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  #1538335 22-Apr-2016 19:37
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tdgeek:
mudguard:

 

So what are the implications if the Reserve Bank ratcheted up the OCR to say 6-7%? I was working at Westpac about that time, some fixed loans were still over 10%.

 

 

 

Not as a mechanism to quell inflation but just lift mortgage rates.

 

 

 

 

 

 

 

Someone else mentioned it was political suicide, maybe now, but what about another 30 years, where the renters are suddenly the majority of the voters?

 



Interest rates aren't just for homes.

Asian immigrants. They are wealthy. How much is a house? 500k. Oh ok here is a cheque. 927660? Oh ok her is a cheque. To me there are many issues. Start with CGT and no foreign non resident buyers that's all fair and a start

 

Never generalise. Not all, perhaps not that many are that well off. Many come to start a new life from very humble beginnings.

 

Of course in a city of 1 million it is easy to see the handful (hundreds - thousands) of wealthy foreigners.

 

Why? Well let's say there is a country with 1,000,000,000 people, and say 0.1% of them are filthy rich and 10% are pretty rich. That gives 1,000,000 filthy rich and 100,000,000 pretty rich people who've saved up all their lives.

 

Let's say 0.1% of those want a piece of your lifestyle, well, I present to you Australasia.

 

Now, multiply it by a factor of say 2-3, to account for the rest of the world, who also happen to want a piece of your paradise.





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


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  #1538336 22-Apr-2016 19:38
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tdgeek:
sbiddle:

 

I'm always interested to know why people think a CGT will have any effect on property prices when there isn't a single place this has worked anywhere in the world.

 

Yes we should have a CGT simply because it brings fairness to the tax system. It however will have no effect on property prices.

 



We had a rental. Yay. If CGT came in that's a hit to to value of a rental. If that tax free gain disappeared
That may free up properties to live in and not invest in?

 

I hope so. On The Nation last weekend Gareth Morgan admitted that he owns six houses and doesn't have tenants in any of them because "they only make the carpet dirty" and he just wants to sit on these vacant houses get the capital gain. 

 

I know that Gareth is a bit nuts, but clearly the housing market is too!


 
 
 
 


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  #1538345 22-Apr-2016 19:42
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MikeB4: I do not think it's politically fixable.

 

That depends. 

 

If the politicians refuse to do anything but rely on "market forces" (which is what this government does....unless they need to steal water for dairy farmers), then there can't be a political fix - by definition. 

 

Supporting the construction of quality long-term RENTAL apartment accommodation would fix it, too. Apartments are a huge bad thing in NZ because of the horrendous - awful - body corporate structures strata title owners find themselves lumbered with. Absolutely crazy more often than not. 

 

So don't do it. 

 

I've seen large rental complexes in Ontario, Canada with hundreds and hundreds of brand new apartments, underground parking, pools, gyms, club houses and broad sweeping lawns and gardens in a park-like setting.....that ordinary people can afford to rent. Ten year lease?  No problem. 

 

That is unknown here...and the solution to that is completely, 100% political. Stop relying on a market that just does not work if the intention is more affordable housing.  

 

 

 

 

 

 

 

 





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  #1538346 22-Apr-2016 19:42
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alasta:

 

tdgeek:
sbiddle:

 

I'm always interested to know why people think a CGT will have any effect on property prices when there isn't a single place this has worked anywhere in the world.

 

Yes we should have a CGT simply because it brings fairness to the tax system. It however will have no effect on property prices.

 



We had a rental. Yay. If CGT came in that's a hit to to value of a rental. If that tax free gain disappeared
That may free up properties to live in and not invest in?

 

I hope so. On The Nation last weekend Gareth Morgan admitted that he owns six houses and doesn't have tenants in any of them because "they only make the carpet dirty" and he just wants to sit on these vacant houses get the capital gain. 

 

I know that Gareth is a bit nuts, but clearly the housing market is too!

 

 

Oh yeah, we forgot about wealth locals. Smaller numbers than 2 billion, but much higher percentage buy your houses.





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


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  #1538349 22-Apr-2016 19:44
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alasta:

 

 

 

I hope so. On The Nation last weekend Gareth Morgan admitted that he owns six houses and doesn't have tenants in any of them because "they only make the carpet dirty" and he just wants to sit on these vacant houses get the capital gain. 

