towers standing shoulder to shoulder so that you can hear one wispering in the neighbour's bedroom will not be cheap.

Recent example many newly built "dwellings" in Glenn Innes. Asking price is about 1 million. With your neighbours next door getting those for free from the Housing New Zealand.

Sections where previously only couple of 2-storey houses were allowed will now host 4 to 5 three-storey dwellings.

Will they be affordable as Unitary Plan claims as a goal? Don't think so.

New Unitary Plan will significantly impact current house prices - they will go up again and quickly.... because of the "development opportunity" ...

Reminds me "UP", very sad.

I'm strongly disagree.

I think building UP and high density is the right and only way for Auckland (but council need to take actions to increase public transport (trams, trains)). Auckland can't stay as it was in 19th century. There're too many people here and they need to leave and work in Auckland not 40-50km away and seat in traffic for 2 hours each way.

Yes prices won't go down in next 2-3 years when building process will start, but eventually market will settle down as more flats/houses will be available for same amount of people. Auckland needs this change. Proposed plan's changes are not rapid, but in 20-30 years people will be pleased, but only after they realize that living 1-2kms away from city center in single story house - is not ONLY option.

I'd say bring on more decent flats, town houses, terrace houses etc. BUT allow international developers with experience to build.

helping others at evgenyk.nz

surfisup1000

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#1600084 28-Jul-2016 10:34

darylblake:

The boom has come and gone, if you were on the boat at the time you made a great ROI, but jumping in now I am not so convinced, even with the tax return.

My brother made this prediction around 3yrs ago and now he is locked out of housing.

kobiak

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#1600086 28-Jul-2016 10:49

Just to add.

I think, majority of Aucklanders/kiwis see new proposed plan as

However, it Auckland should become more like this (sorry this page is in Russian, but google translate is our friend):

https://translate.google.com/translate?hl=en&sl=auto&tl=en&u=http%3A%2F%2Fvarlamov.ru%2F1839789.html

Would you give up these New Zealand houses for something like in Germany?

helping others at evgenyk.nz

darylblake

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#1600087 28-Jul-2016 10:51

surfisup1000:

darylblake:

The boom has come and gone, if you were on the boat at the time you made a great ROI, but jumping in now I am not so convinced, even with the tax return.

My brother made this prediction around 3yrs ago and now he is locked out of housing.

Fair enough, I understand this too. I have friends who suffered the same problems. Also remember 3 years ago you only needed about 10% deposit too. But having a home & a place to live is something you would factor into your decision as well. If it was a from an investment perspective you are buying something and funding something that makes a loss, then the risk you are taking of hoping for a capital gain is higher. And we know now that close to 60% of the stock was bought up by investors during this time.

If its your own home you are living in it, nesting. You don't have to worry about a landlord kicking you out with only 42 days notice. So it really is one more tick in the box to buy a property.

Also If a company makes a good profit year on year for 3-4 years. Is that a reason for me to buy in on the 4th year? Normally I would read the prospectus, even though looking at historical performance is a weighted indicator.

It also just sounds to me like this will be election year and whats gonna win a re-election for National is the centre votes. Right wing voters are not gonna start voting for Labour or Greens. To win middle NZ voters you need to be seen to be pulling levers to make middle New Zealanders afford a property. Or else you will see NZ first and Labour lap up a lot of this, and I think National are smart enough, to just give enough and promise enough to try and keep a grip on government.

sen8or

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#1600101 28-Jul-2016 11:09

Few people would argue against the fact that something needs to be done about not just the housing market (prices) but also the housing situation in Auckland. Clearly there isn't enough housing, which creates the shortfall which with the laws of supply and demand, push up prices, everyone wants it fixed, but they want the fix to be somewhere else.

"Neighbourhood groups" up in arms about the rezoning of their neighbourhoods for intensification, trying to hold on to how things used to be, but if things dont change then the bubble will continue to grow. Sure, there is plenty of land north and south, but how do you convince people that living 50kms away from the central city and commuting is a viable option "jump on the motorway, spend 1-2 hours each way each day going to and from work" - I think I see a Tui Billboard coming...

Rail to and from the city seems to be better now than it was and could be a viable transport option for south, eastern and western routes but with no harbour crossing for rail, this excludes this (for now) as an option from north of the city.

A lady in the herald http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11682457 crying over her rezoning, where do the herald dig these people up from? Would it suck owning a traditional 3brm house on a plot of land and having developers constructing multi-level house / flats next door, absolutely, but things change and those that most succeed in their life (not just financially), adapt and change with them. "If you continue to do what you've always done, you'll get the results you've always gotten".

jmh

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#1600102 28-Jul-2016 11:09

darylblake:

Personally if I had a spare $350K I would invest it somewhere else that has a better ROI and doesn't rely on the capital gain. It also sounds like the government are starting to pull levers left right and centre to win votes, so that makes investing in property right now even more off putting.

One of the problems is that there are not a lot of places to invest that money - interest rates have been coming down so term deposits are not keeping up with inflation. That's one reason why the stock market is super hot right now - aside from property, it's one of the few places giving decent returns. Some say a stock market crash is overdue. It's very hard for the rich to find somewhere to put their money - poor dears.

