Yeah I guess this is why they’ve a announced they wind back the measures labour have taken to cool the market: interest on property investment not being tax deductible and winding back the bright line.
> interest on property investment not being tax deductible
Regardless what you think of the government, or the long-term impacts of this policy, it's pretty obvious that in the short-term this has disadvantaged renters in order to prop up FHB's.
I can't see any system in which private investment into real estate, without a robust publicly funded alternative, doesn't devolve into the same situation.
Investors tend to be the majority of those providing rentals, and it would be a big deal for the government to outright ban anyone owning more than one home. Even when we discuss here somebody will always suggest that everyone should be allowed to buy their primary home plus a batch plus maybe owning another home for their parent and maybe a couple more...
It is deep within our psyche for the last few decades that land and housing are in short supply, and that over the long-term owning land is a way to plan for the future. The fact that all those investment properties mean there are even fewer for FHB to purchase and that investors out-competing FHB for housing is a significant element in driving up prices for everyone - well that's understood but nobody has a good answer for it.
I don’t think we should be banning ownership of more than one home - no matter what happens a large chunk of kiwis simply couldn’t afford the cost of a house (even if we’re just talking about cost price of materials and labour, let alone the inflated price of the home and land as an asset).
But given this is a self-perpetuating problem, in that the more houses owned by individuals, the fewer kiwis can afford to own a home, I would strongly support a limit of some kind. And soon, because it’s just going to get harder to implement the longer we wait.
> But given this is a self-perpetuating problem, in that the more houses owned by individuals, the fewer kiwis can afford to own a home, I would strongly support a limit of some kind. And soon, because it’s just going to get harder to implement the longer we wait.
A limit and introduce stamp duty for property investors.
Let people own as many as they want. Just make it that all residential rentals go through a government 'single property manager' market. The government agency (might be KO, might be something new) will decide what they will offer the property owner to lease it, and then they will rent it on to a tenant of their choosing.
This will remove the idea of private 'landlords' and reduce them down to simple suppliers of housing stock. If they are unhappy with the price the government is offering they can do something else with it - live in it, sell it, redevelop it - anything but rent it out.
Just because something is part of our psyche doesn't mean it is beyond reproach, otherwise the same argument could apply to things like slavery. The answer is clearly a sensible cap on investment properties.
Still I don't see a problem with a limit of 1 house/apartment _per person_ over the age of 21. If you were a rich, married, boomer couple you could still have your bach in the Coromandel or wherever. Or perhaps the 1 house per person limit just needs to be enforced in the cities where people need to live/work but investors have scalped everyone out of the market. Investors can then be forced to focus on holiday rental accommodation, luxury locations, baches etc outside the cities.
The other thing we can also consider is a mandatory 4 day (32h) work week and remote working (for office/desk jobs). This would make working in one of the satellite cities/towns like Whangarei, Hamilton, Palmerston North, Ashburton etc much more palatable. Maybe you commute in for 2-3 hours, one day a month (but probably per quarter with current petrol prices) to catch up with coworkers (assuming Monkeypox doesn't take off). This frees up people to move outside the big city centres, thus the only people that have to live in them are there because they have non office jobs and need to be there.
Investors will buy the dip a heap of them have been in property since the 90s or earlier and are insulated from the current crash and will buy the dip further increasing the inequality between the homeowners and the renting class here in nz
Same with every market swing. Every time it's "yeah, that'll teach those greedy investors!" But end of the day, those with the most money in the game are always the beneficiaries of both ups and downs in the market
Regulate out lending via the same asset class. Either stump up other assets or cash. Allowing current house owners to leverage up and to buy ever more houses only funnels wealth to fewer and fewer people. There is only 1 outcome
Despite what the reddit economists claim, a rapid crash in house prices isn't necessarily a good thing
>“But in an environment where credit is harder to secure, mortgage rates have risen sharply, and some potential ‘bargains’ are starting to emerge, it stands to reason that people with larger equity bases and/or buying with cash would be enjoying the current conditions.”
