Written By:
advantage - Date published:
8:00 am, January 5th, 2018 - 77 comments
Categories: australian politics, Economy, housing, labour -
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Auckland appears to be following the trend set by Melbourne and Sydney of a softening in expected prices for selling houses.
Sydney’s property market is cooling for the first time in two years.
Melbourne is shaving the froth off the beer.
Auckland is going from nuts to fractionally less nuts.
The impending five year bright line test, and the ban on foreigners buying existing homes, also signals a price cooling.
This is likely to be good for house buyers – especially locals. That is the policy intent.
My experience over a few decades is that the hardest hit will be apartment owners in lower-quality blocks whose repayments from rent cover the interest but not the principal.
On previous trends, a fair few apartment owners who could afford it only by renting out and paying the minimum, will find themselves paying mortgages of an amount higher than the market value: they go “under water”.
A few of those won’t be able to sustain that, and sell at a minor loss.
At that point a few in the media will lose their shit.
My advice would be: be cool.
This is necessary, and this is planned.
As noted by the IRD in its paper on the “bright line test”, it does not “impair private property rights, restrict market competition, reduce incentives on businesses to innovate and invest, or override fundamental common law principles”.
But we should expect media discussion that it does.
So not chaos, a good change for first home buyers, but some tough media stories coming up.
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All sounds good.
I don’t have much sympathy for anyone who bought at the peak of the market that cannot ride through a small to moderate drop in price.
A.
Tales of housing Armageddon sells newspapers.
there is a real issue in AKL, namely that people who would like to sell their property to either up or down grade depending on their needs, but don’t want to leave AKL, can’t as even after they sell they won’t have enough money to buy something else the next day.
then there is the real issue in AKL that for people who want to down grade cause the kiddies left etc there are no properties to buy. You can get G J Garderners monstrosities with the silver fern etched into any glass/mirror, but you can’t find a decent two bedroom, one kitchen, one bath, one toilet with a bit of green around and a car park.
so what you have is now people holding on to their properties – good for those that have them paid off – cause they will never make enough money to buy elsewhere, and those that can’t sell to get out of the mortgage. And bingo, your market is fucked.
Well done National. I can see the scavengers circling above waiting for the first to drop so that they get to pick the bones clean.
I also think we are going to see a flood of rentals starting to show up in the sales lists, as I can see a few ‘landlords’ realising that they actually don’t have the money – might never had to begin with – to upgrade their slum rentals to comply with the new insulation regulations. As i have been househunting the last few month i have seen my fair share of ‘rentals’ and oh my gosh, no insulation and no heating source seems to be the Kiwi way. Never mind the illegal add ons, the rotting floorboards, the unclear boundries, the leaking roofs, non closing windows, cracking walls.
And the people who live in these slums say nothing for rear of losing the roof over their heads.
I know personally of one situation in Hastings of a family living in a rental where the spouting is rotten and leaves large puddles on the ground that take days to soak away, the light bulbs blow on a continual basis. The bathroom was ‘renovated’ as the floor was rotten but the owner the waited six months before covering it. While the renovation was being done, which took a week, the family showered at my place and were offered no compensation from the landlord. The house is not insulated but has a heat pump, which then costs a fortune to run as a result. The tenant had to buy their own stove to replace the existing one where only one element worked, the oven was missing the insulation rubber around the door and the door closed quicker than any mouse trap I have seen. The rental is ‘managed’ by a woman who works for a reputable rental company but she is an arrogant, obnoxious c**t who does not give a toss, just as long as the rent is paid, which it is, on time every week. Any time work is required it takes weeks for it to be done and there is always the implied threat that all these repairs are just getting too much for the landlord.
This is not uncommon and every time read a story about ‘hard done by’ landlords, I just laugh.
the family living in one of these properties for sale is ‘keen’ to keep on living there.
the house would collapse with the tiniest quake, no heating, rotten floorboards in the bathroom laundry, a leak under the kitchen sink. etc.
The builders report was fun to read, but hey, it has had a new coat of colour.
Another property the real estate agent pointed out the ‘bridge’ between living room and hallway. The floor boards were gone, so they ‘fixed’ it by putting board over the gap and hiding it under carpet.
The young mother and child is very ‘keen’ to keep on renting that place.
i have a few more of those, and yes, all the tenants are keen to stay, cause there ain’t nothing else to rent.
btw, non of these tenants rubbished the place. just saying.
