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4741 posts

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  #1541477 25-Apr-2016 09:28
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sbiddle:

 

The bulk of the NZ finance company collapses had very little to do with the GFC. Many were simply poorly managed companies and/or Ponzi schemes that ultimately reached the point where they self imploded.

 

 

 

I recall those days well....the herald would have tons of advertisements where finance companies would offer double digit interest rates , and people flocked to them. 

 

Despite almost every other week the herald would also have an article about the very high risks of these companies... even the finance journalists probably never thought it would turn out as badly as it did. Very few survived. UDC is still around, but I think they were owned by ANZ. 

 

 


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  #1541494 25-Apr-2016 10:10
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Aredwood:

Geektastic:


SJB:


The reason there are apparently so many investors is that there is simply nowhere else to put your money at the moment.


Deposit and bond returns are laughable and I won't touch the share market. Same as going to Ellerslie or Riccarton and having a punt on the 2.30.


If it was possible for the Central Bank to raise interest rates sufficiently it would have the dual effect of making mortgages harder to service, potentially cooling the housing market, and deposit and bond returns would improve so people would switch out of property.


Can't see that happening anytime soon though.



 


Another factor IMV is the fact that for some inexplicable reason, pension saving in NZ is taxed. Most comparable nations do not tax that activity, encouraging people to save for their retirement in an effective and tax efficient way.


Here, people look at where to put money to best advantage for their retirement and conclude sensibly that property offers the only tax free gain for their capital.


Time perhaps to consider making retirement saving more attractive from a tax pov as a place to put your spare cash.



 


Only problem is if you allow people to contribute tax free to their pension fund / kiwisaver. It can become a tax dodge for the rich. (as rich people normally have higher incomes therefore more money avilable to put into the pension fund). Better way is no tax on interest earned by the pension fund / kiwisaver acct. (with maybe an upper limit to amount of "tax free" interest).



I have no problem with wealthy people benefiting. I intend to join them.





 
 
 
 


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  #1541495 25-Apr-2016 10:11
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turnin: It's the regions I feel for at the moment. The quiet idilic places will now suffer increased real estate values, increased, rates, increased rents and most likely an overall decrease in the quality of life.


As an occupant of a region whose house has been on the market for 18 months, bring it on I say.





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  #1541497 25-Apr-2016 10:14
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ajobbins:

 

UHD:

 

My view is that this is simply a market correction, too many people want to live in Auckland and for various (already stated) reasons this is not possible. Prices will continue to rise until enough people who want to buy houses in Auckland realise better prospects exists outside Auckland and take them.

 

It is crazy to see so many people railing against the government on this, there is nothing in the short or medium term they can do to make 13,000 new homes a year appear and that should not be their concern in my opinion.

 

 

It's only partly genuine housing demand tho, many of the factors driving up demand are for profit reasons. People have equity, they see a rising (tax advantageous) market, they buy with borrowed money, all on paper with no actual dollars down, and the cycle continues.

 

 

Equity is dollars down by another name though. Instead of cash, a portion of another property is used as security which has value. Sure if the market crashes their equity will drop and they might find themselves losing their entire sale price if they fail their mortgage obligations but I don't see how forcing someone to use actual cash would make a difference at all. In fact, the market is good enough that people might just turn to another loan source using the equity in their property as security and then put down cash for another property thus making your demand for real cash to be used not a solution at all.


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  #1541500 25-Apr-2016 10:17
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sir1963:

 

MikeB4:

 

The long term solution in my unlearned opinion is we need to reverse the 70's and 80's disaster of centralisation of commerce and industry. We created this mess when we decided that every head office and major business needed to be in Auckland.

 

 

 

 

What would help there is a REAL user pays system. So instead of industries averaging prices so that their products costs the same in Auckland as it does in Invercargill it should reflect real costs.

 

So Power for example should cost more in Auckland than it would cost down south.

 

Lower land costs, lower rates, lower power prices could see some industries move out of Auckland to where the the costs are cheaper.

 

Limit tax deductions in Auckland , i.e. because of the traffic jams transport of goods costs more in Auckland, reduces the tax deductibles for this, and again the could encourage business to move to the regional cities.