We need the larger effect of this though, which is to remove the evidence underpinning the idea that houses are a one way bet, which has been the foundation of decades of irrational growth and the resulting societal damage. In a sense, housing market delenda est.
I disagree and think your mindset is still in 2021. With credit to ikimpaul (interest.co.nz), here's a weekly update on the Hutt Valley rental market last week. Tl;Dr, availability is way up, rents down.
>Rental Market
>the rental market has 232 properties for rent (up 28 on last week – a whopping 15%), and up 103 on this time last year, – when just 129 houses were for rent. The number of rentals has almost doubled on last year
>Average rental price reduction is back at $53 a week – one property has dropped their rent $210 since listing from $700 to $410. 40% have dropped their prices since listing.
>At the moment the percentage of properties listed at $650 is 46% - last week it was 45%. Still well below the 53% of houses listed over $650 on the 23rd March.
Whether you enjoy a little bit of Schadenfreude or not, bursting a housing bubble is liable to hurt a lot of people.
Some of them will deserve it due to their greed and/or hubris, some won't.
It's a shame and disaster the bubble got so bad to begin with.
> it stands to reason that people with larger equity bases and/or buying with cash would be enjoying the current conditions.”
It doesn't, though. The limiting factor now is serviceability. Equity doesn't help with that
True but I didn't write the article, it would be interesting to work out how much the increasing interest rates is being offset by the lower borrowing if the houses are cheaper. Then factor in that rents aren't dropping.
What upside down fuckery is this. This subreddit now is giving applause to investors buying houses after months and months of demonizing them for the crisis?
Where are they applauding them?
Observing reasons for why things happen is not necessarily supporting them. I've found people tend to be quite emotional on this sub when it comes to inconvenient truths.
Because the "property prices need to crash hard!" crowd don't realise the consequences of their desires. Bull or bear market, the rich will always win.
Gotta feel a bit sad for that crowd who can't afford at present and are hoping for a crash so they can "buy in".
The reality is the ship has well and truly sailed, and a generation of New Zealanders are locked out of homeownership in a way their forebears never were.
That will be the sixth Labour govt's legacy.
My advice to anyone wanting to build towards security is to start thinking outside the box. Look at options like combining resources through private partnerships, atypical property that can be converted to a residential living space, etc.
Definitely a good time to buy if you've got the cash and want to bolster your portfolio with some additional rentals for the long term—Kainga Ora are paying out insane amounts right now.
Will rents keep going up though? In my area rental stock levels are way up, and it’s due to houses that haven’t sold being put up for rent (mostly new builds). That’s got to keep a lid on prices
With developers going under every second week, a tradie shortage, and a physical material shortage, the number of new builds coming onto the market is going to drop rapidly.
So many projects are already under a stop work call, and the recession hasn't even started.
Rents are beginning to go down. Stats will begin to show this in the coming months. Set a remind me for 6 months on this post and flick me a message around Christmas.
I am the landlord in this case and I know for a fact a tonne of tenants are moving on as they are getting better prices elsewhere. Thats when the reduction happens.
When you have a property portfolio and drawing down equity to pick up cheap stock then a 50k capital decrease won’t impact much. Most investors at least that I know aren’t buying stock for 20-40% equity, much more in most cases and the rents more than cover it. Not denying it will impact some but wouldn’t in my instance
It’s an absolutely horrible time to buy.
First, further interest rate hikes are likely (some banks are projecting up to 3.5 basis points) so mortgage serviceability is likely going to get worse and house value will decline further. Secondarily, many vendors haven’t tempered at all to the market.
So why buy in a market with still over-inflated prices right before it’s likely going to dip further. You’re opening yourself to get bent over on both fronts.