My daughter’s rental is freezing in the winter, uninsulated, damp and draughty. the fire doesn’t work properly either. Last winter her son was admitted to hospital with a chest infection which was exacerbated by the above conditions. The rental is managed by a property company. She is reluctant to complain because, in our small town she would be unofficially blacklisted from any decent future rentals.
Disgusting!
Her father grew up in a large European city and although the family were very well off, they never owned a house. They didn’t feel the need because of long-term tenancies and decent housing.
Antoine a lot people have bought to get a roof over there heads there going to be victims there not the speculator class.
when you read about whats been going on in the housing market its criminal the case Augustine lau is the tip of the ice burg.https://www.interest.co.nz/property/90720/notorious-property-managerdeveloper-augustine-lau-speaks-out-about-why-hes-dog-box
a lot home owners who bought are going to go under because of the housing bubble.
In a lot of cases the loans should never have been made its been 9 years of greed.
another national party disaster and there is no easy fix that doesn’t hurt.
if the last government was doing there job we would never have got to this point.
the greedy bastards did nothing.
https://www.capitalandconflict.com/economics/the-remaining-housing-bubbles-pop/
new Zealand features in the article
True about the first point but they actually encouraged the housing bubble. It was the only thing that let NZ show any sort of growth in the economy and thus allowing them to get their ‘surpluses’. Those surpluses are now going to vanish as the housing bubble pops.
Labours big spending plans are in trouble if those surpluses disappear.
Guess Labours got three options if it wishes to continue with its plans.
Borrow fuckloads, try and keep the housing bubble from popping or increase tax
One and three will be very unpopular options.
What would National do?
Probably not try and crash the property market and aim for a gradual deflation of prices
Labour has been like a bull in a China shop which will no doubt cause a hard crash.
National did a good job softening the market in its last term.
And with the government changing all we are seeing is the same gradual property market softening.
The landlords and the Property Council people are bleating – it’s intended that they do.
It’s amazing the way landlords complain – when almost all young people are locked out of the market because of landlords, but they don’t get the airtime.
It’s time for the landlords to squeal a bit, and then make some hard decisions about whether they want to be in this game.
Sure, some of those “mom and dad” properties will get swept up by large rental companies, but a lot more will then be priced just right for the first home family.
That’s an intended result BM.
The other task is to shift the investment intentions of a strong sector of New Zealand away from multiple house ownership towards productive assets and businesses. Again, an intended result.
So that is what the are doing. And it is good for the 90% not the 10%.
Ad makes his 2018 comedy debut-‘National did a good job softening the market in its last term.’!!!
lets not forget landlords have had billions of dollars of tax payer money
from the rental supplement there greed drove them to leverage up to stupid levels its no good squealing now they cant say they weren’t warned.
its amazing there the very people who demand everyone else take personal responsibility. but they don’t like it for themselves well tough. BM you lot had 9 years and did nothing well the party is over, time to PAY up literally the bank manager isn’t going to be friendly anymore the piper is calling. and as a saver we deserve a higher interest rate we have subsidized speculators since the gfc.
so why has National not done this in the nine years they were in power?
I mean National lost the election in September. You are not saying that it all came crashing down in the last three month, or are you?
And if it all came crushing down in the last three month would that then be because National is not there to ‘hide’ the mess it created?
And again, what would Nationals plan be – other then increasing GST for all and cutting taxes for some, while at the same time defunding healthcare, education, infrastructure and so on in order to pay for the tax cuts?
Please What.Would.National.Do.
cause nothing you have said would make me consider National as a viable answer to Labour/NZFirst/Greens.
Not raise the bright line test to 5 years
Not change the rules around negative gearing
Not introduce anti-landlord tenancy rules
Not intervene in the property market by building houses with taxpayers money and then selling them at cost.
Introduce a scaled-back wof.
Probably look at stamp duty instead of banning foreign buyers.
You’d have to be an ignorant naive fool of the highest order if you’re currently looking to buy a rental or first home at the moment.
Labour is going to intentionally crash the housing market and a lot of innocent people young and old are going to get financially wiped out.
Knock off all that bullish positivity, Labour – BM has no doubt, no doubt at all…
To his credit, the opposition National Party spokesperson on Housing (the Hon Michael Woodhouse – inspired!) hasn’t started banging on about the ‘recent’ housing crisis yet (must still be a few motel vacancies), but it’s only a matter of time.
