NZ houses among least affordable

[The Stranger:Me]

A survey author blamed tight land supply for New Zealand's housing squeeze, saying excessive land use regulation had strangled subdivision expansion and artificially pushed up prices.

My oldest brother was around the other day, and being the good capitalist that he is has decided to chop his section in half and sell one half.

Seeing the prices of sections lately I am thinking he will make a fair bit of money so ask him about the other side of the equasion. Costs. He advised it would cost about $55,000 to make the cut. What??? He recons the council gets about $35,000 $38,000 to rubber stamp the deal.

And you wonder why sections are so expensive.

[davereid]

Its actually speculators doing it, not investors.

In fact the traditional equation of making sure the rental income covers the cost of the loan plus outgoings has been long forgotten.

People are now investing in property because of the (untaxed) capital gains.

Trouble is, it's artificial growth - the contributing factors being a barrier to new land being cut up (aka resource Management Act), wealthy population increase (often due to immigration, but now slowing), the lack of a tax on capital gain, and the number of new speculative investors entering the market.

Its self destructive - lets say for example that growth starts to slow. Then the returns from capital gain slow. So its less attractive to invest in. So there are less speculators. hmm, the bubble bursts.

Realistically, it can't be sustained. The trick is to guess exactly when it will stop. I guessed 2 years ago and got out of property and got it very very wrong.

but, you pay your money and take your chances.

[iwilde]

Its actually speculators doing it, not investors.

In fact the traditional equation of making sure the rental income covers the cost of the loan plus outgoings has been long forgotten.

People are now investing in property because of the (untaxed) capital gains.

Trouble is, it's artificial growth - the contributing factors being a barrier to new land being cut up (aka resource Management Act), wealthy population increase (often due to immigration, but now slowing), the lack of a tax on capital gain, and the number of new speculative investors entering the market.

Its self destructive - lets say for example that growth starts to slow. Then the returns from capital gain slow. So its less attractive to invest in. So there are less speculators. hmm, the bubble bursts.

Realistically, it can't be sustained. The trick is to guess exactly when it will stop. I guessed 2 years ago and got out of property and got it very very wrong.

but, you pay your money and take your chances.

I thought the same thing, but diversified by adding in a spec home here and their to create some cash flow to get my rental balance in a better position in case of the bubble bursting (when?). I'm glad that I kept them now as their capital gains have made up for any stress I've had!

[The Stranger:Me]

It can, and maybe will. When investors are greedy and buy sayu 10 house at near peak prices, everything is a very tight margin and it only takes one factor to upset the balance and cause an investor to sell quickly at a bargin price. Low influx of immigrants, interest rates have risen when their interest only morgages break, a couple of tenants kicking in the walls and taking off without paying the rent...etc...Can happen and if it does the major cause of it will be greed.

Sure it has happened in the past, however, that doesn't really relate to the scenario I presented, or it would appear MisterD was aluding to.

What you describe is something quite different and could happen at any time, not just when the baby boomers want to liquidate.

As well as that many factors have changed. The banks, having been burnt before facing the situation where the very mortgagee sales they were using to recover their debt were forcing house prices down and creating more mortgee sales and significant losses for those banks have tightened there criteria in this respect. Some simply will not do it, or may require them to put in a lot more of their own money than in the past when a person has too many rentals.

Plus people are a lot more aware of this issue now (having experienced it in the not too distant past) and are less likely to put themselves in that situation.

[The Stranger:Me]

By Anne Gibson
The third Demographia International Housing Affordability Survey released today showed it takes Aucklanders 6.9 years of full annual earnings of $57,500 to afford the $395,000 median house price.

Wellington fared better in place 47 with its residents taking 5.4 years (earning $61,400 annually) to afford the $331,000 median.

Ok any guesses as to why the smaller of these cities has the larger incomes, against the trend?

I wonder if some people are being grossly over paid and skewing the result?

[jrandom]

Ok ay guesses as to why the smaller of these cities has the larger incomes, against the trend?

I wonder if some people are being grossly over paid and skewing the result?

Nup.

It's because Wellington, in comparison to Auckland, has very little industry employing large numbers of low-wage workers. Therefore the average goes up.

[Swoop]

He recons the council gets about $35,000 $38,000 to rubber stamp the deal.

And you wonder why sections are so expensive.

Possibly to pay for the mistakes of others... See post #21...

[iwilde]

Sure it has happened in the past, however, that doesn't really relate to the scenario I presented, or it would appear MisterD was aluding to.

What you describe is something quite different and could happen at any time, not just when the baby boomers want to liquidate.

As well as that many factors have changed. The banks, having been burnt before facing the situation where the very mortgagee sales they were using to recover their debt were forcing house prices down and creating more mortgee sales and significant losses for those banks have tightened there criteria in this respect. Some simply will not do it, or may require them to put in a lot more of their own money than in the past when a person has too many rentals.

Plus people are a lot more aware of this issue now (having experienced it in the not too distant past) and are less likely to put themselves in that situation.

I can't see every baby boomer selling all their assets at once. I can see a few of them selling one or two to free up some cash for enjoyment or putting other rentals to a positive cash flow. With housing the way it is I can see a lot of baby boomers putting rentals in trusts for their children or grandchildren as a way to future proof inheritance. I would, or should I say in 30yrs I will. I also can't see that the banks will cause a drop with morgagee sales as they are lending 100% and have far to much invested in the property market that way to create a fall, they're banking on captial gain for their slice of the pie.

