The national median house price surged by over $17,000 in November to a new record high of $425,000, according to the Real Estate Institute.
House price inflation as measured by the REINZ's stratified price index, however, dipped a little to 9.6%, down from 9.9% in October, but Auckland's rate increased again to 14.9% from 12.6% a month ago.
Sales were weaker than anticipated, dropping 6.6% compared with sales in November 2012 to 6691.
The Reserve Bank introduced "speed limits" on high loan-to-value lending from October 1.
Anecdotal evidence has pointed to first home buyers largely retreating from the market since then.
The latest REINZ figures would suggest that this has had the impact of drying up sales in the lower price brackets, while higher priced sales - generally not affected by the LVR restrictions - have continued as usual, thus driving up median prices.
Westpac economists said that on a seasonally-adjusted basis, house sales fell 6% in November. They said combined with October's decline, housing market turnover had now fallen 10% in the past two months.
"We have long been suggesting that rising interest rates and LVR restrictions would start to dampen housing market activity from around November this year. We postulated that the first sign of a slowdown would be a drop in market turnover, beginning in November 2013. Today's data validates this view. "
They said, however, they didn't expect to see the pace of house price inflation start to cool until next year.
"Falling house sales is consistent with our view that the high-LVR lending restrictions would bite hard initially. However, we expect that the impact will moderate over time."
REINZ chief executive Helen O’Sullivan said the November sales were up "only" 2.7% over those for October 2013.
"As the average increase between October and November over the last 10 years has been more than 10%, this indicates a further softening in sales volumes.
"The restrictions on high LVR lending may well be a driver of the softer sales figures, with sales below $400,000 falling almost 20% compared with November last year.”
She said analysis of the underlying sales data suggested that changes in the median price in November may have been influenced by changes in the sales mix.
"If sales in the lower pricing bands are taking longer to complete, or not occurring, this would impact on the median house price.
"However further data is required before we can determine if this is the beginning of a trend, a short term effect from a change in the pace of sales at certain price points, or a seasonal effect arising from an increase in the number of higher value properties brought to market at this time of year."
Auckland, Canterbury/Westland, Wellington and Waikato/Bay of Plenty all recorded new median highs in November, with Auckland reaching $620,000 (from just $582,000 in October), Canterbury/Westland $389,750, Wellington $420,000 and Waikato/Bay of Plenty $340,000.
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68 Comments
It's interesting that days to sell hasn't budged. I would expect days to sell to be increasing by now.
I guess the properties that were expected to sell in Novemeber, but took longer and finally sold in December, wont be in the figures yet.
But what about the properties that were expected to sell at auction in Oct, but actually sold by negotiation in Novemeber, why aren't these reflected in the figures? Is easing just one day significant?
"Auckland's days to sell eased one day in November, from 29 days in October to 30 days in November. Compared to November 2012 the number of days to sell was also steady at 30 days."
@ Bob , unfortuantely your understanding is more wishful thinking than grounded in reality .
Firstly with any tax the saying is : If you want less of something , Tax it .
Do we want fewer houses traded ?
We have a housing shortage in Auckland , thats a known fact , so do we want less houses for sale when we dont have enough ?
Secondly , do you understand how Capital Gains Tax works ?
Its paid on sale , so do you think investors will rush to sell and pay the tax ?
CGT will not make houses more expensive simply because the market price is what it is, and it wont make them cheaper because sellers will look to either recover the tax or wait for the general level of prices to increase to compendsate them for the tax .
The primary residence is always exempt , so its only investors who will be affected and many if not most are neagtively geared anyway .
Speculators , renovators , developers and flippers are already liable for the TAX ON PROIFT / GAINS
It may lead some investors to avoid the market because of a portential tax liability on sale but the tax is often legally avoidable anyway
In summary , given we have a net housing shortage , CGT is more likely to reduce supply of housing stock for sale making the problem worse
"Its paid on sale , so do you think investors will rush to sell and pay the tax ?"
It will take time to have effect. Right now, if i am looking at saving for my retirement, i have a choice of saving money in investment funds. Any losses i bear, any gains are taxed.
Or i can invest in property, i can borrow, and write of any loss against my tax bill, and at the end i can sell and all gains are tax free.
Which is the rational choice? Take away the tax benefits and it simply becomes a question of risk vs reward. Allot of people who currently choose property investment because of it's tax benefits are instead going to choose hastle free investment funds.
