Property costs in NZ - the heart of evil

[HenryDorsetCase]

246 hectares for $6.54 million closeish to town is a good buy.

so divide that by 750 is 3280 potential home sites. Say 2500 by the time you allow for roads and parks and kiosks and streetlights and stuff.

Bargain: each site has an input cost of $2600. Say $70k/site for costs, another $20k/site for council, andother $25k/site for hold and interest costs, bit of the old GST, cost of sale, and hows your father: I reckon we could get them out the door at cost for $150k. If we want to make money (and if you've punted $6.5M we want to make some money, we want to make at LEAST $50k/site, but say we achieve $40k/site: BONZA! $100M profit.

Where do i sign? (I am Hugh Fletcher by the way, I can do this out of pocket lint and sofa change)

[flyingcrocodile46]

The governments approach to managing the leaky homes/buildings issue was a joke initself. The resulting changes to the Building Act and processes around it are off the mark. I don't think that the government should have nearly as much involvement as they do....they seem incapable of responding sensibly to any major drama and respond with the good ol' knee jerk reaction that according to the legislation fixes the problem, but in reality does little to actually address the root causes of the issue. Hence, in the case of leaky building...they are still being built, albeit on a much smaller scale. Buy a plaster house at your own peril! The government answer to a problem 9/10 is to regulate. regulate, regulate regulate. If we regulate against it, it wont happen. *TUI*

Actually it was more of a crime than a joke. The govt (standards Association NZ) removed the requirement for timber treatment to 90% of timber in houses. That factor alone (NZBC B2 compliance failure via decay damage) exacerbated the problem and repair cost by about 500%. Then the dirty fuckers wrote & passed the WHRS Act to allow the creatation and funding of a new litigation pathway so everyone could sue each other (instead of them) and at the same time dissolved the BIA (the govt dept that was then equivalent of todays DBH) and legislated to make it all but impossible to sue BRANZ (Govt dept that appraised all these failed cladding systems as ok) and SANZ. If that isn't the most gutless cunt act of the NZ govt ever, I don't know what is.

The money spent on lawyers and experts by all of the parties involved in the claims is estimated at totaling between 3 to 4 times the claim settlement value. So aside from being inherently unfair (hanging the wrong people) but the system is so fucked that is crippling the economy fourfold to fix it.

The leaky building debacle will cost the country more than the chch earthquakes. The resulting devaluation of our housing stock has helped considerably to drive down our country's international credit rating, so on top of everything else we have to pay extra for the money we borrow to fix it.

This is what happens when you have MMP and tinpot greeny parties that get to play kingmakers in exchange for environmentally friendly laws which allow removal of nasty timber preservatives.

Laws and regulations were unnecessarily and inappropriately changed purely because of politically driven decisions (trade offs).

We can thank the greenies for this horrific disaster. Fucking PC crap is gonna send us all bankrupt.

The Building Act, Regulations and Building Code are horrendously over complicated and are properly understood by approx less than 1% of people in the industry. You need a fucking degree just to understand how the rules are applied before you can even think about studying the rules themselves.

We need to re write our country's rules and regulations, not with new text, but by deleting 66% of it, so we have a half a chance of understanding them. Same goes with tricky dicky artistic wet dream house designs. Keep them simple and outlaw the use of 90% of the materials currently on the market. Go back to basics until we understand them. If you want unrestricted freedom of design perversion and forbidden list material use then build them without any reliance on compliance with the building code or compensation from anyone when it all turns to shit. Fair or unfair it would be a sight better than where we have gone and our flailing attempts to strive for perfection.

That would help drive both compliance and material costs down.

My 2 cents

[flyingcrocodile46]

The governments approach to managing the leaky homes/buildings issue was a joke in itself. The resulting changes to the Building Act and processes around it are off the mark. I don't think that the government should have nearly as much involvement as they do....they seem incapable of responding sensibly to any major drama and respond with the good ol' knee jerk reaction that according to the legislation fixes the problem, but in reality does little to actually address the root causes of the issue. Hence, in the case of leaky building...they are still being built, albeit on a much smaller scale. Buy a plaster house at your own peril! The government answer to a problem 9/10 is to regulate. regulate, regulate regulate. If we regulate against it, it wont happen. *TUI*

I kind of agree. the big thing is industry training. A couple of my clients are builders in their 50's: they started as apprentices and they did everything. started digging trenches for services, site setout, built the foundations and carried on from there. I am not that sure that the LBP regime will help that to be honest. Ze Chermans, when not invading other bits of Yrp, or propping up their economies*, sure know how to do trades training though.


*kind of the same effect, if not the same thing.

The LBP system will pay dividends eventually but expect 5 years to pass before the industry really takes it on board and starts to run with it. Another 5 years before really measureable results in service quality/delivery will be evident. Another 10 to 15 before the objective (including more effective self training and ITO tools/methodology) could be regarded as both achieved and self sustaining.

