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

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6325 posts

Uber Geek

#1541114 24-Apr-2016 13:04

Are there any examples globally where buying a home without being a resident is not possible?

And if so would that be a bad idea?

Are there any stats on how many empty home investments we have in Akl?

If its even slightly identifiable it clearly has an impact on supply and demand.

ajobbins

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#1541116 24-Apr-2016 13:10

TeaLeaf:

Are there any examples globally where buying a home without being a resident is not possible?

And if so would that be a bad idea?

Are there any stats on how many empty home investments we have in Akl?

If its even slightly identifiable it clearly has an impact on supply and demand.

Not sure of the details, but in AU non resident foreign investors pay higher stamp duty. And it's about to go up for them even more.

Some have told lies to get around it but there was little that could be done until recently, now I think they can seize and sell if the property was bought for a non resident without paying the appropriate duties.

There is an apartment building near my work here in Melbourne that was completed nearly 2 years ago but many, if not most of the apartments have never been lived in and don't seem to be advertised for lease or sale. Lots of suggestion they are likley purchased by non residents wanting to park capital in Australia. Given the rate the prices are rising and the fact they aren't financed, they don't even need to tenant them to be profitable.

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wsnz

649 posts

Ultimate Geek

#1541118 24-Apr-2016 13:20

The bottom line is this: has Australia's CGT & Stamp Duty on housing eliminated or even moderated house prices? If not, then why do many persist in proclaiming this as the solution to NZ's housing issues?

TeaLeaf

6325 posts

Uber Geek

#1541124 24-Apr-2016 13:33

wsnz:

The bottom line is this: has Australia's CGT & Stamp Duty on housing eliminated or even moderated house prices?

its not about that really, not havng total disagreement I hear your point. its about keeping people honest and paying their way. would you like to see people get ahead in life simply because they were lucky enough to inherit enough money to buy a magnitude of IPs, only to have them turned into capital gains generators not long term investments and not pay a single cent on their already ridiculous wealth? i personally dont believe in poorer getting poorer rich getting richer, their are weighs to distribute prosperity with giving people options of getting a little further ahead but other not living in leaky homes while their children get sick.

it helps keep the amount of properties available for tenancy high, a problem we have in NZ right now.

personally having paid it and seen it working in Aus, yes I think it does work. Stamp duty I have no comment on.

AJ, spot on again, thats the environment we are facing, if you add up people buying and selling and not occupying and empty homes. Do we really have a house shortage? Along with a government making it much harder for immigrants to move to Auckland.

Thats all outside the satellite city, telecommuting and fast trains options we have mentioned.

ajobbins

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#1541128 24-Apr-2016 13:53

wsnz:

The bottom line is this: has Australia's CGT & Stamp Duty on housing eliminated or even moderated house prices? If not, then why do many persist in proclaiming this as the solution to NZ's housing issues?

CGT and Stamp Duty are just two factors of many that are influencing house prices. Having these alone will not have a major impact to the problem, they need to be considered along with a number of other mechanisms.

But at the end of the day, tax does have an effect, it's simple economics. It's very difficult to use AU vs NZ as an example of why it either works or doesn't because AU has had stamp duty and CGT for a long time (before boom times) and you can't compare what the market looks like without it. Australia has affordability problems too, but I can still buy a brand new 4 bedroom house in Melbourne within an hour of the city for $400k.

Australia also has a 50% CGT discount for any assets held for 12 months or more, so the impact of CGT is significantly reduced. Not to mention that CGT is an income tax, so if you're not a tax resident of Australia, you may not have to pay it.

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#1541131 24-Apr-2016 14:02

ajobbins:
TeaLeaf:

Are there any examples globally where buying a home without being a resident is not possible?

And if so would that be a bad idea?

Are there any stats on how many empty home investments we have in Akl?

If its even slightly identifiable it clearly has an impact on supply and demand.

Not sure of the details, but in AU non resident foreign investors pay higher stamp duty. And it's about to go up for them even more.

Some have told lies to get around it but there was little that could be done until recently, now I think they can seize and sell if the property was bought for a non resident without paying the appropriate duties.

There is an apartment building near my work here in Melbourne that was completed nearly 2 years ago but many, if not most of the apartments have never been lived in and don't seem to be advertised for lease or sale. Lots of suggestion they are likley purchased by non residents wanting to park capital in Australia. Given the rate the prices are rising and the fact they aren't financed, they don't even need to tenant them to be profitable.

That sounds like money laundering.

littleheaven

2130 posts

Uber Geek

#1541156 24-Apr-2016 14:22

From what I understand, in Australia you have to be a citizen or permanent resident to buy property without applying to the foreign investment office. In December they announced they were cracking down on real estate illegally owned by non-residents or temporary residents.

Some countries allow non-residents to buy property, but they have to actually build a new home, so that it increases the housing stock. Not a bad idea in places where land is plentiful, but not sure it would be terribly helpful in Auckland.

I purchased my little 3-bed townhouse in Glenfield in 1996 for $222,000, and I thought I was being royally ripped off at the time - prices were at a bit of a peak. I think it did dip below the original purchase price very slightly at one point, but it's now worth around $750,000 which seems silly for a modest little place on a cross-leased section on the south side of a hill. I thought it was about right when it was hovering in the low $400,000's to be honest. My parents live a couple of streets from me, and they bought their place for the huge sum of $26,000 in the 70's. Smaller houses a few doors down from theirs have just sold for over a million. They all have full sections.

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SJB

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#1541164 24-Apr-2016 14:32

I don't believe there are any restrictions in the UK on non-residents buying property. They can buy what they like (if they can afford it - a 2 bedroom apartment in central London will set you back around $2m at the moment).