 

Foreign investment should ONLY be allowed if it creates NEW jobs. Buying an existing business is NOT investment, limit foreign owner ship to 49%, and if they want to have 33% then they need to expand the existing business by 50% (so they own 1/3). Land can only be leased for 25 years by foreign people/companies, they can not own it.

 

NZ companies can NOT buy land in China, so why let them buy up the farm here ?

 

 

 

 

Power in Auckland is more expensive than in Invergargill.

 

I don't buy this racist drivel about foreign ownership, foreigners are a minority of the problem.


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  #1541502 25-Apr-2016 10:26
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UHD:

 

sir1963:

 

MikeB4:

 

The long term solution in my unlearned opinion is we need to reverse the 70's and 80's disaster of centralisation of commerce and industry. We created this mess when we decided that every head office and major business needed to be in Auckland.

 

 

 

 

What would help there is a REAL user pays system. So instead of industries averaging prices so that their products costs the same in Auckland as it does in Invercargill it should reflect real costs.

 

So Power for example should cost more in Auckland than it would cost down south.

 

Lower land costs, lower rates, lower power prices could see some industries move out of Auckland to where the the costs are cheaper.

 

Limit tax deductions in Auckland , i.e. because of the traffic jams transport of goods costs more in Auckland, reduces the tax deductibles for this, and again the could encourage business to move to the regional cities.

 

Foreign investment should ONLY be allowed if it creates NEW jobs. Buying an existing business is NOT investment, limit foreign owner ship to 49%, and if they want to have 33% then they need to expand the existing business by 50% (so they own 1/3). Land can only be leased for 25 years by foreign people/companies, they can not own it.

 

NZ companies can NOT buy land in China, so why let them buy up the farm here ?

 

 

 

 

Power in Auckland is more expensive than in Invergargill.

 

I don't buy this racist drivel about foreign ownership, foreigners are a minority of the problem.

 

 

 

 

Have you been to an AKL auction? The bids go to where Kiwis budget to, then the foreign money pays what it needs to. They are a minority number issue I agree, but when a house that anyone will buy at 600k, is happily bought at 750k, then the failed bidders go to another auction, its a real thing. Before long the 750k house while worth 600k is now a 750k house, as are other sales guide prices. That premium is not made up of location, desirability, landscaping, improvements, nice view, its made up of a bigger chequebook that WILL buy it. Its exactly as though the price tag just got increased without any added value or salary improvements for the populous. Foreigners are a numerical minority in house purchases, but they don't use a NZ chequebook, they use one that has a much higher ceiling, pun not intended 

 

And BTW its not racist, its math, pure and simple


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  #1541527 25-Apr-2016 10:46
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tdgeek:

 

News today is an AKL housing crisis, worse than leaky homes.

 

 

If it was the same article I saw, I couldn't help but chuckle. It referred to the "leaky home crisis of the mid 90s".

 

Our leaky home is currently being reclad. This process has taught us a lot about leaky homes, the most important being that the problem is far more widespread than most Kiwis realise. Our house was built in 2003, so the problem is definitely not just one affecting 90s built houses. I have also read reports from various sources (such as HOBANZ) that leaky homes are still being built today. 

 

It is also not just affecting houses with monolithic cladding. We had large portions of brick on our house, which due to poor construction were also sources of damaging water ingress. 

 

Add to this the fact that so many people are living in them without even realising, and we're very much at the tip of the iceberg of the leaky home saga. I reckon we'll see a spate of houses failing over the next 10-15 years, and because all of these are outside of the 10 year threshold for assistance under the Weathertight Homes Resolution Service, there will be a lot of home owners in deep financial trouble.

 

 


 
 
 
 


627 posts

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  #1541654 25-Apr-2016 13:39
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tdgeek:

 

 

 

 

 

Have you been to an AKL auction? The bids go to where Kiwis budget to, then the foreign money pays what it needs to. They are a minority number issue I agree, but when a house that anyone will buy at 600k, is happily bought at 750k, then the failed bidders go to another auction, its a real thing. Before long the 750k house while worth 600k is now a 750k house, as are other sales guide prices. That premium is not made up of location, desirability, landscaping, improvements, nice view, its made up of a bigger chequebook that WILL buy it. Its exactly as though the price tag just got increased without any added value or salary improvements for the populous. Foreigners are a numerical minority in house purchases, but they don't use a NZ chequebook, they use one that has a much higher ceiling, pun not intended 

