Are property investors the scourge of the earth?

[R650R]

Back in the day....when we had a stable housing market everyone was complaining about dole bludgers and welfare families having a free house for life, someone started spousing user pays.... So someone though it was a a good idea to sell off a large amount of these assetts to the private sector, and that welfare recipient should pay market rents... Some or many of you voted for that someone....
About this time the unions started dying off, individual employment contracts came out and people started thinking about themselves... Soon wages for many jobs were shite so people started leaving in droves... creating a shortage of skilled workers....
So someone opened the flood gates of immigration and all these foriegn people came in buying up houses not believeing how cheap they were in paradise. And coming from longer developed countries they knew where things were going.....
Soon mom and pop investors realised real estate was a good thing, they make up 40% of landlords in this country, peopel who own one renatl property only....
Anyway the reason we have proeprty investors is because we have such low interest rates because thats what people with homes and mortgages like. So its pointless to put your cash into any financial product no matter how "low" the risk is when bricks and mortar returns 10%p/a easily and the asset itself rises in value at same time.
So remember the reason your paying mega bucks for your mortage its because you looked down upon those getting a handout from the govt. So in cutting off our nose to spite our face, not only are we paying more for our own homes, we're having to pay the benificies even more for their higher living costs!!!!!

[R650R]

When English is your second language..... flushing shite into stream is Devolution not Revolution......

http://www.stuff.co.nz/business/prop...-pay-90k-costs

[pritch]

there are fuck all poor dairy farmers in my experience

You would probably be surprised to know how many have a community services card though.

[Zedder]

Members of Parliament property investments:https://www.interest.co.nz/property/...-25-if-you-cut

[oldrider]

You would probably be surprised to know how many have a community services card though.

True! - and other well healed miscellaneous business people from "all walks of life" - it seems to make them feel good by bucking the system!

[merv]

The whole lot of squealing going on about negative gearing is a load of rubbish.

An investor starting out young buys houses and borrows money from the bank. Just think about that, say the investor early on is paying for example $30,000 interest to the bank in the first year (keep it simple as an example and ignore other expenses such as rates, insurance etc) and claims that as a tax deductible expense, it gets offset as a loss against any other income the investor makes. So if the investor's income is effectively $30,000 less, the tax saving is $10,000 at 33c in the dollar. Now here's the rub, the poor bugger still paid $30,000 in interest and only gets $10,000 back, so that investment still cost $20,0000.

Add the other expenses which again remember are still costing 2/3 with a 33c in the dollar tax rebate and the poor bugger is probably having to pay in about another $10,000 p.a.

That means early on most mum and pop investors are usually tipping cash into their rentals because typically rents don't cover those costs at all. People act like it is a crime that some have enough rentals that the costs of the rentals can offset other income and the investor may effectively pay no tax if it zeroes out. However, as I've shown above the money may not be paid to the Govt as tax but 2/3 of all costs are still being paid, including the one big one of local body tax namely rates, and then there is the interest costs.

Don't be under any illusion here the winner is always the bank which makes great profits whether you deposit money or borrow money.

As rentals mature, loans get paid down, interest diminishes, tax rebates diminish, but usually with say a 20 or 30 year mortgage the amount paid to a bank each month doesn't diminish. Sure the money starts going more to paying off the capital of the loan but the investor still has to find the money with less tax rebate and rent payments can't be raised just for that. It is not until the investor has finally paid off enough loans to reap some income or is in a position to cash up and sell that any money can be made.

Now none of this is different to any business that raises money through a loan to buy property, machinery or whatever. Most businesses with shareholders make sure they run with a debt level that allows them to claim optimum tax deductions and if profits rise they have a habit of doing share buybacks and raise their debt to do it. A bit like cashing up and selling a house for the shareholder but for the company it takes on more loans.

People begrudge the housing investor but as has been said above if investors aren't going to provide housing who will? A roof over a person's head surely is as much a basic need as food, yet no one seems to squeal about the tax arrangements of supermarkets, fast food joints like Maccas etc, but sure as hell they will be doing exactly the same with tax deduction of expenses.

People like Gareth Morgan keep spouting on about trying to get money out of housing and into investment in business (e.g. shares) which he keeps calling the productive sector. It wouldn't be a productive sector without any housing of employees which is no different than providing transport, telecomms or whatever. Housing is all part of the total requirements.

When I was young a rule of thumb was that assets like houses doubled in value every ten years and over the long run I doubt that has changed, but we have seen some spikes over the last 10 - 15 years. As anyone living in Wellington knows house values flattened from the time of the GFC around 2008 and in many cases went negative and the recent rise in values has gone nowhere near to correcting the trend. A house that could be bought in 2007 for say $500,000 was probably still able to be bought for that in 2015 and may have even dipped under $450,000 around 2010. Now it probably costs $750,000 and rising and people are squealing because it has gone up $250,000 in two years, but on the long run it has only gone up 50% in 10 years which is only about 4% p.a on the long run.