John Key certainly didn’t hesitate to talk up the housing crisis when he was ‘leading’ the opposition; in government – not so much.
https://thestandard.org.nz/keys-powerful-speech-on-the-urgent-housing-crisis/
When are all the private landlords are forced from the market who’s going to provide the rentals?
I live in a run-down and comfortable small mortgage-free provincial home, and have no ambition to be responsible for a second house.
I have no recent experience of the rental housing market in NZ. What are your reckons on the % of all domestic rentals that landLORDS will be ‘forced’ to take off the market, and what do you think will happen to most of those properties? [If you’ve stated this in a previous post then my apologies; just refer me to that – thanks.]
This is off topic but was reading this article and it put me in mind of your belief that technology or inventiveness will intercede in environmental problems and thought you might enjoy it
https://www.theguardian.com/culture/2017/mar/19/yuval-harari-sapiens-readers-questions-lucy-prebble-arianna-huffington-future-of-humanity?CMP=fb_gu
lol…hyperbole….these rental properties are going to vanish in a puff of smoke are they?….even should every private landlord in the country be bankrupted overnight the property remains….unless of course there is a mass pyromanic insurance fraud, which judging by your hysterical tone may be a possibility
hahahahahaha, seriously BM this is the best you can do?
they are going to take the rentals of the market? They already did that, thanks to negative gearing. so hopefully that loophole is gonna be taken away.
they are going to take the rentals of the market? Where are they gonna put them?
they are going to take the rentals of the market? Sell them to the next owner?
seriously BM? Go back to your head office of National INC and Bullshittery and ask for better talking points cause that is low even for you.
True the number of houses aren’t going to disappear, the issue is that nothing stays static.
Populations will increase, more rentals will be needed who are going to build and supply those rentals?
Even at the moment, we’ve got a shortage of rental housing does the government intend to make up that shortfall? you make property so unattractive to the investor then that’s the only option left.
Looks like an interesting read Tracey.
I’ll have to go see if I can find an epub.
@ BM you say
“Even at the moment, we’ve got a shortage of rental housing does the government intend to make up that shortfall? you make property so unattractive to the investor then that’s the only option left.”
but but but the National Party says, or at least said before they lost the election that There.Is.No.Housing.Crisis.Or.Shortage.Of.Houses and that Lot’s.Of.Building.Consents.Have.Been.Granted.
https://www.radionz.co.nz/news/national/304378/no-housing-crisis-in-nz-paula-bennett
http://www.newshub.co.nz/home/politics/2017/07/govt-admits-it-had-no-idea-of-emergency-housing-costs.html
https://www.stuff.co.nz/national/73248902/community-housing-providers-cant-rely-on-government-funding–bennett
https://www.beehive.govt.nz/release/government-injects-another-300m-emergency-housing
https://www.interest.co.nz/property/81428/housing-minister-says-government-does-not-believe-there-housing-crisis-sees-challenge
http://www.newshub.co.nz/home/election/2017/08/national-s-paul-goldsmith-accused-of-blaming-indians-for-housing-crisis.html
https://www.interest.co.nz/property/84753/bill-english-and-paula-bennett-plan-sell-2500-state-houses-christchurch-community
https://www.nbr.co.nz/article/auckland-land-bankers-paradise-nk-141226
lol. You really have run out of talking points, haven’t you? Or you simply forgot that all the statements and pontifications by National INC are there for all to find, in writing, in word, and on camera.
The new owners who bought in at lower prices they will be able to give the places an upgrade and make them habitable.
The Banks are starting to worry about taking a haircut, I know this for a fact !!!
Well, I suppose at that point we will either all own our own homes or the government will supply all rentals.
In other words, it’s not really an issue.
BM the houses don’t disappear just the dick head who borrowed 10 times his/her income.
If all the private landlords were forced to sell their rental properties tomorrow there would be a lot of much houses suddenly available at prices that renters could suddenly be able to finance. One person’s crash is another person’s windfall.
The main government action in such a situation should be to ensure long term tenants are provided with access to equitable finance.
Rental should be mainly a government or non-profit-making community trust activity. Tenancy laws should be biased to make private home rental a poor investment option.
– bright line test? you mean this one here http://www.ird.govt.nz/technical-tax/legislation/2015/2015-111/leg-2015-111-ta-bright-line.html oh dear, so you have an issue with people having to pay taxes on a property they bought to flip and make a profit on? Oh dear. You say.
– negative gearing?