There's certainly no Overseas Investment Office AFAIK.

TeaLeaf

6325 posts

Uber Geek

#1541179 24-Apr-2016 15:04

SJB:

I don't believe there are any restrictions in the UK on non-residents buying property.

reminds me of the flag debate when someone said their was no link to the commonwealth anymore. if this quad open door no passport concept goes ahead, which I hope it does, not that i need to worry as I can access all 4 of those countries, but without a passport and just a tax file number would make life simpler ;-p

TeaLeaf

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Uber Geek

#1541186 24-Apr-2016 15:15

littleheaven:

I purchased my little 3-bed townhouse in Glenfield in 1996 for $222,000, and I thought I was being royally ripped off at the time - prices were at a bit of a peak. I think it did dip below the original purchase price very slightly at one point, but it's now worth around $750,000 which seems silly for a modest little place on a cross-leased section on the south side of a hill. I thought it was about right when it was hovering in the low $400,000's to be honest.

i lived there a wee while a decade earlier. good honest working mans suburb.

when i moved back to NZ I couldnt believe the suburbs and money people were asking, and the suburbs people were proud to live in, ponsonby, onehunga, beachlands, ok ill stop at beachlands lol.

but its no different when my grandad lived in Panmure all way up to point england was well to do. who knows, it may well change again in half a century.

doing the old school way, id draw a line at 96 add 6-7% per annum and thats what I personally think your property is worth. Auckland hasnt degraded nor has it gotten remarkably better. so i think your property is likely worth that based on the calcs I just did.

but that doesnt account for what people can afford.

and the big problem i see in Auckland is salaries vs cashed up overseas buyers. salaries cant buy them, barely. then someone overseas buys it leaves it empty and we claim we have a housing shortage.

mattwnz

20155 posts

Uber Geek

#1541187 24-Apr-2016 15:23

The Auckland housing market is going to take decades to correct, as if it crashes, banks will also likely be under a lot of stress for having lended so much, and it will be savers who will take the haircut with the new rules, and the government won't want that. I think if they do introduce something to solve it, such as preventing foreign buyers purchasing existing housing stock (requiring them to build new like they do in OZ), and reducing how much people can borrow, it will have some effect. But people in Auckland now can be borrowing 1 million to buy a house. That is just madness. Really it is the land that has the value, as many of these houses on that land are not worth more than 200k, as they have a lot of deferred maintenance and updating in them. Banks want to lend as much as they can, as that is how they make money. So they want house prices to keep going up. Someone truely independent needs to make some tough decisions. Big rate increases may help, because people don't want to pay a high amount for a house, when they can't afford to pay for the rates on top of interest payments, so they will factor that into a lower offer price, which overtime will bring the price of higher properties down, and reduce the rates back to affordable levels. I have seen this happen before, but it takes a long time, and the property owners end up not getting as much for their property as they once may have got.

The fact is that NZ has some of the most favorable conditions for property investment for foreign buyers in the world. Foreign buyers have a lot of cash that they need to get rid of into fixed assets, and the property in NZ is such a big part of the economy, that it is too big to fail. If property in NZ crashes, so does the NZ economy IMO. So many people have interests in property prices increasing, (banks, real estate agents, property owners, councils etc) that there is no real incentive for them not to increase.

mattwnz

20155 posts

Uber Geek

#1541189 24-Apr-2016 15:27

SJB:

I don't believe there are any restrictions in the UK on non-residents buying property. They can buy what they like (if they can afford it - a 2 bedroom apartment in central London will set you back around $2m at the moment).

There's certainly no Overseas Investment Office AFAIK.

But they have a lot of other taxes on property which help to keep it down, as well as a lot of other taxes including inheritance tax, stamp duty, CGT etc. So it is not a fair comparison. Outside London, properties in the UK are actually quite affordable compared to NZ.

sbiddle

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#1541190 24-Apr-2016 15:34

All those talk of "fixing" Auckland makes me wonder what people actually mean. What is the "fix" that people speak of?

An immediate (as in even over a 2-3 year period) 25% drop in Auckland property prices would probably put the entire country into a very dark place. You would have tens of thousands of people defaulting on mortgages, banks being hurt baldy, and a council with revenue that would crash.

Geektastic

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#1541199 24-Apr-2016 16:19

wsnz:
The bottom line is this: has Australia's CGT & Stamp Duty on housing eliminated or even moderated house prices? If not, then why do many persist in proclaiming this as the solution to NZ's housing issues?

Anyone who thinks Stamp Duty will benefit anyone but the IRD should try buying a house in London or any other major British city.

It does nothing to moderate prices and I for one see no need to make us all pay more tax.

Geektastic

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#1541205 24-Apr-2016 16:28

mattwnz:
SJB:

I don't believe there are any restrictions in the UK on non-residents buying property. They can buy what they like (if they can afford it - a 2 bedroom apartment in central London will set you back around $2m at the moment).

There's certainly no Overseas Investment Office AFAIK.

But they have a lot of other taxes on property which help to keep it down, as well as a lot of other taxes including inheritance tax, stamp duty, CGT etc. So it is not a fair comparison. Outside London, properties in the UK are actually quite affordable compared to NZ.

The only taxes on property specifically are Stamp Duty and the equivalent of rates. The other taxes you mention apply to other assets as well.

And property outside London is no more affordable than here unless you're prepared to live in the boonies. Anywhere within commuting distance of a major conurbation in SE England is likely to be at or above Auckland. My mother's house, for example, is 45 minutes by train to London but not in London. It cost the equivalent of $1.1 million two years ago and is a two bedroom detached bungalow on about 1600 square metres.

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