 

And BTW its not racist, its math, pure and simple

 

 

 

 

To me this just raises even more questions:

 

  • How do we know these are foreigners as opposed to newly anointed citizens, or 2nd, 3rd or 4th generation New Zealanders of foreign descent?
  • Are other methods of house sales dominated by foreigners, or is it just auctions, thereby providing a biased sample?
  • How do we know that all of these people are using overseas funds for purchasing? Could they not also be borrowing from NZ banks?
  • Do we know for sure that these possibly foreign buyers are not discerning, and simply want anything? My personal experience overseas dealing in a related industry was that Chinese ex-pats would primarily target very specific homes & apartments around transport hubs. These were hard working, sophisticated, well-educated and discerning purchasers.
  • What role do New Zealanders play in all of this? Does my NZ neighbour who buys a family home every year using a mortgage from an NZ bank (whose cash is in turn obtained from foreign funds), renovates it, sells it for $100k profit, then rises, lathers and repeats the process, carry any of the blame?

I don't think we have the data to be able to come to the conclusion that foreigners are to blame, or even partly to blame. We certainly don’t have a magical cure either, despite what political parties proclaim.

 

 

 

 

 

 


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  #1541713 25-Apr-2016 16:24
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I think there is a lot of xenophobic reporting around home ownership. As there are currently not stats recording who are buying, then it's all dribble. If you go to an auction and the rest of the bidders are of Asian descent are they foreigners? I went to school with plenty of Kiwis whose great grandparents were Chinese immigrants, yet I bet an informal NZHerald poll would assume they were all foreign.

 

That aside, perhaps my earlier suggestion of ramping up the OCR could be modified with stricter lending maximums. I can't remember the exact figures when I was doing mortgages at Westpac, but it often surprised me what we would lend given the incomes of applicants.

 

Perhaps if it was reigned in to no more than 5 times? And increase the equity required in the first property before lending against the second.


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  #1541753 25-Apr-2016 17:25
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Unfortunately the "debate" on immigration numbers inevitably ends up being hijacked - and argued along lines of xenophobia / racism.

 

The simple truth is that via immigration, NZ is adding population equivalent to a city the size of Palmerston North every year - it's no wonder there's a shortage of housing and infrastructural lag - when most are going to Auckland (& top a lesser degree Chch) - because that's where the jobs are.

 

When it turns to custard I expect there may be a rascist backlash, blaming "them" for lack of jobs for locals etc.  I don't believe 2% PA population growth is desirable or sustainable.  It's kept some of NZ's headline economic figures looking comparatively okay post GFC, but there's a cost.


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  #1541776 25-Apr-2016 17:34
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There certainly seems to be some misunderstanding somewhere about just how hard it is to actually become an 'immigrant' in NZ.

 

Having done it, I can attest to the fact that it is both expensive and time-consuming, with no guarantee of success at all. The inference in the media that somehow hoardes of 'immigrants' are moving here is somewhat cavalier. The vast majority of them will be highly skilled people who have satisfied stiff criteria with regard to their education, qualifications, good character and financial well-being. They are not just random people turning up willy-nilly.

 

I think there has to be some very careful delineation between an offshore buyer who will only be here a few weeks a year (or not at all) and someone who has made a commitment to move here and work here and add to the collective effort to improve NZ.






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  #1541788 25-Apr-2016 18:30
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mudguard:

 

I think there is a lot of xenophobic reporting around home ownership. As there are currently not stats recording who are buying, then it's all dribble. If you go to an auction and the rest of the bidders are of Asian descent are they foreigners? I went to school with plenty of Kiwis whose great grandparents were Chinese immigrants, yet I bet an informal NZHerald poll would assume they were all foreign.

 

That aside, perhaps my earlier suggestion of ramping up the OCR could be modified with stricter lending maximums. I can't remember the exact figures when I was doing mortgages at Westpac, but it often surprised me what we would lend given the incomes of applicants.

 

Perhaps if it was reigned in to no more than 5 times? And increase the equity required in the first property before lending against the second.

 

 

 

 

Theres a ton more chinese in auckland than back in the 90's. 