 

I know that Gareth is a bit nuts, but clearly the housing market is too!

 

 

Morgan's not alone. 

 

Many Chinese owners who live outside NZ don't have tenants in their houses because the tenants can do damage they are liable for and they need to communicate with a property manager. Too hard. Just leave it empty. 

 

Walk the streets. It's not hard to spot these places once you get a feel for what the tell-tale signs are. 





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  #1538353 22-Apr-2016 19:51
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tdgeek:
sbiddle:

 

TeaLeaf:

 

 

 

I think its pretty obvious the Government is maintaining this bubble. Yes a correction will hurt, but its beyond needed imo as its now impacting/lowering prices of property elsewhere and so much more, ie pricing essential trades out of the city like has happened in London. Imo the bubble was driven firstly by empty home buyers and a lack of capital gains tax and secondly by Aucklanders jumping on the bandwagon thinking they were getting rich for nothing. Neither of which I have an opinion on.

 

 

 

 

 

 

I'm always interested to know why people think a CGT will have any effect on property prices when there isn't a single place this has worked anywhere in the world.

 

 

 

Yes we should have a CGT simply because it brings fairness to the tax system. It however will have no effect on property prices.

 

 

 

 

 



We had a rental. Yay. If CGT came in that's a hit to to value of a rental. If that tax free gain disappeared
That may free up properties to live in and not invest in?

 

If you sell a property now and make a profit having now owned it for long you need to legally pay tax on it - this is really a CGT by stealth anyway.

 

The fact you do now need to (legally) pay tax on those capital gains really shows how a CGT will have zero effect on the market.

 

 

 

 


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  #1538355 22-Apr-2016 19:54
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I still think the OCR would be an extremely effective tool. Push up the cost of borrowing for housing (and therefore those funding a business using their equity).

 

Maybe a hammer to crack a nut, but surely there isn't a way that isn't going to hurt?


 
 
 
 


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  #1538369 22-Apr-2016 20:09
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TeaLeaf:

 

I think its pretty obvious the Government is maintaining this bubble. Yes a correction will hurt, but its beyond needed imo as its now impacting/lowering prices of property elsewhere and so much more, ie pricing essential trades out of the city like has happened in London. Imo the bubble was driven firstly by empty home buyers and a lack of capital gains tax and secondly by Aucklanders jumping on the bandwagon thinking they were getting rich for nothing. Neither of which I have an opinion on.

 

But I dont buy into the "its because of immigration" or other squeamish reasoning's spouted out in attempts to keep the second lot of buyers, Aucklanders, buying more property.

 

Anyway have any of the parties discussed policies on how to increase interest rates, more aggressively approach immigration to other cities, if the city is truely growing (Im talking business) encouraging to set up outside of Auckland, ie move jobs to where we dont have to tackle unnecessary infrastructure concerns.

 

After a lifetime as a national voter Im changing.

 

Nobody wants to see rates jump to 18% or people lose 40% of their house prices, thats the last thing one would wish on a first home buyer. But I feel its out of control now and its just too hard basket and they are waiting to be voted out rather than taking action. ie leaving the problem to the next government.

 

 

Government can't maintain a bubble, it has no control over the bubble to start with. However government did create the conditions that sustain it, mostly the city planning (or lack of planning) regime that makes it difficult and expensive to build multi-story buildings outside the CBD and even overly restrictive in the various urban centres where good transport links should justify higher density.

 

 

 

Immigration is obviously part of the demand side, but so are the large numbers of Kiwis from around the country that keep moving to Auckland. Demand and supply have to match or the prices will be pushed up, so lets start pushing council to work on the supply side and encourage more development in the city!

 

 

 

Capital gains tax... if you make a killing on capital gains then you pay tax. Still make a killing but perhaps less incentive to improve the property first. No disincentive to make a capital gain! Supply and demand can't be fixed by fiddling with interest rates or taking a bigger slice of peoples earnings, because there are still the same people needing a house to live in. Reserve Bank rules is likely pushing some investment to the regions around the edges of Auckland as can be seen by the growth of Pokeno.





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  #1538375 22-Apr-2016 20:21
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House market is driven by cheap money , which is cheap because countries around the world have been pumping out money like crazy. 

 

Rather than people going out and spending this money on consumer goods like cars, tv's, holiday etc, people have bought properties. 