[HenryDorsetCase]

Here's some cheap sections:

http://www.trademe.co.nz/Browse/List...x?id=471346940


where the hell is Mura Para anyway? Nice place to live?

[Smifffy]

Maybe then they will realise that living like a rockstar on a hairdresser's or barista's wage while paying rent their whole working life wasn't such a great idea.

One other thing that the government may not have considered in allowing the price of homes to become so inflated:

We are becoming a nation of tenants. There have been a few newspaper stories on this already.
Typically when people retire, they have paid offf their houses, and can live relatively rent free, or with minimal payemnts to be mde on their house. What happnes when the current nation of tenants retire? Their annuation costs will be enormous in light of the current rental costs!! The government is going to end up having to support retired pensioners in state houses because private housing just wont be possible! Can they afford to put an entire generaton of pensioners in state houses? Or does the taxpayer have to pay for that too?

[avgas]

You can get a 10-15 year old waterfront 3-4 bedroom house with a big garage, large section, and possibly inground semi/indoor pool in Florida, USA for $150-200K......which is approx $250K NZ.

But some poor unlucky bastard probably paid $500-750K US for it 5-7 years ago.

The same reasons why property is so cheap in the US, but used to be so incredibly expensive(real estate price collapse of up to 75-80% in places in Florida, Nevada, California) is the massive over cheap credit bubble and credit collapse.

In many places in the US(differs state by state) there is no personal guarantee on the owner with the property....you can do what's called "jingle mail", mail the keys to the bank holding the mortgage and walk away if you're mortgage is much higher than the current value of your property.

NZ has been protected a bit by this because our lending didn't get AS silly(like 125% of overinflated home value and falsified income requirements) and every mortgage holder in NZ has a personal guarantee on the mortgage.

So we're still quite inflated property wise.

Still far better than China though......in some places in China a home(which is really just a poorly made shitbox apartment on long term LEASE) is going for 20-30 times the average annual wage for a professional.

China's got a big property bubble...a real BIG one that could make the US/UK property bubble that popped in recent years look like an appetizer waiting for the main course.

If/when China pops(and signs are showing of stress although China's command economy can try to stem it far faster than the US/UK) it's going to hurt down here....and even the lucky country will take a fair whack.

Friend whom I am going to visit lost big on her holiday home in Florida. But she don't really care too much as the smoking industry paid for it anyway - easy come easy go. Also she didn't have a mortgage to recover on it - so she keeps the holiday home, but its lost value.
I think it went from US$770 down to US$450.

As for the China thing. I currently have access to more property there than here. Apparently this just came into the family after they (govt) took an apartment off us in CBD. Looking forward to go over and get it all fitted out.
Not the prettiest design, but way bigger than what I can afford here.

[R-Soul]

You obviously know very little about the history of changes to the Building Act, the reasons behind the "leaky homes" "Crisis" or the drivers of house price inflation. Or indeed what insurance companies do and dont do, and how one gets from a bare patch of dirt to the 1/4 acre paradise. (actually these days 1/6th acre but whatever).

No, I know nothing about it - except that you now treat any non-weatherboard houses with suspicion.
I was not criticising it - I was making the point that other markets have managed to get houses made cheaply and efficiently to reduce demand and hence cheapen house prices. We should be able to as well.

[R-Soul]

You obviously know very little about the history of changes to the Building Act, the reasons behind the "leaky homes" "Crisis" or the drivers of house price inflation. Or indeed what insurance companies do and dont do, and how one gets from a bare patch of dirt to the 1/4 acre paradise. (actually these days 1/6th acre but whatever).

And as to what drives house price inflation - why, demand of course! Same old, same old rules of economics of course. Too many people want already built housesdue to reasona already mentioned (immigration, speculation, tax incentives etc), too difficult/expensive/whatever to develop new ones. Land not released for building therefor not available.

Net result is nobody building new ones, and everybdy buying old ones, with prices for crappy, shitholes with no trimming being 5 x wages.

[R-Soul]

the key difference in australia vs here is material cost. the reason for that is the cost of materials in NZ is controlled by a duopoly (like groceries). My brother can (and has) imported container loads of mdf and that formica faced MDF way cheaper than he could have bought it here, even with his buy price. (which is very good). How else do you get a house in Straya for way less than it costs here when the trades are getting paid way more? two reasons: land is cheaper, and materials are cheaper.

Don't get me started on subdivisions.

I agree- almost every bloody market has a duopoly beause teh market size cant really support much more than that, unless there are a lot of smaller, efficiently run operations competing with them. However, with no cash in hand, and no way to get it from investors -who are all illiquid and up the hilt in property - it will always stay like this unless government regulates pretty much fucking everyything - something I would not typically like to see.

[Andy67]

And as to what drives house price inflation - why, demand of course! Same old, same old rules of economics of course. Too many people want already built housesdue to reasona already mentioned (immigration, speculation, tax incentives etc), too difficult/expensive/whatever to develop new ones. Land not released for building therefor not available.

