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  Reply # 1597825 24-Jul-2016 19:15
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sxz:

 

tdgeek:

 

mattwnz:

 

jmh:

 

alasta:

 

richms:

 

The ones I do feel sorry for in the upcoming correction are those that have their cash together for a deposit and as a young couple/group are mortgaged to hell for a pretty average property that will become worth a lot less than they owe on it. And because of how things work in NZ, they are liable for the whole value of the loans, no walking away like in the USA.

 

 

Up until now politicians have been encouraging young people to get up to their eyeballs in debt to buy a house because it's never politically expedient to tell them that they can't or shouldn't buy houses. It was a relief a few days ago to finally near Nick Smith admitting on Morning Report that now is a bad time for young financially stretched people to buy houses. 

 

The real risk here is that housing investors are relying on capital gains for their income. When those capital gains eventually dry up then rents will have to increase substantially, hence creating a huge amount of inflationary pressure, which will then prompt the Reserve Bank to raise interest rates. When interest rates go up then highly leveraged homeowners could be in real trouble. 

 

 

With both Nick Smith and Bill English telling people to 'be patient' it makes me wonder whether they know a price crash or take-down is on the way.  

 

The other risk for investors/landlords is if unemployment rises suddenly and people can't afford to pay their rent.

 

 

 

 

If unemployment rises a lot, so over 12% the whole economy will suffer, as it has a big knock on effect. The problem with rising house prices, is that rents also need to increase for investors to get a reasonable return. Especially as they can't then rely on capital gain at the moment. But  investors do have the choice whether they should drop their rent to a more affordable level. People will also get government handouts if unemployed to cover rent.

 

 When rents decrease or can't go up any more, houses will be worth less for investors, and you will get more selling up, which will then give an opportunity for first home buyers. This will be a good thing, and these things all go in cycles. I always cringe when I hear investors say they are doing it for public good and they are providing a public service. Some maybe doing this, but I think  the majority are doing it to make money.

 

 

 

 

Investors dont do it for public good, they do it for number 1. Supply and demand. Rents are too high, no tenants, rents drop, house follow, as income is relative to investments.

 

Ive invested in property at age 18. Its a money making exercise, nothing else. Rent less expenses, can be lucrative if your well geared, then you have capital gain. Easy as. But, housing is for living in, owning, passing it on, wealth, and by that I mean family wealth from ending up with freehold for yourself and for the kids. More money to spend on the economy than interest for banks. 

 

So, eliminate the investment angle and you satisfy the real home ownership, i.e. the ones the live there. CGT helps that. I feel that there is a huge gain from real home ownership, self worth, security, and so on. 

 

 

Then aren't you part of the problem?

 

 

 

 

I don't believe so.

 

 

 

We bought a property. Spend time and money on it, and rented it to tenants who weren't able to or who wanted to, rent. Or we could have not bought and let someone else provide that need. Or demo it and build a block and sell, and deny renters. So, no. 


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  Reply # 1597858 24-Jul-2016 20:48
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tdgeek:

mattwnz:
tdgeek:


Go back when times were supposedly good. More affordable homes, baby boomers bought them. Thats normal. Who was running the country then? Not baby boomers. Perhaps the previous generation is to blame. Or put the blame to baby boomers who bought, saved, invested, thanks to the older generation then, who ran the place




There are several reason why house prices are high. But that will change as these things go on cycles. The thing is house prices don't always go up, and when there is a glut of house supply prices will come back. If you are a good investor you never buy at the top of the market, you wait for a correction.


 


They do go up, ask Bob Jones or Oliver Newland to name but two. Historically, house prices double every 10 years. Not linear. With todays low inflation and low wage increases that no doubt changes. But its like food, a solid investment. The market will show a lack lustre gain, so people move to stocks, then back to property. If I had my way and if I was voted PM for 10years, I would make property, electricity and whatever other necessities, state owned. No profit, get the necessities done as low cost as possible, and let the market take care of luxuries. 



Over time they trend upwards. But there is no set formula of what that is, as it depends on so many factors But short term they can drop. Doubling every 10 years sounds unsustainable as that would mean wages and inflation would also double over that time. But they don't.

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  Reply # 1597862 24-Jul-2016 20:54
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The thing is that there is no supply of cheap houses in to the low end of the market in auckland.

 

Progress is being blocked by the mentioned group of people mostly. If ridiculous old villas with excelent public transport that was not used by the occupants were demolished and blocks of apartments put up in their place, they would be more affordable, and not give people a 2+ hour commute each day which in some cases pushes your effective pay rate to below minimum wage.





Richard rich.ms



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  Reply # 1597903 25-Jul-2016 07:48
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mattwnz:
tdgeek:

 

mattwnz:
tdgeek:

 

 

 

Go back when times were supposedly good. More affordable homes, baby boomers bought them. Thats normal. Who was running the country then? Not baby boomers. Perhaps the previous generation is to blame. Or put the blame to baby boomers who bought, saved, invested, thanks to the older generation then, who ran the place

 

 

 



There are several reason why house prices are high. But that will change as these things go on cycles. The thing is house prices don't always go up, and when there is a glut of house supply prices will come back. If you are a good investor you never buy at the top of the market, you wait for a correction.