Yet well prior to the GFC we had the oil crises of 1974 and 1979 and for the next 25 years or so house price inflation was probably closer to 10% p.a and somehow no one seemed to blame investors then.

What is the difference now? The biggie in my view is how wage growth got screwed all in the name of productivity starting in the 1980's. People with less money is more the issue than houses inflating at traditional rates (albeit with up and down spikes) and that coupled with immigration so that people can bring foreign money in and outbid underpaid NZ workers on property.

[YellowDog]

There seems to be a lot of confusion here. The media knows nothing and reports anything to make readable stories only. Auckland prices from last September, to now, have dropped around 20% in some sectors. The Fletcher build rabbit hutches are still selling. There are many streets (formerly pasture) of non-English speakers, paying $1.2m per hutch. This is not the market most of us compete in.

The comments made by the politicians indicate that they certainly know nothing. Foreigners consider Kiwi housing to be very poor and inferior. Forcing them to live in higher standard new homes, is not a punshment. It is encouraging them - lol.

Lots of so called investors lose heaps of cash and many end up with divorces and serious debts, just because they believe what the idiot media and what its following sheep have been telling them.

The real estate industry is overflowing with prertentious scavengers whom would do and say anything to get your business. Most Real Estate agents force prices down and don't push them up, to the degree of bullying the vendor into accepting well below the market price. They want their commissions. Selling the property for $800k or $890k, makes bugger all difference to the real estate agent, so they screw the vendor with their persuasive pearls of wisdom, regardless as to wherther the price is reasonable, or not. They just want the sale at any price, as without it, they earn $0.00.

With no basic salary to fall back upon, a large percentage, of newly licensed agents, don't make it past their first year. This is a very poor reflection upon the state of the industry and why you have so many scavengers, desperate to make a sale at any cost.

Greedy sellers try to push the prices up. The media goes out of its way to force prices up. However the main guilty party is the councils, looking to increase their revenue. Push up the CV and you automatically push up the sale price.

There are also lots of great agents around, whom will be honest and play it with a straight bat for you. These usually aren't in their 20s or 30s and don't work for the big four 'List & Sell' agencies (some do though). Lots of dumb arse homeowners think they can do it better themselves. Most don't ever sell, as they are working with their own delusions and media hype. They usually eventually sell through an agent, for a considerably lower price. Many private sellers get seriously fucked over, either by a smarter buyer, or 5-10 years down the line, when they get their arses sued off them, as they don't have industry knowledge or know and understand the governing laws.

Oh and BTW: It's not just Auckland, which is now seriously lagging behind the huge (catching up), increases areas of many other areas

Yes, yes, of course I work in Real Estate and yes of course I consider it to be a shitty industry, containing many bad human beings. Being a responsible and caring individual, is quite a handicap - lol. But I'm not that self-riteous. I do have good and honest friends that I collaborate with, working at all of the big five agencies - lol.

[Ocean1]

The peasants are revolting.

The sheer number of media articles quoting politically vested interests pointing the finger at rich pricks for housing affordability is a farce.

Just to be perfectly clear: If you're getting a subsidy to live in someone else's house then chances are you're a far greater drain on taxpayers than anyone legally declining to pay tax on money they're not earning.

[Ocean1]

People like Gareth Morgan keep spouting on about trying to get money out of housing and into investment in business (e.g. shares) which he keeps calling the productive sector.

He's right, it is the productive sector.

And it's a damned fine idea to support it, it drives the whole economy.

And Kiwis used to do just that, until repeated market crashes and socialist meddling lost a lot of them their life's savings.

So now we're stuck with bricks and mortar, which may pay fuck all but tends not to sink with the loss of all hands.

[merv]

Yeah so true Ocean but point I was making is you still need houses for everyone to be part of the productive system as a total.

[Jin]

[Ocean1]

Yeah so true Ocean but point I was making is you still need houses for everyone to be part of the productive system as a total.

Yes. Insomuch as people living under bridges probably tend to be a bit unproductive.

But it's a chicken and egg thing, innit? Isn't low productivity likely to be a key contributor to not owning a house?

[Ocean1]

Graph thing

All very well, in a free market.

But it's not, you've got any amount of councils, regulatory authorities, materials supply monopolies and dodgy developers colluding to punch the fuck out of the ticket on the way past.

Which begs the question: what would the cost of supply be if it was a genuinely free market?

[TheDemonLord]

All very well, in a free market.

But it's not, you've got any amount of councils, regulatory authorities, materials supply monopolies and dodgy developers colluding to punch the fuck out of the ticket on the way past.

Which begs the question: what would the cost of supply be if it was a genuinely free market?

However, you need those checks and balances because there is not perfect information and not perfect understanding.

[Ocean1]

However, you need those checks and balances because there is not perfect information and not perfect understanding.

What checks and balances?

Council regulation? Who needs them? As the one paying for them I sure as fuck don't.

With what they're charging I could pay for a custom design with full engineering spec's and 10 private surveyors for far more in-depth inspections. They're a monopoly, you don't even have to make such comparisons, it's axiomatic: they're massively overcharging.