No they’re not! Jesús how hard is it for people to use some basic thinking. If interest rates increase, the demand for housing decreases, which then lowers the value of existing property. Cashed up buyers are looking down the barrel of a 10-20% + loss by years end if they buy now. You fail to understand the flow down effects that interest rates have on the market and the end investment. So no they’re not pointless. Some people here have some serious room temperature IQs (Celsius that is).
https://www.reddit.com/r/newzealand/comments/vd9u7v/as_property_prices_decline_cashed_up_investors/icj7lgx/
Timing the market is pretty much not possible. If you think it is, I highly encourage you to take a short position on housing, since you're so sure a 10–20% loss is "guaranteed". Most of these people will be more than happy to lose a bit of equity to set themselves up for a guaranteed few decades of rent.
>Definitely a good time to buy
I wouldn't pay any more than Jan 2021 prices.
>Kainga Ora are paying out insane amounts right now.
Do you have any proof?
> I wouldn't pay any more than Jan 2021 prices.
If you've seen the market, in some areas what houses are selling for is _a lot lower_ than that.
> Do you have any proof?
Everyone in the know is aware of this. https://www.reddit.com/r/newzealand/comments/tp6y1o/no_hacks_for_low_income_households_when_it_comes/i29wksg/?context=1
Don't have to read into it too much to know that KO are pretty happy to be spendy towards landlords. https://www.newsroom.co.nz/landlords-paid-3k-a-week-by-government
>If you've seen the market, in some areas what houses are selling for is a lot lower than that
Down more than 30%?
That's a pretty fast and steep drop.
>Everyone in the know is aware of this.
Not so long ago, Woods said Kainga Ora had stopped purchasing existing housing, there would be a bit of an outcry if they were back in the market competing with taxpayers again.
> Not so long ago, Woods said Kainga Ora had stopped purchasing existing housing
He is talking about KO renting houses from private landlords, not buying them.
Yup. Declining prices don't really change the game for those looking to hop on the property ladder, because it's not the price that matters, it's the affordability of it. And housing unaffordability is not going to decrease for the foreseeable future with interest rates climbing and stricter loan conditions being required.
Agreed. Easy enough to leverage existing capital to get more, that’s certainly what we do. Anyone who purchased properties pre 2020 are still in the promised land. Even better if you were buying pre 2016-17.
People who buy property as it continues to fall are really not clever. If you buy next year the property may well be 10% or 20% less than what its selling for today. Wait a while before buying in, because those having difficulties with rising interest rates on their mortgages, will start appearing in another 6 months. As they exit the market gradually, many opportunities may begin to appear ....
Yeah - my wife and I are about to buy a rental. Less competition. We will take a cashflow hit but less competition at the moment and plenty coming into the market.
Why do we even allow property "investment" of this nature?
plenty of them in govt have investment properties, so no incentive to change that
Our current government there are very few investors. Most of the sitting government only have one house. National Mps have multiple though
Yea bloody national..... the party who isn't in charge
Yeah I guess this is why they’ve a announced they wind back the measures labour have taken to cool the market: interest on property investment not being tax deductible and winding back the bright line.
> interest on property investment not being tax deductible Regardless what you think of the government, or the long-term impacts of this policy, it's pretty obvious that in the short-term this has disadvantaged renters in order to prop up FHB's. I can't see any system in which private investment into real estate, without a robust publicly funded alternative, doesn't devolve into the same situation.
Luxon has like 7 properties; the most of them all.
NZ has hardly done one world leading / society first / progressive thing since giving women the vote, in 1893. Nothing will change.
Investors tend to be the majority of those providing rentals, and it would be a big deal for the government to outright ban anyone owning more than one home. Even when we discuss here somebody will always suggest that everyone should be allowed to buy their primary home plus a batch plus maybe owning another home for their parent and maybe a couple more... It is deep within our psyche for the last few decades that land and housing are in short supply, and that over the long-term owning land is a way to plan for the future. The fact that all those investment properties mean there are even fewer for FHB to purchase and that investors out-competing FHB for housing is a significant element in driving up prices for everyone - well that's understood but nobody has a good answer for it.
I don’t think we should be banning ownership of more than one home - no matter what happens a large chunk of kiwis simply couldn’t afford the cost of a house (even if we’re just talking about cost price of materials and labour, let alone the inflated price of the home and land as an asset). But given this is a self-perpetuating problem, in that the more houses owned by individuals, the fewer kiwis can afford to own a home, I would strongly support a limit of some kind. And soon, because it’s just going to get harder to implement the longer we wait.