 

 

 

 

 

 

 

They do go up, ask Bob Jones or Oliver Newland to name but two. Historically, house prices double every 10 years. Not linear. With todays low inflation and low wage increases that no doubt changes. But its like food, a solid investment. The market will show a lack lustre gain, so people move to stocks, then back to property. If I had my way and if I was voted PM for 10years, I would make property, electricity and whatever other necessities, state owned. No profit, get the necessities done as low cost as possible, and let the market take care of luxuries. 

 



Over time they trend upwards. But there is no set formula of what that is, as it depends on so many factors But short term they can drop. Doubling every 10 years sounds unsustainable as that would mean wages and inflation would also double over that time. But they don't.

 

They used to, but they don't know, and therein lies the problem. And that causes investment to rise, rather than standard home ownership. Property investment needs to be made unsustainable, thats a big start. Let the Govt gives incentives to new builds, via lower deposits, and some flexible first 5 years deals on playing with the finance to make it easier now, and that can be added back to the principal later. Incentives for do ups for living in, not renting.  


jmh

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  Reply # 1597908 25-Jul-2016 08:01
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richms:

 

The thing is that there is no supply of cheap houses in to the low end of the market in auckland.

 

Progress is being blocked by the mentioned group of people mostly. If ridiculous old villas with excellent public transport that was not used by the occupants were demolished and blocks of apartments put up in their place, they would be more affordable, and not give people a 2+ hour commute each day which in some cases pushes your effective pay rate to below minimum wage.

 

 

I don't agree with knocking down perfectly good housing which is fulfilling a need, plus it has historical interest.  What you are suggesting would lead to a city looking like a Russian outpost of utility housing.  There is a lot of new housing going up near me - it's all four-bed houses on tiny sections similar to the huge amounts of building out in Flat Bush in Auckland.  Even the few terraces going up are expensive.

 

I'm ok with apartments on vacant land or poor-quality housing pulled down.  I'm also ok with the state doing this instead of having the taxpayer paying private landlords rent.  


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  Reply # 1598237 25-Jul-2016 14:55
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My parents are of the much maligned boomer generation.  Despite both working full time  they were on the bones of their backside to buy their first house too. 

 

I'm about 40 ('Gen Y?').  It was hard going buying my first house too. Cash was short for the first few years. 

 

I don't think its ever been easy to get your first house. 

 

If I was in my 20s right now I absolutely would not buy a house. 

 

Why would you want to buy at peak value?

 

An increasing number of people are predicting a correction so you have to consider  the risk of ending up with negative equity if values decrease.

 

 





Mike

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  Reply # 1598334 25-Jul-2016 16:54
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tdgeek:

 

Investors dont do it for public good, they do it for number 1. Supply and demand. Rents are too high, no tenants, rents drop, house follow, as income is relative to investments.

 

Ive invested in property at age 18. Its a money making exercise, nothing else. Rent less expenses, can be lucrative if your well geared, then you have capital gain. Easy as. But, housing is for living in, owning, passing it on, wealth, and by that I mean family wealth from ending up with freehold for yourself and for the kids. More money to spend on the economy than interest for banks. 

 

So, eliminate the investment angle and you satisfy the real home ownership, i.e. the ones the live there. CGT helps that. I feel that there is a huge gain from real home ownership, self worth, security, and so on. 

 

 

 

 

CGT won't stop investors purchasing properties as those that do are already subject to taxes on capital gains.

 

The class of investors who masquerade as family home owners requires stricter enforcement action from IRD. I have worked with a number of people over the years who were regularly purchasing family homes - either building or buying an existing property - adding value to it, then rapidly flicking it and purchasing another who to this day are still boasting about how much tax free capital gain they have made. This is one of the reasons why I'm against exempting the family home from any CGT implementation.

 

  

 

 

 

 

 

 


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  Reply # 1598337 25-Jul-2016 16:56
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wsnz:

 

CGT won't stop investors purchasing properties as those that do are already subject to taxes on capital gains.

 

The class of investors who masquerade as family home owners requires stricter enforcement action from IRD. I have worked with a number of people over the years who were regularly purchasing family homes - either building or buying an existing property - adding value to it, then rapidly flicking it and purchasing another who to this day are still boasting about how much tax free capital gain they have made. This is one of the reasons why I'm against exempting the family home from any CGT implementation.

 

 

Agreed, dont see why the house you live in should be any different tax wise from any other property you own.

 

Opens too many issues about what is living in, what is the family etc.





Richard rich.ms

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  Reply # 1598339 25-Jul-2016 16:58
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MikeAqua:

 

Why would you want to buy at peak value?

 

An increasing number of people are predicting a correction so you have to consider  the risk of ending up with negative equity if values decrease.