Less demand = lower prices.
This only makes sense if you view houses as an isolated discretionary spend rather than a neccessity. If investors decided they didn't want houses there would still be a demand for houses. In fact there's probably exactly the same number of people who want to live in houses whatever the ownership structure of those houses.
Yes there would be exactly the same number of people who want a roof over their heads.
But a tax system that encourages property investment means that people want a roof over their own heads, and then in addition, they want to own the roof over someone elses head as well. This gives us the inflated house prices and reduced rents that we see in auckland.
The conception that property investors are responsible for high house prices is nonsense.
If it were the case then the suburbs with highest price rises would be the suburbs with the most property investors and vice versa. This is the opposite of what we see. The less rentals = the suburbs with the biggest capital gains. The best suburb to buy if you want capital gains is the suburb with 0% property investors.
The balance between demand and supply is responsible for the cost of housing. More buyers create more demand and, all else being equal, higher prices. Property investors are buyers, therefore property investors are responsible (along with home owners, developers and speculators) for high house prices.
All the investors in this forum are rubbing their hands with glee that they can purchase cheapers houses now that FHB have been taken out of the market. But you don't accept that taking propery investors out of the market would also lead to lower prices?
Property investors tend to buy the cheaper suburbs because the rental yield is better.
Those suburbs are cheaper because they are less desirable. Property investors are not causing the properties to be cheaper.[1] If the property investors were not buying in those neighbourhoods prices would be even lower.
1.Except to the extent that many investors do no major renvovation and so whole streets can become less desirable if allot of the properties are run-down.
You comments are getting illogical. You claim that cheap suburbs would be even cheaper if there were no PI's buying there - but what about the big capital gain suburbs with no PI's - surely they would also be cheaper if there were no PI's there, but there already aren't any PI's and the're the most expensive with biggest capital gains?
You claim that "investors in this forum are rubbing their hands with glee that they can purchase cheapers houses" - so investors previously weren't buying (because of no yield) but "now that FHB have been taken out of the market" they will.
So you are saying actually it's owner/occupiers/FHB's pushing prices up not investors - then you go on to say it's investors?
"But you don't accept that taking propery investors out of the market would also lead to lower prices?" That's right. The amount of cheap housing developed would plummet and rents would rise.
" but what about the big capital gain suburbs with no PI's - surely they would also be cheaper if there were no PI's there"
I don't follow. If there are no investors there, what does it mean to ask wouldn't it be cheaper if there are less investors? That's illogical, you can't get less than zero.
"So you are saying actually it's owner/occupiers/FHB's pushing prices up not investors -"
No, i am saying it is buyers competing against buyers that is pushing up prices.
If you take away buyers prices will drop. If you take away FHB prices will drop. If you take away investors prices will drop. The seller doesn't care who they are selling to.
This notion that's it's FHB that are pusing up prices is nonsense. When a FHB bids on top of an investor, that's a bid that wouldn't be made if the investor wasn't competing against the FHB.
It doesn't matter if it's a FHB bidding against an investor, or an investor against an investor, or two FHB. Take away the buyers and prices will drop.
The tax system in this country creates an unusual number of propety investors. That means demand to own is higher than it would otherwise be, and that means house prices are higher than they otherwise would be.
"The tax system in this country creates an unusual number of propety investors"
That is incorrect.
It has been demonstrated clearly many times in this forum.
You can negative gear any proper investment, property is just one of the few that stays negative long enough, with low enough return that the time frame is significant.
There is no tax advantage (after they dropped the depreciation for buildings) for property investment or speculation, despite what the neigh sayers are trying to push.
You said "... a tax system that encourages property investment [blah blah]... gives us the inflated house prices ... we see in auckland." I simply pointed out that where there's the most inflated house prices there's the least investors and vice versa. So your claim is simply not true.
I can see how you'd look at the bottom end of the market and say if there were less buyers there could be lower prices, however ia signifigant amount of housing comes to market only because investors can commit to funding it. At the bottom end if you took out investors as buyers you'd also take out fhouses. Losing 50 investors bidding in the market is one thing, but coupled with taking 100 houses out of the market is another. A large proportion of bottom end coming to market in Auckland over next few years would not happen without investors.
I doubt that investors have been outbidding owner/occupiers - it's fanciful to assume that every property sold is a bidding war between an owner/occupier and investor, won by the owner/occupier at the last moment. Returns are not there.