Net result is nobody building new ones, and everybdy buying old ones, with prices for crappy, shitholes with no trimming being 5 x wages.

I realise this is a rant and you are not alone. A lot of what you are saying s right and a lot is tenuous at best.

The world is in deep trouble, NZ is a good place to be. You have 2 choices. First is to accept that kiwis will always do what kiwis do in the face of slim investment options and hop on board if you ever want to get into your aspirational house, second is don't. Your call cause no one gives a shit f you do or don't. Awesome aye.

[R-Soul]

Maybe then they will realise that living like a rockstar on a hairdresser's or barista's wage while paying rent their whole working life wasn't such a great idea.

Spoken like someone who bought a cheap house way back when. After arriving here in 2006, with money that was worth toilet paper, my wife I have been trying hard to save a deposit for a house, with not much luck. Granted its a on a single salary, but then its a decent salary. No rock star living here. And the thing is that even if we did manage to save 20% on a $500k house ($100,000- yeah right with these rent prices!?) , I am not sure I actually would want to fork over that kind of money for that kind of craphole.

[R-Soul]

I realise this is a rant and you are not alone. A lot of what you are saying s right and a lot is tenuous at best.

The world is in deep trouble, NZ is a good place to be. You have 2 choices. First is to accept that kiwis will always do what kiwis do in the face of slim investment options and hop on board if you ever want to get into your aspirational house, second is don't. Your call cause no one gives a shit f you do or don't. Awesome aye.

My point is that I want to, but CANT. Damn few young and even middle aged people can right now - especially starting from scratch, orwithout a loan from daddy.

Sure, I get your point. Do or die cause nobody cares. I am saying that someone should start caring because pretty soon there will be signs at the airport saying "Please will the last person leaving switch off the lights".

[Andy67]

My point is that I want to, but CANT. Damn few young and even middle aged people can right now - especially starting from scratch, orwithout a loan from daddy.

Sure, I get your point. Do or die cause nobody cares. I am saying that someone should start caring because pretty soon there will be signs at the airport saying "Please will the last person leaving switch off the lights".

No one cares mate, you sound like youre in the same spot I was, cant wait till one of my kids says, why didn't you buy 6 of them dad when they were only a million each.....my first house was 280k I had 40k deposit, 5 years hard saving ... I shat bricks, was on little more than my deposit. Difference was I had no kids and a partner who earnt slightly less. In hind sight I should've bought as much property as I possibly could've over the next 10 years. Would've should've didn't. Mate what I can see is property flat lining for a bit. Don't worry about media hype and all those talking their book. If you want to get in, just do it even If it means living in Titirangi .... Up down now later......all relative.

[BMWST?]

Big diddums OP.

Why would any new landlord want to tie up half a million dollars in an asset that has no capital gain, that he has to place in the hands of others, that needs constant maintenance, that can be wrecked and all he can get back is 4 weeks rent, that he can not loss adjust against other income (which every other business can do), just to keep you in the luxury you think you are entitled to?

In the 80's landlords were gods, you could not get a flat for love nor money. The govt did not have the funds to keep up with the requirements for state housing sothey made the losses landlords had tax deductable, which attracted a lot of ma and par investing, the nett result was good properties became available for rent and rents were low.

Why would anybody want to tie up their funds in a low return high maintenance investement that pays them less than the current morgage rate? I would suggest you are going to see rentals going up another 10-25% in price over the next few years and the avalibility really going down.

there is one BIG difference though.The underlying asset actually appreciates...rare indeed

[Smifffy]

Spoken like someone who bought a cheap house way back when. After arriving here in 2006, with money that was worth toilet paper, my wife I have been trying hard to save a deposit for a house, with not much luck. Granted its a on a single salary, but then its a decent salary. No rock star living here. And the thing is that even if we did manage to save 20% on a $500k house ($100,000- yeah right with these rent prices!?) , I am not sure I actually would want to fork over that kind of money for that kind of craphole.

There was a never a cheap house way back when. I bought my first house in '95 and it was 4-5 x wages then, it was a crap hole, and I spent at least another year's worth of wages doing things to it that needed doing. It was about the cheapest house on the market back then. It was vacant possession when I bought it. When the land agent showed it to me she said "I know it looks like crap now that it's empty, but it will look a lot different with your furniture in it. I replied "Actually no it won't" I thought I was going to be sitting on beer crates, my 'furniture consisted of an entertainment unit a tv and a stereo in my bedroom. Luckily neighbours of my parents were throwing out two armchairs so I got them, and a dining table and chairs for $125 from the 2nd hand dealer. I replaced the dining table and chairs about 2 years ago. Most of the rest of the stuff was replaced well before then.

Maybe it would have helped if you had researched the house prices and living costs when you made your choice in 2006?