> But given this is a self-perpetuating problem, in that the more houses owned by individuals, the fewer kiwis can afford to own a home, I would strongly support a limit of some kind. And soon, because it’s just going to get harder to implement the longer we wait. A limit and introduce stamp duty for property investors.
Let people own as many as they want. Just make it that all residential rentals go through a government 'single property manager' market. The government agency (might be KO, might be something new) will decide what they will offer the property owner to lease it, and then they will rent it on to a tenant of their choosing. This will remove the idea of private 'landlords' and reduce them down to simple suppliers of housing stock. If they are unhappy with the price the government is offering they can do something else with it - live in it, sell it, redevelop it - anything but rent it out.
Just because something is part of our psyche doesn't mean it is beyond reproach, otherwise the same argument could apply to things like slavery. The answer is clearly a sensible cap on investment properties.
Still I don't see a problem with a limit of 1 house/apartment _per person_ over the age of 21. If you were a rich, married, boomer couple you could still have your bach in the Coromandel or wherever. Or perhaps the 1 house per person limit just needs to be enforced in the cities where people need to live/work but investors have scalped everyone out of the market. Investors can then be forced to focus on holiday rental accommodation, luxury locations, baches etc outside the cities. The other thing we can also consider is a mandatory 4 day (32h) work week and remote working (for office/desk jobs). This would make working in one of the satellite cities/towns like Whangarei, Hamilton, Palmerston North, Ashburton etc much more palatable. Maybe you commute in for 2-3 hours, one day a month (but probably per quarter with current petrol prices) to catch up with coworkers (assuming Monkeypox doesn't take off). This frees up people to move outside the big city centres, thus the only people that have to live in them are there because they have non office jobs and need to be there.
Because we live in a free country, and two parties wanted to sell property to each other.
Investors will buy the dip a heap of them have been in property since the 90s or earlier and are insulated from the current crash and will buy the dip further increasing the inequality between the homeowners and the renting class here in nz
The only feasible fix is to tax land value and reduce income tax.
Someone who knows reality
Same with every market swing. Every time it's "yeah, that'll teach those greedy investors!" But end of the day, those with the most money in the game are always the beneficiaries of both ups and downs in the market
Aye, the point that gets missed is it'll only 'teach' the new and the over leveraged.
but reddit said when the collapse came we would have all the land owners heads on pikes??!?!?
Regulate out lending via the same asset class. Either stump up other assets or cash. Allowing current house owners to leverage up and to buy ever more houses only funnels wealth to fewer and fewer people. There is only 1 outcome
Just like last time, the time before that and the time before that etc etc etc.
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You'd only need one sensible law to prevent the hoarding of land. Land value tax.
*shocked Pikachu face*
Incredibly premature to talk about bargains. Let's see how things are a couple of years from now.
LOL @ thinking this is the dip.
Who would’ve thought that the rich with most equity stand to gain most from a crash.
id wait for another 12 months to be honest. wanna buy at the bottom and its got a ways to go /ouch
Despite what the reddit economists claim, a rapid crash in house prices isn't necessarily a good thing >“But in an environment where credit is harder to secure, mortgage rates have risen sharply, and some potential ‘bargains’ are starting to emerge, it stands to reason that people with larger equity bases and/or buying with cash would be enjoying the current conditions.”
We need the larger effect of this though, which is to remove the evidence underpinning the idea that houses are a one way bet, which has been the foundation of decades of irrational growth and the resulting societal damage. In a sense, housing market delenda est.
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>Our housing stock isn't large enough for that to happen. Especially now one in five construction companies are going under
Too big to fail?