 

If the govt had some nads, they'd have increased interest rates as they well should .  Our exchange rate is currently much lower than it has been for the last few years so I don't see the problem. 

 

Make money more expensive and the house prices will take care of themselves. 

 

Of course ,chinese immigration into auckland has been huge.  It has had quite an effect, just look at the number of chinese real estate agents now. 

 

However, auckland property is still very cheap. I see price growth slowing once prices double again, in about 4 - 5 years time. 

 

 

 

 


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  #1538414 22-Apr-2016 20:51
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Linuxluver:

 

Supporting the construction of quality long-term RENTAL apartment accommodation would fix it, too. Apartments are a huge bad thing in NZ because of the horrendous - awful - body corporate structures strata title owners find themselves lumbered with. Absolutely crazy more often than not. 

 

So don't do it. 

 

I've seen large rental complexes in Ontario, Canada with hundreds and hundreds of brand new apartments, underground parking, pools, gyms, club houses and broad sweeping lawns and gardens in a park-like setting.....that ordinary people can afford to rent. Ten year lease?  No problem. 

 

This is actually a good point. There is a general attitude amongst New Zealanders that everyone should aspire to own a house, and people who rent their homes are all losers. It's a generational perception that is going to have to change. I prefer to rent my home because, as I said above, the ROI doesn't stack up unless you take a gamble on getting excessive long term capital gains.

 

Renting for life is fine as long as you have some way of building long term wealth to support your retirement. Managed funds have done quite nicely for me over the last few years.


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  #1538465 22-Apr-2016 22:56
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I believe the problem is to some extent self-inflicted.

 

The way housing is developed in New Zealand is very, very slow. There is a predilection for building one house at a time, immensely slowly. I have seen houses in this area take 8 months to build and essentially all they are is big wooden garden sheds with more windows and doors in. 8 weeks ought to be adequate with modern pre-fabrication systems.

 

The problem really begins with land and the way that development is dealt with under the RMA. In the planning systems I am familiar with elsewhere, once a council has consented the development the owner is free to sell. No title per se need be issued: the act of sale creates a new title. If the council has placed requirements on the consent for roads, fences or whatever, complying with those consent conditions merely becomes the responsibility of the new owner.

 

Here, the landowner must find the money to execute all the consent conditions before he can get title to sell. Now, in many cases the landowner will not have access to the significant funds and/or manpower, machinery etc that are often required for that, whereas a firm of developers would. This results in developable land being slow to market because the landowner investigates, finds that he could get consent but that he will need to find $100,000 for roads and fences before he can sell. He then decides that he can't find that level of cash so the land sits undeveloped.

 

Poor transport means land in cheaper areas further out remains unviable: a modern rail system that could get you from (say) Pokeno to the CBD in 30 minutes would be transformational.

 

Out of interest, this story I came across the other day shows an example of housing development being done on a much larger scale. Too big for here, perhaps, but even a third of this scheme done at a time in Auckland would make a huge difference.






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  #1538466 22-Apr-2016 23:00
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alasta:

 

Linuxluver:

 

Supporting the construction of quality long-term RENTAL apartment accommodation would fix it, too. Apartments are a huge bad thing in NZ because of the horrendous - awful - body corporate structures strata title owners find themselves lumbered with. Absolutely crazy more often than not. 

 

So don't do it. 

 

I've seen large rental complexes in Ontario, Canada with hundreds and hundreds of brand new apartments, underground parking, pools, gyms, club houses and broad sweeping lawns and gardens in a park-like setting.....that ordinary people can afford to rent. Ten year lease?  No problem. 

 

This is actually a good point. There is a general attitude amongst New Zealanders that everyone should aspire to own a house, and people who rent their homes are all losers. It's a generational perception that is going to have to change. I prefer to rent my home because, as I said above, the ROI doesn't stack up unless you take a gamble on getting excessive long term capital gains.

 

Renting for life is fine as long as you have some way of building long term wealth to support your retirement. Managed funds have done quite nicely for me over the last few years.

 

 

Renting for life is fine, but you need tenancy law that reflects that and allows sufficient terms, controls rent review processes and protects tenants when buildings are sold and so on. I may be wrong but I have seen little evidence of that here to date.

 

A family friend in the UK, for example, lives on a lovely moated farm house in Kent. They hold it on the balance of a 99 year lease, the rent for which was commuted to a single payment at the beginning of the lease with the annual rent thereafter being a peppercorn rent.