Many investors are attracted to negative gearing because of its tax advantages. Negative gearing is when the annual cost of your investment is more than your return. Basically, when the cost of maintaining your property and paying the interest on your loan is more than the rental income you receive. With a negatively geared investment property you may be eligible for a tax deduction if you have a loss on your investment.
https://www.loanmarket.co.nz/products/tax-and-negative-gearing
when you anual cost of maintaining your ‘investment’ is higher then the rental you receive you are a. either spending too much on your investment, or maybe you should just rent it out rather then keeping it empty – or if you can’t rent it cause your rent demand is too high, drop that price and get real.
Cause yeah, there is a lot of empty real estate, residential and commercial btw, that is kept empty simply to have a tax write off you know to just reduce the tax bill on a venture that may make money.
should all these ghost houses be counted as a loss towards IRD? http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11654495
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11676319
https://www.noted.co.nz/money/property/running-on-empty-the-ghost-homes-in-aucklands-housing-crisis/
– What would be an anti – landlord tenancy rule? Installing Insulation? fixing rotten floorboards? fixing leaking roofs? installing a heating source?
– so selling houses that were build with the use of tax payers money is bad when labour does it, but ok when National does it? or is it only good when National does it? Cause National has literally been selling State Houses at any cost, to the point of simply keeping them empty boarded up until they fall apart?
https://www.stuff.co.nz/national/…/government-to-sell-1000–2000-state-houses–john-k…
https://www.stuff.co.nz/national/politics/82526332/housing-new-zealand-council-plan-to-sell-hundreds-of-state-and-council-homes
https://www.radionz.co.nz/news/political/282781/thousands-of-state-houses-up-for-sale
https://www.stuff.co.nz/national/83769749/hundreds-of-empty-state-houses-in-wellington-while-523-wait-for-new-hom
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=11187065
i especially like this one…..NO point in State Houses….Bill English, the housing fraud of the National Party
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11344052
these are just a few samples going back to 2014…..i could continue 🙂
– oh suddenly the National Party has a heart for young homebuyers? Really?
https://www.stuff.co.nz/business/money/98143924/young-home-buyers-and-how-they-live-with-massive-mortgages
https://geog397.wiki.otago.ac.nz/index.php/Housing_Affordability_for_First_Home_Buyers
https://www.propertyinstitute.nz/pinz-in-the-news
again, just a few links, but well i am sure many of the young people that can’t even afford a ditch to rent in AKL are feeling good knowing that National has had their interest at heart, – the interest they pay on a mortgage for a highly inflated ‘asset’ just so that they don’t have to rent a ditch.
No seriously BM, National came to power in 2008 telling people that they would fix the housing crisis http://www.scoop.co.nz/stories/PA0708/S00336.htm and here http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10489424
so what did they do? Nothing much?
Must say BM you are not doing a stellar job in convincing us that National would be the better alternative to the current government of Labour/NZFirst/Greens.
iam just so happy the bubble is popping to all those debtors we told you so ! https://www.youtube.com/watch?v=jo505ZyaCbA
Why?
There’s going to be a lot of people from all both left and right who are going to hammered financially.
You’ve got to remember not everyone is clued up on what is going on, they rely on the opinion of some called professionals, not quite getting that those people pushing property have a vested interested in keeping the market going.
For example, It was quite common for to banks cold call customers and offer loans to purchase rentals.
“Hey, your property is worth xxxx amount now, here we’ll lend you half a million to buy another place
Mate, you can’t lose”
Hopefully you will remember that list when the same stories about hundreds of families living in cars this winter come around again.
In fact don’t worry BM – I’ll recite it back to you.
If Labour goes ahead with what it’s proposing then I expect to see thousands of families living in cars this winter.
are you speaking of these homeless/housing deprived/living in housing insecurity?
http://www.otago.ac.nz/news/news/otago613529.html
Quote: Friday, 3 June 2016 kate amore image
Dr Kate Amore
At least one in every 100 New Zealanders were homeless at the latest census in 2013, compared with 1 in 120 in 2006, and 1 in 130 in 2001, say University of Otago, Wellington (UOW) researchers.
UOW researcher Dr Kate Amore, from the Health Research Council-funded He Kainga Oranga/Housing and Health Research Programme, measured the “severely housing deprived” population.
“Homelessness is worsening in New Zealand in terms of both numbers and as a proportion of the population. This upward trend accelerated between the 2006 and 2013 censuses, compared with the 2001 and 2006 period,” Dr Amore says.