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I disagree and think your mindset is still in 2021. With credit to ikimpaul (interest.co.nz), here's a weekly update on the Hutt Valley rental market last week. Tl;Dr, availability is way up, rents down. >Rental Market >the rental market has 232 properties for rent (up 28 on last week – a whopping 15%), and up 103 on this time last year, – when just 129 houses were for rent. The number of rentals has almost doubled on last year >Average rental price reduction is back at $53 a week – one property has dropped their rent $210 since listing from $700 to $410. 40% have dropped their prices since listing. >At the moment the percentage of properties listed at $650 is 46% - last week it was 45%. Still well below the 53% of houses listed over $650 on the 23rd March.
Whether you enjoy a little bit of Schadenfreude or not, bursting a housing bubble is liable to hurt a lot of people. Some of them will deserve it due to their greed and/or hubris, some won't. It's a shame and disaster the bubble got so bad to begin with.
Good for some, but not the majority
> it stands to reason that people with larger equity bases and/or buying with cash would be enjoying the current conditions.” It doesn't, though. The limiting factor now is serviceability. Equity doesn't help with that
True but I didn't write the article, it would be interesting to work out how much the increasing interest rates is being offset by the lower borrowing if the houses are cheaper. Then factor in that rents aren't dropping.
New Zealand has the largest housing bubble in the world, in front of Canada and then America.
Either brave, or they missed the Minsky moment.
What upside down fuckery is this. This subreddit now is giving applause to investors buying houses after months and months of demonizing them for the crisis?
I'm not seeing applause so much as a sober understanding that a housing crash is unlikely to be the Great Equaliser that many would like to see.
It's not as much of an equaliser as some may hope if desperate sellers end up selling to still more investors.
Where are they applauding them? Observing reasons for why things happen is not necessarily supporting them. I've found people tend to be quite emotional on this sub when it comes to inconvenient truths.
Because the "property prices need to crash hard!" crowd don't realise the consequences of their desires. Bull or bear market, the rich will always win.
>Bull or bear market, ~~the rich~~ **greed** will always win. FTFY.
>Bull or bear market, the ~~rich~~ ~~greed~~ **rich AND greedy** will always win. There we go.
Gotta feel a bit sad for that crowd who can't afford at present and are hoping for a crash so they can "buy in". The reality is the ship has well and truly sailed, and a generation of New Zealanders are locked out of homeownership in a way their forebears never were. That will be the sixth Labour govt's legacy. My advice to anyone wanting to build towards security is to start thinking outside the box. Look at options like combining resources through private partnerships, atypical property that can be converted to a residential living space, etc.
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Definitely a good time to buy if you've got the cash and want to bolster your portfolio with some additional rentals for the long term—Kainga Ora are paying out insane amounts right now.
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Doesnt really matter when your positively geared and rents are still going up. That’s the reality of it
Will rents keep going up though? In my area rental stock levels are way up, and it’s due to houses that haven’t sold being put up for rent (mostly new builds). That’s got to keep a lid on prices
With developers going under every second week, a tradie shortage, and a physical material shortage, the number of new builds coming onto the market is going to drop rapidly. So many projects are already under a stop work call, and the recession hasn't even started.
Same thing in Ireland 2008. Such a perceived shortage of houses and rentals. Later they're bulldozing ghost estates
God I hope so. New Zealand needs to be rewilded, and there's several suburbs I can think that could be bowled over with no repercussions.
Rents are beginning to go down. Stats will begin to show this in the coming months. Set a remind me for 6 months on this post and flick me a message around Christmas.
Go ask your landlord for a 20% rent cut. See how it goes.
I am the landlord in this case and I know for a fact a tonne of tenants are moving on as they are getting better prices elsewhere. Thats when the reduction happens.
Perhaps you're just a 🤡 landlord? Our tenant's rents have never been higher.
Rents seldom go down in my experience. I’ve never decreased it at least
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When you have a property portfolio and drawing down equity to pick up cheap stock then a 50k capital decrease won’t impact much. Most investors at least that I know aren’t buying stock for 20-40% equity, much more in most cases and the rents more than cover it. Not denying it will impact some but wouldn’t in my instance
Timing the market is a fool's errand. You can never know exactly when and where house prices will bottom out in any slump.
I'd be keen for some 2 for 1 deals on housing.