[Brian d marge]

My daughter and her partner shifted into their new house less than 6 months ago....they have two adjoining sections and built on one,their mortgage is about $110,000 and managable on a single income,the new house was valued at $165,000 when it was built,the new garage was finished on thursday and now there is enough equity to start building on the other section...if they want to.Huntly is an hour from Auckland and half and hour from Hamilton....they consider they made a damn good choice to come down here,no way would they have their own home in Auckland.

We had a look, but the thing was work, I know an hour isnt a bad commute ,,,but thats a few KM in NZ, there are a few places still cheap ,,the problem is work. not a lot of it in them places

Stephen

[scracha]

I wonder if some people are being grossly over paid and skewing the result?

If I remember maffs correctly then median is the middle value.

e.g.
NAME Salary
Dickie Branson 10,000,000
Lawyer Skum 200,000
Average Joe 55,000
Average Joe 53,000
Average Joe 35,000
Low Earner 13,000

Average (or mean) = 1,726,000
Median = 54,000

[The_Dover]

It's our fuckin parents generation that are fucking it up for young people with their greed and retarded "let every fuckin rich gook under the sun into NZ so we can cream their cash off them" policy.

Investment properties, over inflated market due to (parasitic education hunting) immigrants, lack of capital gains tax. It's totally fucked.

Even on two incomes we're struggling to buy a shit hole in a p-lab/ tinnie house infested coon ridden ghetto. Fuck paying more in a mortgage to live next door to a bunch of fucking porch monkeys that'll rob us as soon as we go to work than we do in rent for a fucking choice house.

We don't want or need a palace and why the fuck should I have to pay more for travel (gas/maintenance/tyres etc) than I would for accomodation??

I hope all the arseholes that have shaped this housing market die a horrible painful death and that the short sighted fucked up politicians suffer double.

I'll get where I want to go, but I'll be a bitter cynical cunt in the process.

And don't give me any of that young people, flash car, flash bike, HP bullshit you self righteous old wankers. Given my time again I'd have told the old man to stick his uni education up his arse and been a fuckin tradesman. (I would at least be able to justify my penchant for the tradesmans entrance then)

Still, we'll all be laughing when we buy all you old cunts houses and then watch the niggers terrorising you in your retirement villages, you can fuckin defend yourselfs.

[Skyryder]

Years ago, when we HAD a Socialist government , this problem was well sorted. We did indeed have a capital gains tax, and we had something called the State Advances Corporation, that financed people into their first home.At nominal interest rates. We also had inflation proofed savings bonds, so that the value of your deposit wasn't eroded while you were saving it, tax deductions for interest on home loan accounts ,and a lot of other good ideas, that in total meant that NZ had the highest home ownership ratio in the world. And no homeless people, and noone living in garages.

Then a right wing capitalist ideologue called Roger Douglas destroyed the whole apparatus in the name of "the market" , and the only people who benefited were the speculators and banks.

My answer is simple and effective. Nationalise the banks, impose a strict capital gains tax and death duties, and return State housing to its original purpose. All can be done within a few weeks, all it needs is political will (or a brick wall and a few bullets)

EDIT: And as Mr Finn observes, back then we had Building Codes , and council inspectors who were proper tradesmen and knew what they were doing. So the houses were good solid ones that have invariably lasted half a century alread, not the present leaky, jerry built ramshackle dog kennels we have today. Of course we didn't have property speculators making millions of dollars erecting the dog kennels, either.

What that man said. We are in the process of helping our daughter get her first home. She lives in Auckland. Without our help they would be paying land lords for the rest of their lives.


Skyryder

[Guitana]

[QUOTE=The_Dover;

I hope all the arseholes that have shaped this housing market die a horrible painful death and that the short sighted fucked up politicians suffer double.

I'll get where I want to go, but I'll be a bitter cynical cunt in the process.

And don't give me any of that young people, flash car, flash bike, HP bullshit you self righteous old wankers. Given my time again I'd have told the old man to stick his uni education up his arse and been a fuckin tradesman. (I would at least be able to justify my penchant for the tradesmans entrance then)

Still, we'll all be laughing when we buy all you old cunts houses and then watch the niggers terrorising you in your retirement villages, you can fuckin defend yourselfs.[/QUOTE]

Yeah and those parasitic realestate fuckers grind my nuts when I sold my house down south privately the fuckers kept ringing me when they saw the add in the local rag.I told them to fuck off but they kept saying it would be too hard to sell privately well fuck me if it didnt sell that weekend and for twice what we paid for it> These pricks are lower than low and are partly responsible for driving the market up!! Scum sucking bottom feeders when you work out the fees they charge to sell the house it equates to over $800 an hour! I hope they all get the clap and their dicks fall off!! Ill stay renting till the market collapses under its own weight and then clean up!!!!!

[Timber020]

One of my older clients was selling her house, she and her late husband had built the house, raised her kids and grandkids in the place and wanted to sell it to "a nice young family."

I think she had 20 people inquire. out of that only 2 wanted to live in the place themselves. The rest were people trying to get in on the capital gain game. In the first round of tenders the first two were knocked out. Took 5 rounds of the so called tender process to get a winner.

We need a capital gains tax, as for making land more easily available, you should see how easily the big developers are able to bribe there way into property that nobody else could legally aquire.

[Lou Girardin]

Rising house prices, I just love it.
We've had around 200% return on our investment in 5 years.
Tax free!
I wonder if Alan Bollard can show me a NZ company share that has done that.