PI are indeed partially responsible for a market to exist. There is value there so people will invest in it. Thing is, for investors to invest there has to be margin somewhere for them to utilise, the demand has to exist for the asset or service. So PI, in and of themselves, can't support a market. ...otherwise places like the Stock exchange wouldn't need underlying paper or indexes, they could just chase profits around in circles forever.
no no no - NO. That's is not how the inelasticity of supply formula works. although it would explain why so many people get it wrong.
You and the extra fee, yes fewer properties (less supply will be on the market).
BUT! that shifts the "base price". yesterdays moderate price now _instantly_ becomes todays low (base) price.
The curve is essentially the same for a $1 apple or a $400k house. What adding the CGT or fees that must be recovered, doesn't change the position on the curve - it means you are simply now working on the $425k house curves. Your prices go up, you trade rate slows, but everything else changes, this is because the entire market shifts for every point on the graph. To shift your position on the same base graph, you have to change the action at different points, introduce cheaper supply makes the bottom end parameters softer, without affecting the top. Introduce a price per unit, and the same money will get less returns at the bottom, and thus will gently harden the bottom end for those with more money, while soften the top end, thus they will tend to move toward the top, which softens the bottom.
When I went to school price elasticity was measured like so.
Market demand curves were an aggregate of all the participants individual demand curves. So if one group has extra taxes then their individual demand curves falls. This slightly lowers the whole market demand curve and the market equilibrium price is lower, especially for the groups that do not pay the tax. So CGT could marginally benefit FHB but I believe the major benefits would be from flattening the supply curve, making it more elastic.
Making the supply curve elastic is well covered, see Hughes posts.
Ahh yes "education" taught by those who don't use the material they preach to make money off people who don't know any better.
CGT will massively penalise FHB, by removing entirely their market.
That's why, in answer to the original article the rise in average price is permanent not a trend or a bubble.
If you put your hard/soft bands over your S&D curves it becomes clearer.
Where do FHB buy?
What resources powers their demand?
Good chance 70% buy in the cheapest end of the market, and the supply for them is powered by available credit, and they must overcome rent as a resistance factor.
The LVR, knocked them almost completely out of the 450k market, they account for 0% pressure (zero demand).
However the 300k market (in auckland) doesn't exist, because demand completely swallows any supply there instantly - creating the effect you were taught.
In the 450k market, there are very very few FHB, they simply don't have the equity (20% of 450k (90k deposit) is way more after-rent to save than 5% of 380 aprox 20k deposit).
So they were never in that market to begin with...and likely never will. So those who were buying cheaper properties are gone, and so are the cheap properties. Put on the CGT and the only market left is the higher end (by price).
Until there is a force in the market to force people to sell, there is no pressure to cause the elasticity you talk about. Keep in mind the longer people hold and more teh prices rise, the more paper equity existing property owners have - keeping them in the game, and keeping the riff raff who would pull down the market by buying cheap substandard goods and offering cheap accomodation and relieving renter demand pressure...out.
Ahh yes "education" taught by those who don't use the material they preach to make money off people who don't know any better.
CGT will massively penalise FHB, by removing entirely their market.
That's why, in answer to the original article the rise in average price is permanent not a trend or a bubble.
If you put your hard/soft bands over your S&D curves it becomes clearer.
Where do FHB buy?
What resources powers their demand?
Good chance 70% buy in the cheapest end of the market, and the supply for them is powered by available credit, and they must overcome rent as a resistance factor.
The LVR, knocked them almost completely out of the 450k market, they account for 0% pressure (zero demand).
However the 300k market (in auckland) doesn't exist, because demand completely swallows any supply there instantly - creating the effect you were taught.
In the 450k market, there are very very few FHB, they simply don't have the equity (20% of 450k (90k deposit) is way more after-rent to save than 5% of 380 aprox 20k deposit).
So they were never in that market to begin with...and likely never will. So those who were buying cheaper properties are gone, and so are the cheap properties. Put on the CGT and the only market left is the higher end (by price).
Until there is a force in the market to force people to sell, there is no pressure to cause the elasticity you talk about. Keep in mind the longer people hold and more teh prices rise, the more paper equity existing property owners have - keeping them in the game, and keeping the riff raff who would pull down the market by buying cheap substandard goods and offering cheap accomodation and relieving renter demand pressure...out.