While some blame the boomers for pushing prices up, many like my parents bought into property because they were afraid that the super would not provide the income they require. $300 a week is pretty tight. If you built up savings over your lifetime you are only earning 2-3 % interest pa - you can see why property is attractive. Those of us not at retirement age yet are fearful that the super might disappear altogether - how will you generate an income if you don't have it - property? Seems a good choice right now.

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sir1963

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#1600114 28-Jul-2016 11:28

jmh:

darylblake:

Personally if I had a spare $350K I would invest it somewhere else that has a better ROI and doesn't rely on the capital gain. It also sounds like the government are starting to pull levers left right and centre to win votes, so that makes investing in property right now even more off putting.

One of the problems is that there are not a lot of places to invest that money - interest rates have been coming down so term deposits are not keeping up with inflation. That's one reason why the stock market is super hot right now - aside from property, it's one of the few places giving decent returns. Some say a stock market crash is overdue. It's very hard for the rich to find somewhere to put their money - poor dears.

While some blame the boomers for pushing prices up, many like my parents bought into property because they were afraid that the super would not provide the income they require. $300 a week is pretty tight. If you built up savings over your lifetime you are only earning 2-3 % interest pa - you can see why property is attractive. Those of us not at retirement age yet are fearful that the super might disappear altogether - how will you generate an income if you don't have it - property? Seems a good choice right now.

That is exactly what I have done.

With rental properties I can do most of the maintenance myself. I also understand rentals (as opposed to the sharemarket ), I don't have some over paid "investment manager" taking a huge cut no matter how badly they do.

I started before there was kiwi saver. And when I fall off my perch there will be a freehold house for each of the kids plus potentially a rental for each of them.

No, I am not in Auckland, so I have not seen these huge property gains, but I was never in it for that. For me it was always the rent will give me about the same income I currently have and in the main be inflation adjustable.

surfisup1000

5288 posts

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#1600118 28-Jul-2016 11:34

jmh:

One of the problems is that there are not a lot of places to invest that money - interest rates have been coming down so term deposits are not keeping up with inflation. That's one reason why the stock market is super hot right now - aside from property, it's one of the few places giving decent returns. Some say a stock market crash is overdue. It's very hard for the rich to find somewhere to put their money - poor dears.

While some blame the boomers for pushing prices up, many like my parents bought into property because they were afraid that the super would not provide the income they require. $300 a week is pretty tight. If you built up savings over your lifetime you are only earning 2-3 % interest pa - you can see why property is attractive. Those of us not at retirement age yet are fearful that the super might disappear altogether - how will you generate an income if you don't have it - property? Seems a good choice right now.

Ha ha, yes, that is a OK chunk of spare cash.... which will get you around $500-$600 a month after tax, in the bank. Enough (maybe) to pay for the monthly winter power bill. Basically chump change. And, your money is still at moderate risk in the event of a global financial shock.

The very rich are very interested in investments that are safe and return most of their money (they have given up on making any money).

This is why large investors purchase negative interest rate products.

frankv

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#1600128 28-Jul-2016 11:51

I lived for 6 months in Switzerland, in apartments not too dissimilar to those Munich blocks... 4-storey blocks, 2 family and 1 studio apartment on each storey.

There are all sorts of implications to this, that don't spring to mind until you've been there:

1. How do you do your washing? In Switzerland, the answer was one *big* communal washing machine plus drying area in the basement. Each apartment got this in rotation for 2 days at a time. No washing allowed on Sundays, so you got to do your washing once every 4 weeks. I can't see that concept going down well with Kiwis.

2. Where do you park your car(s)? Car parking there wasn't an issue because public transport (throughout the country, not just urban) was so good that many (most?) people didn't even own cars.

3. Where do you put all the sports gear/paddling pools/bikes/crap that you currently have in your garage/garden shed?

4. Do *you* want to live on the 4th floor and lug all your groceries (and furniture) up the stairs, and all your trash down the stairs?

5. Pets. No rabbits/guinea pigs. Cats inside 24/7. High dogsh!t density on the streets.

6. Limited self-expression. No gardens, no choosing the colour of your house or style of your front fence, building a BBQ area or a deck.

There are some perhaps unforeseen benefits though:

1. Communal heating becomes practical... one big efficient boiler for the whole building. No electric heaters or fireplaces needed.

2. Higher density housing means that public transport becomes economic, amenities (e.g. swimming pools, libraries) are closer together, cycleways become economic, more efficient rubbish collection.

3. Cable TV (which I guess nowadays means fibre Internet connections).

4. Better security, with a very secure entrance to the stairwell (locked overnight), as well as a locked apartment door.

5. Potentially a sense of community in each building (although I didn't really see that in Switzerland).

6. Large amounts of communal recreational spaces between the buildings.

mattwnz

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#1600134 28-Jul-2016 12:07

surfisup1000:
RUKI:

With the introduction of the new Unitary Plan (draft has been released yesterday and you and me have absolutely no say :-()

Auckland needs to intensify to fit more people.