“If the homeless population were a hundred people, 70 are staying with extended family or friends in severely crowded houses, 20 are in a motel, boarding house or camping ground, and 10 are living on the street, in cars, or in other improvised dwellings. They all urgently need affordable housing.”Quote End
How much did Bennett spend on ’emergency housing’ ?
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11743758
The Government has announced a massive new funding package for emergency housing, which includes 1400 extra places for homeless families and individuals.
The housing package, released this afternoon, would cost $300 million over four years, Social Housing Minister Paula Bennett said.
The new funding would allow for an additional 1400 temporary housing places at any one time, Bennett said, of which 600 would be in Auckland.
The remaining 800 places would be in areas of high demand around the country.
In total, the Government was aiming for 2200 emergency places to be available at any one time.
http://www.newshub.co.nz/home/politics/2017/02/government-blows-the-budget-on-emergency-housing.html
The Government has had a massive blowout in emergency housing grants, spending almost four times its annual budget in just three months.
As part of an overall $345m investment in emergency housing, the Government only budgeted $2m per year for an estimated 1400 emergency housing grants – which pay for urgent motel stays for families in need.
But in the December quarter alone, the Ministry of Social Development spent $7.7m on emergency housing grants.
There were 8860 grants in the final three months of 2016 – which is more than six times the Government’s expectations.
Quote end.
You were saying again BM?
Nope, I’m thinking of all the people who’ll be kicked out of their rentals.
Stealing the Natzi’s Policy getting more people living in their cars Clown ?
@BM Nope, I’m thinking of all the people who’ll be kicked out of their rentals.
Oh you mean the people that have not lost their rentals just yet.
You are not speaking of the many thousand people that have been kicked out of their rentals so that speculators could sell the same house again and again for a tidy untaxed profit? (something that you would like to continue as stated in your comment to me above – – bright line test? you mean this one here http://www.ird.govt.nz/technical-tax/legislation/2015/2015-111/leg-2015-111-ta-bright-line.html oh dear, so you have an issue with people having to pay taxes on a property they bought to flip and make a profit on? Oh dear. You say.
you speak of those that may loose their rental if their house sells? Cause that is what is going to happen by the National Party endorsed Slum Lords. They will sell their houses, kick the tenants out before the property goes on the market less the builders report comes back showing every one just how much of a slum lord the seller is.
they buyer then has the option to upgrade the property, or to raze it and rebuild it, as the buyer always had. Result, better rental properties for NZ tenants.
You still have not pointed out tho what National would do to keep the slumlords in check, prevent blatant speculation and landbanking all the while helping young people to buy a house in a million dollar market and get the homeless caused by National Politics into permanent accommodation rather than fleecing the taxpayer to pay for emergency housing and thus shoveling taxpayes funds to support the Motel / Hotel industry while not providing anything of substance to the tax payer in return.
SO they have done it to themselves greedy deserve everything they get. we cant start fresh with out destroying the old broken market it must end !
Yes, National would continue destroying the economy so a few rich people could get richer – for awhile.
What National did was to promote the housing bubble, insist there wasn’t a housing crisis (after John Key said that there was a housing crisis) and generally push the economy into pre-crash condition.
Labour/Greens/NZ1st are now trying to undo that damage without causing further damage.
But make no mistake – the problem is what National did.
We can’t borrow anymore fool BM the Balance Sheet is maxed out by your little buddies Bill & John ?
“We can’t borrow anymore fool BM the Balance Sheet is maxed out by your little buddies Bill & John ?”
This is exactly what BM’s ilk would like you to believe but is completely untrue.
The NZ government can at all times buy absolutely anything for sale in NZ dollars, that is the governments actual budget constraint. This follows from the payments system (where all government taxation and spending happen and also transactions between banks) being operated by the RBNZ and the RBNZ being a subsidiary institution (according to its charter) of the NZ government.
The same is true of most countries and so we observe most countries have not got any issues with spending or running government deficits. Unfortunately an exception to most countries is the EuroZone countries several of which have got into spending trouble because they can’t simply instruct their shared central bank (the ECB) to fulfill their spending needs. In these cases their spending decisions are only as good as their relationship with the ECB allows (in many countries the ECB has been overseeing what these countries are ‘allowed’ to spend, as you will well understand from the news). This is important because there is an important difference between most countries and the scare stories coming out of the EuroZone which do not apply in most other places.