 

 

 

 

Any Government that causes voters to lose equity or worse still, move into negative equity will face a severe backlash at the voting booths. We as voters want the prices of houses to reduce, just as long as it is not OUR house that reduces in value.

 

 

 

Despite renting being a valid choice, our culture in general denigrates those that do.

 

 




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  Reply # 1598350 25-Jul-2016 17:00
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MikeAqua:

 

My parents are of the much maligned boomer generation.  Despite both working full time  they were on the bones of their backside to buy their first house too. 

 

I'm about 40 ('Gen Y?').  It was hard going buying my first house too. Cash was short for the first few years. 

 

I don't think its ever been easy to get your first house. 

 

If I was in my 20s right now I absolutely would not buy a house. 

 

Why would you want to buy at peak value?

 

An increasing number of people are predicting a correction so you have to consider  the risk of ending up with negative equity if values decrease.

 

 

 

 

10% over 3 years is mentioned. Thats a small correction. Given deposits that shouldnt cause negative equity. You buy at 800k, pay mortgage every month. House is now worth 720, you keep living in it, you keep paying the mortgage. If your plan was to sell up and make money, well you lose. 




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  Reply # 1598356 25-Jul-2016 17:06
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wsnz:

 

MikeAqua:

 

Why would you want to buy at peak value?

 

An increasing number of people are predicting a correction so you have to consider  the risk of ending up with negative equity if values decrease.

 

 

 

 

Any Government that causes voters to lose equity or worse still, move into negative equity will face a severe backlash at the voting booths. We as voters want the prices of houses to reduce, just as long as it is not OUR house that reduces in value.

 

 

 

Despite renting being a valid choice, our culture in general denigrates those that do.

 

 

 

 

Whose fault is it? The Govt for allowing prices to increase or the Govt for allowing them to reduce? Your comment seems to be both? So the Govt places a wage/price freeze so nothing changes?  Its a market issue, some body is not building enough of the right type of houses. Should the Govt take that over? Thats heading from  a market economy to a controlled economy. Most certainly there are things the Govt could have done to help, like my suggestion that immigrants have to build to buy a new home. 


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  Reply # 1598361 25-Jul-2016 17:11
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I feel trying to apportion blame is fruitless. The government should ditch party politics and all parties, related business interests and community organisations should join in a cooperative attempt to resolve this issue.





Mike
Retired IT Manager. 
The views stated in my posts are my personal views and not that of any other organisation.

 

 It's our only home, lets clean it up then...

 

Take My Advice, Pull Down Your Pants And Slide On The Ice!

 

 




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  Reply # 1598375 25-Jul-2016 17:20
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MikeB4:

 

I feel trying to apportion blame is fruitless. The government should ditch party politics and all parties, related business interests and community organisations should join in a cooperative attempt to resolve this issue.

 

 

Agree. Right now its been supply and demand and that hasn't worked out. The building industry should be on the band wagon with the demand, but it doesnt seem that way. Id like an SOE builder to jump in, bring in qualified immigrants of we lack the skilled numbers and get stuck in. Immigrants have to build, so they are kept away from sales of existing homes, to allow that to cool off. With low inflation, house builds should be fairly stable.


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  Reply # 1598382 25-Jul-2016 17:22
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The Government should not get involved by building homes as an SOE. Governments do not do well running businesses.





Mike
Retired IT Manager. 
The views stated in my posts are my personal views and not that of any other organisation.

 

 It's our only home, lets clean it up then...

 

Take My Advice, Pull Down Your Pants And Slide On The Ice!

 

 


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  Reply # 1598385 25-Jul-2016 17:24
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wsnz:

 

tdgeek:

 

Investors dont do it for public good, they do it for number 1. Supply and demand. Rents are too high, no tenants, rents drop, house follow, as income is relative to investments.

 

Ive invested in property at age 18. Its a money making exercise, nothing else. Rent less expenses, can be lucrative if your well geared, then you have capital gain. Easy as. But, housing is for living in, owning, passing it on, wealth, and by that I mean family wealth from ending up with freehold for yourself and for the kids. More money to spend on the economy than interest for banks. 

 

So, eliminate the investment angle and you satisfy the real home ownership, i.e. the ones the live there. CGT helps that. I feel that there is a huge gain from real home ownership, self worth, security, and so on. 

 

 

 

 

CGT won't stop investors purchasing properties as those that do are already subject to taxes on capital gains.

 

The class of investors who masquerade as family home owners requires stricter enforcement action from IRD. I have worked with a number of people over the years who were regularly purchasing family homes - either building or buying an existing property - adding value to it, then rapidly flicking it and purchasing another who to this day are still boasting about how much tax free capital gain they have made. This is one of the reasons why I'm against exempting the family home from any CGT implementation.

 

The problem is that it's harder for people to move to a better house that way.  Everytime you sell you lose 1/3 of the capital gain you have made. 

 

Yes you capture people who are flipping houses, but you also capture genuine people who just want a nicer house to brig their family up in, or have to move because of a change in employment or whatever.





Mike

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