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  #1539567 23-Apr-2016 10:59
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littleheaven:

 

I think if it were easier to get into the major areas of employment from further out, it would ease the pressure a bit, as would a willingness for slightly longer commuting times.

 

 

and with a bit fore-site you could a) commute it in less time b) buy a house locally to work for a fraction of central auckland c) spend time with family which is what life is about not working to buy over priced houses.

 

Fred99:

 

I call BS on the claims that "it's always been hard to buy a house".

 

 

haha I agree

 

somebody really let that out of their brain?

 

i remember friends/family buying a 4 bed do up on Mt Eden Rd, just down from the village on a 1/4 acre for $200k ish 20 years ago, a 3 bed in onehunga for $115k 15 years ago, a house in beachlands for $20k 20 odd years ago.

 

wages have barely moved in comparison to the price of those houses since. those houses were paid in what would now be seen as 1/2 a deposit in some of the least to do suburbs of auckland today. because they were affordable.

 

if what you are all saying is true and the correction is not somethning a) any government would want to do b) will have any choice over when it does, then i feel really sad for those first home buyers that are going to be left with 100s of k in debt and a mortgagee sale. i dont think anyones greed level surely wanted to see that occur. maybe im naive to humanity.




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  #1539572 23-Apr-2016 11:05
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sbiddle:

 

Yes we should have a CGT simply because it brings fairness to the tax system. It however will have no effect on property prices.

 

 

i agree re price in a normal market. its not a price holding tax, its a frenzy holding strategy. but not one i would rely on soley hence why i mentioned many measures, this is like 2% of the puzzle. i wouldnt overly focus on it. and as you said, if you havnt lived in it long enough, NZ already has CGT.

 

it slows the rate of how many IPs you can buy. and imo having felt it work, it does work. sure someone else mght come along and buy the property for more than its worth but in a market like Aucks it would have slowed that frenzy.

 

precisely the only point, to keep peoples greed in check, ie paying tax on earnings. ive paid it a lot in Aus on properties and i have no issue with it.




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  #1540576 23-Apr-2016 11:41
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alasta:

 

The thing I find interesting is that rents are not increasing anywhere near as fast as house prices. Rents can only go as high as people can incomes allow, whereas house price rises are theoretically unlimited as long as people are buying and selling in the same market. 

 

This means that the only way you can get an acceptable yield on residential property is if you're getting ongoing capital gains well in excess of inflation. Can that continue forever? Probably not.

 

People who buy into residential housing shortly before the capital gains dry up are going to be the big losers here.

 

 

nail, head, game over.

 

its a bit like my families house in europe its worth a lot but is technologically advanced and they rebuilt the entire layout with state of the art materials, but the rents locally (for not quite such a high standard of living, no triple glazed windows or state of the art heating etc) are insanely small nzd $100-$150 a week for an average 3 bed.

 

immigration wont raise house prices, it will lower it imo. but it will lower the standard of housing. NZ should be leading the way.

 

we will price people vacations out of the city because we expect them to pay a mortgage they spent WAY too much on. it wont work. if you have $40k single income, 2 babies and a dog, would you really pay 120% of your income on rent? that will be outside what i had hoped would be government intervention the bursting of the bubble.

 

its hard enough of 2.5 times that salary and rents are still cheap compared to buying, but not like my aforementioned european version.

 

Ill state my long term solutions and Im sure there are many others to a happier more spread out work environment.

 

1. Train systems equal or better to Brisbane, especially speed trains to get to said Satellite cities

 

2. Satellite cities, especially in established areas that are equally pretty to Auckland and a lot less toxic environmentally.

 

3. Improved use of telecommuting as per the poster who worked from home from Melbourne, I too did this 3 days a week in Sydney. Auckland seems really backward with employers demanding you show up to an office and waste 2 hours of a day. Its not like they cant see if you are working.

 

4. Government enforcing much stronger immigrant policy to move to these satellite cities

 

5. A no empty home investment policy

 

6. Possibly look toward a 30 hour week like that european country that demands its workers put in 100% in the 30 hours recognosing 25% of work time is wasted (facebook, office gossip, brain dead from commuting). Id like to see how this turns out and if it improves productivity.

 

There is more but Im sick and will likely be a zombie by the time the bubble bursts. ;-p

 

 


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