This anti-democratic ‘scam’ is essentially the same rort the republican party is running once again by claiming they have given away too many tax breaks and therefore can’t afford social spending programs and must impose austerity of the US poor. In fact the recent US tax cuts will massively increase the US budget deficit (a fact US republicans are fully cogniscent of) but they could absolutely care less because its irrelevant to them unless its useful to scare the wider public with.
QFT
You missed: print money.
The enormous untaxed (and unearned) capital gain on residential property that has gone to investors/speculators since the GFC through to 2017, has been a major driver of inequality.
Gradual deflation of housing prices now, while a good thing, will not reverse that inequality, especially where investors/speculators have already cashed up and got away with murder. They are now waiting to swoop back in at the bottom of the next cycle.
Agreed market price management is only a part of the solution – but it is a necessary part.
Those who are about to swoop to reinvest for rental purposes would do well to hold until they have seen the precise shape of the housing legislation coming down the pipeline in the first quarter.
Our housing stock in this country is highly inflated in value for the quality of the building materials. Unless your home is a bespoke home and built for millionaires the bulk of the housing stock is just crap. The fixtures and fittings are budget, you could drive a toy car through the walls they are so flimsy. Our kitchens are so so budget its not funny. Why is everything so expensive when the cheapest materials are used.
I have family who have lived in many countries and the homes they have bought would make you weep. Kitchens to die for, solid timber cabinets, granite benches, high end fittings, proper crown mouldings, solid timber flooring – none of this laminate rubbish, stairwells which could be a piece of art on their own of solid hard wood timber. Thick walls and lots of insulation, some of the homes they have bought have been old but still built like a brick s…. house.
Their latest house is in the US and they paid $425,000 US for it – its sickening what the cost of homes are here. Our home, when they visit, is just a cheap and chatty dump and its only 20 years old and considered a “lovely family home” – it is valued at 1.3 million and its not worth half that – its utter rubbish in comparison..
Somebody is rorting and rorting well here in NZ with the building of our homes.
It may be nice to have homes worth so much but its wrong, utter wrong and the market has failed young buyers of first homes. If the market corrects then so be it – it shouldn’t have elevated like it has done in the first place.
Taking into account our small population (and I am sure commentators will come back with this) is still not an excuse for using such cheap and nasty building materials and fixtures and fittings.
I agree NZ housing is grossly overvalued.
Just to rub salt in the wounds, I expect to see rental prices increase significantly over the next few years as we’ll have an acute rental shortage as well as many landlords desperately trying to improve their return on their investment
With no chance of a capital gain, added compliance costs and hassles, the rate of return has to rise significantly to make their investment remotely viable.
If you’re renting and financially struggling at the moment, then I feel sorry for you as life is about to get notably tougher.
so where was you pity when it happened under National over the last several years?
oh you pity is selective?
I would have no issues with a principled conservative, but this party line bullshit is just that bullshit.
my ex mother in law – a fairly successful women with a property in Remuera came to visit my family in Germany during a congress she attended in Belgium.
she was very very jealous of the kitchen my mother had in the tent attached to teh caravan.
She would have broken out in tears had she seen the kitchen my Mum had in her rental. lol.
But yeah, kitchens and bathrooms in NZ are just a joke.
“Someone is rorting and rorting well here…”
I was talking about exactly this with a mate of mine who has been in the building industry for decades. He said ond word… Fletchers. And its a racket that goes all the way to Government.
It’s not the house that is worth $1.3 million, but the land. The same house in, say, Taumarunui would be worth stuff all. We badly need a land tax, with no exemptions except possibly for unused Maori land, and offset by reductions in income tax. This would be far more effective than a capital gains tax, especially one that exempts private homes.
Having worked in the Real Estate Industry here in Auckland I have seen a lot of Rat’s Nests going for big money $800-$900k. You are really only buying the land value which has been over inflated by over zealous Asian real estate agents and Asian buyers parking money in NZ in safe havens like Residential Housing ?
Selling at a loss is perfectly fair. You buy what you can afford, not leverage against future capital gain. Whether my mortgage is higher or lower than the ‘market’ value is irrelevant – because I’m still living in the damn thing.
Get out of Auckland you muppets.