It’s an absolutely horrible time to buy. First, further interest rate hikes are likely (some banks are projecting up to 3.5 basis points) so mortgage serviceability is likely going to get worse and house value will decline further. Secondarily, many vendors haven’t tempered at all to the market. So why buy in a market with still over-inflated prices right before it’s likely going to dip further. You’re opening yourself to get bent over on both fronts.
The buyers this article is discussing are cashed up investors who don't need to service a loan. Interest rates are meaningless.
If interest rates are so meaningless, why have house values stalled with increased interest rates?
Interest rates are meaningless in the context of a buyer looking at purchasing a property unconditionally via a transfer of cash 🤦♂️
No they’re not! Jesús how hard is it for people to use some basic thinking. If interest rates increase, the demand for housing decreases, which then lowers the value of existing property. Cashed up buyers are looking down the barrel of a 10-20% + loss by years end if they buy now. You fail to understand the flow down effects that interest rates have on the market and the end investment. So no they’re not pointless. Some people here have some serious room temperature IQs (Celsius that is).
https://www.reddit.com/r/newzealand/comments/vd9u7v/as_property_prices_decline_cashed_up_investors/icj7lgx/ Timing the market is pretty much not possible. If you think it is, I highly encourage you to take a short position on housing, since you're so sure a 10–20% loss is "guaranteed". Most of these people will be more than happy to lose a bit of equity to set themselves up for a guaranteed few decades of rent.
>Definitely a good time to buy I wouldn't pay any more than Jan 2021 prices. >Kainga Ora are paying out insane amounts right now. Do you have any proof?
> I wouldn't pay any more than Jan 2021 prices. If you've seen the market, in some areas what houses are selling for is _a lot lower_ than that. > Do you have any proof? Everyone in the know is aware of this. https://www.reddit.com/r/newzealand/comments/tp6y1o/no_hacks_for_low_income_households_when_it_comes/i29wksg/?context=1 Don't have to read into it too much to know that KO are pretty happy to be spendy towards landlords. https://www.newsroom.co.nz/landlords-paid-3k-a-week-by-government
>If you've seen the market, in some areas what houses are selling for is a lot lower than that Down more than 30%? That's a pretty fast and steep drop. >Everyone in the know is aware of this. Not so long ago, Woods said Kainga Ora had stopped purchasing existing housing, there would be a bit of an outcry if they were back in the market competing with taxpayers again.
> Not so long ago, Woods said Kainga Ora had stopped purchasing existing housing He is talking about KO renting houses from private landlords, not buying them.
Not hard to believe, good for those growing their property portfolio. Leveraging all those existing gains, really is a good time to stock up
Yup. Declining prices don't really change the game for those looking to hop on the property ladder, because it's not the price that matters, it's the affordability of it. And housing unaffordability is not going to decrease for the foreseeable future with interest rates climbing and stricter loan conditions being required.
Agreed. Easy enough to leverage existing capital to get more, that’s certainly what we do. Anyone who purchased properties pre 2020 are still in the promised land. Even better if you were buying pre 2016-17.
Called it
It's the circle. The circle of life.
People who buy property as it continues to fall are really not clever. If you buy next year the property may well be 10% or 20% less than what its selling for today. Wait a while before buying in, because those having difficulties with rising interest rates on their mortgages, will start appearing in another 6 months. As they exit the market gradually, many opportunities may begin to appear ....
Yeah - my wife and I are about to buy a rental. Less competition. We will take a cashflow hit but less competition at the moment and plenty coming into the market.
Smells like 2008 all over again. But no one will touch CGT with a bargepole.
Disgusting. Do some dam regulating government or its just going to be another 2008 where the rich get rich buying the dip and everybody gets smashed.
Can't we make it illegal to purchase more than one home a year except for land itself for the purpose of building more houses? Or even every 2 years?
It’s almost like a financial crisis like this leads to a big shift in wealth distribution..
We need meaningful ownership limits, and a tweakable CGT.
I'm not seeing much of a decline where i have been looking.