 

I reckon it feels like Auckland is an asian city sometimes now.      I first noticed this trend when chinese displaced the maoris from the spacie parlours in queen st. 

 

You'd be forgiven for thinking the governments since the 90's had been targeting asian immigrants. 

 

 

 

 

 

 


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  #1541872 25-Apr-2016 22:23
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surfisup1000: 

 

Theres a ton more chinese in auckland than back in the 90's. 

 

I reckon it feels like Auckland is an asian city sometimes now.      I first noticed this trend when chinese displaced the maoris from the spacie parlours in queen st. 

 

You'd be forgiven for thinking the governments since the 90's had been targeting asian immigrants. 

 

 

Ever been to Melbourne?





Involuntary autocorrect in operation on mobile device. Apologies in advance.


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  #1541873 25-Apr-2016 22:25
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wsnz:

 

tdgeek:

 

 

 

 

 

Have you been to an AKL auction? The bids go to where Kiwis budget to, then the foreign money pays what it needs to. They are a minority number issue I agree, but when a house that anyone will buy at 600k, is happily bought at 750k, then the failed bidders go to another auction, its a real thing. Before long the 750k house while worth 600k is now a 750k house, as are other sales guide prices. That premium is not made up of location, desirability, landscaping, improvements, nice view, its made up of a bigger chequebook that WILL buy it. Its exactly as though the price tag just got increased without any added value or salary improvements for the populous. Foreigners are a numerical minority in house purchases, but they don't use a NZ chequebook, they use one that has a much higher ceiling, pun not intended 

 

And BTW its not racist, its math, pure and simple

 

 

 

 

To me this just raises even more questions:

 

  • How do we know these are foreigners as opposed to newly anointed citizens, or 2nd, 3rd or 4th generation New Zealanders of foreign descent?
  • Are other methods of house sales dominated by foreigners, or is it just auctions, thereby providing a biased sample?
  • How do we know that all of these people are using overseas funds for purchasing? Could they not also be borrowing from NZ banks?
  • Do we know for sure that these possibly foreign buyers are not discerning, and simply want anything? My personal experience overseas dealing in a related industry was that Chinese ex-pats would primarily target very specific homes & apartments around transport hubs. These were hard working, sophisticated, well-educated and discerning purchasers.
  • What role do New Zealanders play in all of this? Does my NZ neighbour who buys a family home every year using a mortgage from an NZ bank (whose cash is in turn obtained from foreign funds), renovates it, sells it for $100k profit, then rises, lathers and repeats the process, carry any of the blame?

I don't think we have the data to be able to come to the conclusion that foreigners are to blame, or even partly to blame. We certainly don’t have a magical cure either, despite what political parties proclaim.

 

 

I believe money laundering explains a good proportion of these rich buyers. But there is no proof of course.





Involuntary autocorrect in operation on mobile device. Apologies in advance.


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  #1541883 25-Apr-2016 23:17
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dclegg:

 

tdgeek:

 

News today is an AKL housing crisis, worse than leaky homes.

 

 

If it was the same article I saw, I couldn't help but chuckle. It referred to the "leaky home crisis of the mid 90s".

 

Our leaky home is currently being reclad. This process has taught us a lot about leaky homes, the most important being that the problem is far more widespread than most Kiwis realise. Our house was built in 2003, so the problem is definitely not just one affecting 90s built houses. I have also read reports from various sources (such as HOBANZ) that leaky homes are still being built today. 

 

It is also not just affecting houses with monolithic cladding. We had large portions of brick on our house, which due to poor construction were also sources of damaging water ingress. 

 

Add to this the fact that so many people are living in them without even realising, and we're very much at the tip of the iceberg of the leaky home saga. I reckon we'll see a spate of houses failing over the next 10-15 years, and because all of these are outside of the 10 year threshold for assistance under the Weathertight Homes Resolution Service, there will be a lot of home owners in deep financial trouble.

 

 

 

 

 

 

I've never really found an explanation as to why the councils who certified the building work are not liable? Or the government who drew up (I assume) the regulations that applied?

 

AFAICT the owner (assuming he was the one who had the house built) had no part to play in the failure.

 

The lack of qualified Chartered Surveyors to carry out building surveys, who you can sue if they get it wrong, is a worry.






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