They cant there all panicking at the same time they will sell at a loss they cant clear there debts and the bank will come after them for the difference and to make matters worse on default the bank can take there kiwi saver as well. national changed the rules hahahahh! its only just began
https://youtu.be/__VQX2Xn7tI
Yes we need a correction alright as this the property bubble was just a Ponzi scheme and john key knew it would end so he got out and left his lackie to face the music.
Key will now be engineering another “run on the NZ Dollar” as he did in 1987 when he teamed up with Alex Krieger to force the NZ dollar down and then made a packet of money.
He will be wanting to repeat this again now since the partnership he had then with Krieger was so ‘profitable and he knows how to make another ‘killing’ on the NZ dollar it is likely he will do it again and not remember afterwards.
http://www.stuff.co.nz/national/politics/250525/Who-is-John-Key
Dumb questions
No 1.
1. when landlords sell who will provide the rentals?
The person buying the property will no longer be renting. 1 less landlord 1 less person renting, nothing has changed.
From above
The number of houses isn’t going to disappear, the issue is that nothing stays static.
Populations will increase, more rentals will be needed, so who’s going to build and supply those rentals?
Even at the moment, we’ve got a shortage of rental housing does the government intend to make up that shortfall? you make property so unattractive to the investor then that’s the only option left.
Do you believe the government has the ability to fill the void left by all the private landlords leaving the market?
Can you read? Landlords leaving the market changes nothing – just increases the level of home ownership.
As to levels of supply and demand.
1. Migration to Oz is resuming as their economy improves – less demand
2. Immigration is being reduced – less demand
3. Foreign investment is channelled into new builds – increased supply
4. Government funded building is increasing – increased supply (this will be of both state housing for rent and also housing on-sold to homeowners).
5. The government is bring back onto the market homes that Nationals shonky P testing regime took out of the market.
6. The governments plan for higher rental standards does not apply to newly built rental property (that would meet those standards as new builds).
Fuckwit, private investment drives the rental market.
If people see no reason to invest in the rental market, people won’t invest.
If people don’t invest, the government will have to step in and make up the shortfall.
From what I’ve seen this government has well and truly signalled they don’t want people investing in property and being landlords.
So, they better have a watertight plan otherwise this government is going to bring down a world of hurt on the people they are trying to help.
Very few landlords build new property, the great majority just buy up existing flats or houses. If they sell that on to someone not a landlord (because they do not want to provide good standard properties), it is to someone renting, who will now own – and they will improve them. The only change would be higher levels of housing ownership.
The government has done nothing to discourage new builds for rent, all new builds meet the new rental standard – and have encouraged more new investment in this sector by limiting foreign investors to new builds.
And as I have noted, all changes in demand and supply on the horizon look positive.
+ 100 SPC people don t listen to the neo liberal trolls on this site. One has to remember that these trolls have shonkys $$$$$$$$ in there back pockets distorting there dum ass views on reality so ignore them . shonky and his trolls are wishing that the Auckland house price could crash there motive is to damage the Mana of OUR new coalition Government and shonky does not care whom get hurt in the process .I say that the regional housing market will still inflate a bit this is logical as people target cheaper housing. Its good to be home in Rotorua with my computer. Ana to kai
Private investment drives the whole housing market in the form of banks.
There will always be a market for rentals; not everybody wants to own their dwelling place.
Smart questions
No 1.
1. When landlords making a loss on their rental can no longer reduce their tax liability on other income, what will they do?
They will sell their rental. One less landlord, 1 less person renting.
…only if the purchaser is a person previously renting. If the purchaser is a new home buyer not previously renting, then the result of your scenario could be one less rental.
And if they were owning elsewhere, who now lives where they did?
Most upgrades to family home ownership comes from those living in smaller units (some couples own these first). Something someone renting might be able to afford to buy.
“And if they were owning elsewhere, who now lives where they did?”
Sorry, when i said ‘new home buyer’ I meant ‘first home buyer’. For example – I am MC at a friends daughter wedding in June. Both bride and groom live with parents. They want to purchase a property before the wedding to move in to. If they buy one of my rental properties to occupy, that is one less rental.
Every home owner has to start with their first home. If that first home was previously tenanted, that is one less rental.
Smart questions
No 2.
What happens to those who bought property at near the peak and the value falls below what they paid for it?
At first nothing, provided they can still make their repayments, the only change is their level of equity falls below the original amount at purchase (for first home buyers 20% and or higher for landlords).
It gets most interesting for the bank if the equity gets (is getting) wiped out and the borrower can only meet interest payments.