Consider this.
Would the prices of sales at Southerby Auction house go up or down, if they stopped qualifying the bidders who apply to be there, and instead got 200 extra people from the dole queue to attend the auctions?
In your example, the latter should increase the prices.....
Cowboy obviously the higher the prices the lower the quantity demanded. That is what demand curves look like for most things, FHB fit that pattern.
I don't actually think CGT would make much difference either way in the long term. The same with LVR limits.
The big factor is making the supply of new housing more responsive -what Wheeler talks about. So if demand increases for whatever reason the supply response is to quickly build more houses not for house prices to quickly inflate. That is elastic supply -large change in quantity supplied and small change in price. This is what we want. We want a flexible housing market that can cope with rapid changes in demand.
What we have is inelastic supply of houses -demand increases a little and the supply response is massively inflated prices i.e. small change in quantity supplied and massive change in price.
The biggest cause of our inelastic housing supply is our Local government zoning and planning laws. After that it is the excessive up front charges for public services for said housing. After that it is duopoly building materials industry structure. Then it is all the little effects, H & S etc that Waymad commented on that add up to a big effect.
End result house prices doubled last decade and after a brief settling period following the GFC house prices have taken off again.
"Cowboy obviously the higher the prices the lower the quantity demanded. That is what demand curves look like for most things, FHB fit that pattern."
Your assumption is incorrect. Or rather, incomplete. such is the nature of "obvious" or tranparent beliefs.
Give all other things being equal, you would be right. But in the real world things aren't all equal.
What is the demand for low price artworks? poor, because most of it has little value. What is the price for high end art, extremely high///the demand? tiny.
Why is this backwards? _qualified_buyers. in knocking the FHB completely out of the ballpark, we don't have the same S&D curve, we're in a completely different market altogether - one where the ticket price might not be the "price" that the buyers are concerned about. This negates the normal $ based S&D/elasticity rules. for a start S&D assumes consumption, the current qualified buyers aren't consumers in that regard, they buy & hold. the more they hold, the better their buying power. the higher they pay, and the better the quality of the holdings they hold, the higher their buying power becomes.
Producing more NEW houses is actually going to make the problem worse. You understand why?
I don't understand cowboy economics you will have to enlighten me.
P.S in some markets such as property, with fixed supply it is possible for a demand curve to be upward sloping for some time because price rises now leads to greater demand as PI use this to predict future price rises and FHB try to get onto the property ladder now rather than later at a higher price.
But if there is an alternative housing option like Hugh campaigns for then new builds becomes more desirable during periods of housing inflation due to stable farm to residential prices and this effect cannot occur. In places like Germany and Texas with responsive housing supply, demand curves are downward sloping.
in property the supply isn't fixed. Just check out the new works by the manakau bridge there to confirm. It's just sluggish and dependent on many factors.
Texas is losing economic value in some areas, that's whats driving that. Not sure what going on in German, it's a big place, and their market a lot more subject to controls. IIRC there's a double whammy of low population growth, plus the bottom falling out of the value market (devalutaion, why buy today when you know the price tomorrow will be better - certain no room for quick speculators, and those with cash to play with can find better deals in other vehicles).
When they build the houses, they may to too far from auckland reducing their _value_ (not cost). this means they will be effectviely competing against Hammy or Rural buildings... tehy will drop in price, but being outside the desireable area few people will want them. low price, but slow sales - won't have major effcet on under supply in auckland.
If build in the areas with good demand, they the buildings will be NEW, fit all the new regulations, pay all the red-letters to the right people at council to get connected, all the fengshui of RMA etc. They will be very nice new houses, and cost a packet... thus they will all come in at the premium end of the market. If Ferrari built 3 times as many cars next year, do you think it would have an impact on NZ's second hand car market? No.
But those properties will be promising deals for those with good equity positions already. They'll be low maintenance, mod cons, and not "you buy an old house, you always end up with an old house, no matter how you renovate" material. Good chance these properties will be in safe areas, and being premium priced, have polite tidy neighbours.
They will supply the higher end of the market, not the lower end. But how many of places like that will be build? how many like that can be afford to be built IF building them depresses the price of the finished product? (ie if you build enough at 90% levergae, that you depress your own equity, you might find yourself in developers' hell).
But because they are available, and people with money want them, AND they can't depress the price significantly, then the property price will lift, (on the back of good rentals and solid investment figures.) 'k.