I quite like the general direction of the unitary plan.

You certainly did have a say, did you make any submissions?

But why are we trying to increase the population so much and so fast? Nz is a far better country with a smaller population imo and wet don't want to be like every other country and city in the world.Essentially we are bringing in all these immigrants without anywhere to house them nor the infrastructure in place which is why house prices have rocketed up Financially on paper it makes the government's numbers look good for growth but in reality it is coming at a huge social cost. The reserve bank did say nz needs to look at the immigration policies which would indicate they aren't happy with it.

mattwnz

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#1600135 28-Jul-2016 12:21

jmh:
darylblake:

Personally if I had a spare $350K I would invest it somewhere else that has a better ROI and doesn't rely on the capital gain. It also sounds like the government are starting to pull levers left right and centre to win votes, so that makes investing in property right now even more off putting.

One of the problems is that there are not a lot of places to invest that money - interest rates have been coming down so term deposits are not keeping up with inflation. That's one reason why the stock market is super hot right now - aside from property, it's one of the few places giving decent returns. Some say a stock market crash is overdue. It's very hard for the rich to find somewhere to put their money - poor dears.

While some blame the boomers for pushing prices up, many like my parents bought into property because they were afraid that the super would not provide the income they require. $300 a week is pretty tight. If you built up savings over your lifetime you are only earning 2-3 % interest pa - you can see why property is attractive. Those of us not at retirement age yet are fearful that the super might disappear altogether - how will you generate an income if you don't have it - property? Seems a good choice right now.

Any Investment should be diversified, shares property and bank deposits. The thing is that just having your money in the bank isn't investing , as the interest make on it would barely cover inflation.

All markets have the potential to crash under the right conditions and different markets go in cycles. So even though people say the share market is a heated Bear market, I wonder what that makes the Auckland property market.

Also it is currently winter and there is very little for sale on the market which will also help push up prices even higher. The free market isn't working with property due to external factors distorting it.

frankv

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#1600138 28-Jul-2016 12:25

What I struggle to understand is why anyone would *want* to live in Auckland.

Not only are houses unaffordable, you have horrendous traffic jams, horrendous parking problems, horrendous long drives to the beach, and there's a bazillion people wherever you go.

Why do people not go to Hamilton or Wellington or Whangarei or Morrinsville instead? Is it the jobs? In which case, why do businesses insist on being in Auckland?

As a non-Aucklander, I think that economics should left to apply... if *you* want to live in Auckland, *you* pay for the housing and the roading and all the other drama that goes with it. When people pay the actual cost of living, the rational will choose to live elsewhere and the problem will be sorted.

kobiak

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#1600141 28-Jul-2016 12:31

@frankv, this is the exact attitude of most new zealanders who at vast majority grow up in rural area, yes even New Zealands cities is rural compared to other cities in the World. People want private land, gardens, etc. There's nothing wrong with it, it's perfect way of living. And these people never experience anything else and afraid of it.

1. Washing. I'm living in apartment and have no problem with washing, combo washer/dryer serves me well for the past 12 years.

2. Underground parking/garage

3. Underground parking/garage/storage

4. Lifts from basement.

5. well yeah, poor pets. especially dogs.

6. There's flat to express your personality, keep it inside.

I understand that apartment living is not for everybody, and it's not kiwi way of living, but it will change in 20-30 years.

There're options, if someone does not like/ don't want to adopt to new way of living in Auckland, there're other parts of New Zealand.

helping others at evgenyk.nz

mattwnz

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#1600167 28-Jul-2016 13:41

frankv:

What I struggle to understand is why anyone would *want* to live in Auckland.

Not only are houses unaffordable, you have horrendous traffic jams, horrendous parking problems, horrendous long drives to the beach, and there's a bazillion people wherever you go.

Why do people not go to Hamilton or Wellington or Whangarei or Morrinsville instead? Is it the jobs? In which case, why do businesses insist on being in Auckland?

As a non-Aucklander, I think that economics should left to apply... if *you* want to live in Auckland, *you* pay for the housing and the roading and all the other drama that goes with it. When people pay the actual cost of living, the rational will choose to live elsewhere and the problem will be sorted.

Exactly. Also their public transport system is horrendous. Absolutely no planning either for population growth, essentially it is all ambulance at the bottom of the cliff stuff. It probably hasn't been helped by central governments immigration policies. They still only have that single harbour crossing which is well past it's useby date as the primary connection.

But that is where the high paying jobs are, and where the big businesses base themselves, but money isn't everything.

That said, it has a lot of attractions and things going for it. eg lots of things to do. But with a high population, it means that things will only get more crowded.

One of the big benefits is that it is a far lower risk of earthquakes, and that is one reasons people don't want to live in Wellington, or Christchurch these days.

People should look at what happened in Christchurch with housing after the earthquakes. There was a big housing bubble there not long after the earthquakes, where house prices rocketed, solely because of the lack of supply, due to so many being damaged.. But since then prices have come back somewhat as supply has picked up.

If Auckland isn't careful, it is going to turn into ghetto city, with a lot of horrible medium rise developments, designed by a developer on the back of an envelope.

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