The trigger points are:
1. House owner can’t meet mortgage payments. Outcomes – Bank either refinances, or forces mortgagee sale.
2. Market value falls below bank lending (or within a margin of it). Outcomes – Bank calls up additional equity from house owner, or forces mortgagee sale.
The current government has inherited an already cooling market, so in my view they should tread warily. I’m not too interested in property speculators, but I am sympathetic to families and owners of small businesses wo have given security over the homes.
2. Banks do not force a sale where mortgage payments are being made, even if the value of the property falls below the outstanding mortgage.
The only real risk is of a rise of interest rates impacting on the ability to meet mortgage payments.
Government policy related to property is not going have any impact in that area. Whether rental standards or ending the ability of to offset losses against other income (or next term CGT).
“2. Banks do not force a sale where mortgage payments are being made, even if the value of the property falls below the outstanding mortgage.”
That’s generally true. My two points above really need to go hand in hand.
“The only real risk is of a rise of interest rates impacting on the ability to meet mortgage payments.”
There are other risks, including a reduction in income.
“Government policy related to property is not going have any impact in that area.”
Not necessarily. For example, lets say (purely hypothetically of course) that the government initiates a large scale house building program. Then lets add the dynamic that those houses have to meet an ‘affordability’ criteria that results in the government selling said houses below cost. That increases government debt, which potentially increases interest rates. A lot of hypotheticals, but economics tends to be quite a holistic beast, where a tweak here can have unintended consequences over there.
“Whether rental standards or ending the ability of to offset losses against other income (or next term CGT).”
Rental standards are a cost of landlords providing the service they get paid for. They are no excuse for getting out of the business, although they may be a factor in rents increasing. The removal of tax deductibility is a similar beast. Either being a landlord is a business or it isn’t.
Nationals minion’s trying very hard to spread cynical fake news.
Demand and supply.
Landlords sell to whom .
The NZ property market will take years to meet supply.
Speculaters will jump ship before market crashes then home buyers will be able to buy at reasonable prices.
Auckland prices will plateau but not drop because big Cities bring migration.
It may slow private construction which will allow govt to build its 100,000 affordable homes.
The Key is to sell at the top like John Key.
I will buy into the Auckland market to fulfil my dream but only on a 50% drop, meantime Queenstown (holiday home and Dunedin residence will have to do.
Then again nearly every time I was in Auckland 2017 it rained.
Is that normal for Auckland’s climate change, will it get worse, what are the predictions.
There is a huge shortage of rental properties and apparently those being sold are not going for rentals therefore even more shortages and homelessness.
If increasing supply is the idea, I don’t think Labour is on the right track.
Labour has not gone far enough in stopping foreign ownership by only targeting existing residential housing, not all housing and assets. They are not doing enough on the demand side either.
In spite of capital gains taxes and stamp duty, countries like the UK have a major housing shortage. A tax 15% tax on foreign owners in Vancouver was more effective in bring down prices. Labour has not gone far enough in stopping foreign ownership by only targeting existing residential housing, not all housing and assets.
They should be looking at the demand side, closing immigration loopholes and actually making residency and citizenship not only much harder to obtain but also taking 20 years to achieve free social security, so that only committed new migrants qualify.
Globalism has totally changed immigration from the type of migrant coming to NZ 30 years ago who actually lived in NZ, worked exclusively here, learnt the language and were happy to migrate here.
Nowadays we are getting citizens like Peter Thiel who stay for 11 days and get citizenship and their application states they won’t be expected to live here. WTF?
Or people coming for slave wages until getting citizenship and family over and then leaving NZ to work overseas for decent money while the non working dependants stay behind. Who can blame migrants if the loophole is there and we offer wages 30% below Australia and cheap labour seems to be our focus not quality, but we do have “free’ schools, hospitals and social welfare to offer?
Who can blame migrants who come here when they are actively advised to invest in property as part of the rich investment category (which clearly property should be removed from).
You shouldn’t have to be a genius to work out that if we have 200,000+ new people with citizenship, residency or work permits each year, then you will get a housing shortage. It was designed to happen by National.
And with climate change and national disasters, housing is getting more and more destroyed and it’s the uninsured that suffer most. Those making housing materials are raking it in, often multinational corporations.
A catch 22 made to be a catch 22 by National that’s only economic achievement was to sell off NZ and give away citizenship as quickly and quietly as possible to keep their failings masked, the economy only focused on development, and to change the demographics in their favour.