There are plenty of options for 300K in auckland.
Not 3 bedroom free standing houses on 600sqm of land. But pleanty of reasonable options for a first home under 400K.
For instance http://www.trademe.co.nz/a.aspx?id=646183192
I don't follow the Auckland market, and you probably don't follow the Palmerston North and districts market, so I used a figure to illustrate the principle. If it warms your cogs, use 250k then, if it's not too much of a stretch. So we have 5% of _250k_ being around the 13k market. not too many paychecks for your average middle manager in a free hold home. Or stretch for a young couple with a couple of k from the rellies. c.f. 20% of 300k = 60k of tax paid savings (while paying rent).
muppet, are you being sarcastic?
BD said (all) taxes put prices up, thus CGT is no use to anyone.
IMO, nothing about land tax, which would acheive the same thing but be unethical as well. why you want rising prices with no value? stuff to cheap at your local stores?
Even if it doesn't have an impact on prices, it might change the buyer. CGT is going to put a bit of a downer on speculators isn't it? It's part of the solution, not a silver bullet.
Just wanted to add that I don't support a CGT. I think the government could have more impact by restricting foreign buyers, looking after the voters and tax payers rather than foreign interests.
@rjf I know you dont support CGT , but if it is introduced , CGT will make no difference to demand for housing whatsoever .
Firstly Tax is already payable on gains from sales by people buying and sellling houses , property traders , renovators , speculators and flippers.
I suspect there is under-recovery by the IRD due to non-disclosure by these people , but the tax is payable
Read Mr Wheelers statement on this site today , he acknowledges the causes of price increases as being demand from migrants and low interst rates .
He did not mention supply constraints , but that is complicating matters
"Firstly Tax is already payable on gains from sales by people buying and sellling houses , property traders , renovators , speculators and flippers."
Do you not think long-term investors are a significant part of the market? These are the people that will be affected.
I have found company structure to be more effective than Trusts. The main point/advantage of a Trust is just so the kids or widow don't mismanage their finances (as traditionally they've had a trustee or settlor to do that work, so they're not skilled in financial dealings and could blow their financial future easily. ) but government /IRD are looking to gut trust legislatin and protections in their search for rorted funding.
Yes. Major property owners are often 3rd gen.
Their profit is from rental income, not capital gain. They know that the capital gain they could get now (or would have gotten 50 years ago) is dwarfed by the rental income in future (or now on what they didn't sell 50 years ago).
yes. Because you can only sell once.
And when you sell in a capitalist market, the buyer is going to be considering the value based on future earnings (including any disposal value).
If one speculates on such trade (without specific arbitrage gap - eg different continents causing a differential) then it becomes a "who's the last biggest fool" competition" which is gambling, not investing.
As each buyer is hoping that the market value will be pushed up, without the "service use income value" (ie rental. or for plant the value of goods made, or for education the value of jobs/research at the finish). Because when they buy they are predicting so many years of (revenue less expenses) value, that is moderately predictable - which means it gets factored in at the market price when the purchasers are "bidding" (ie looking around). Since it's factored in, they're buying that value with their purchase money.
A future purchaser must take a long view that the value is actually going to be higher than that predicted.
And that's part of the food-fight of Auckland property. The rent is dependant on the capital value+expenses, but the market value is setting the independently valuered capital value, and that is set by the earnings capacity (including rent&disposal), which is sensitive to the rent charged+passed on expenses.
Then add in the expenses related to disposal, fees, taxes, cost of replacing the investment with something equally performing....then it becomes quite unlikely that sellers will do so easily or quickly.
C.Moa speculators can only trade properties if there is a projectable rise in the future value.
CGT etc won't change that, it will just push up the price and reduce the value of each trade.
CGT and what you propose will just cause property owners to hold properties longer, and will significantly reduce supply of property to the market. That will push up price and make room for MORE (not less) speculation (as speculation as mentioned comes into play when there is a price differential to be taken advantage of, which porpoerty owners buying and holding, forcing tighter demand, is -perfect- for their aims, as the less property on the market, the higher they can expect for each one they trickle out. gold & diamonds you'll be making of property, not commodity!!!
Let's not let the CGT issue cloud the article - house prices are rocketing even with LVR restrictions in place.
My view: I'm waiting for the pop. House prices are unsustainable - once interest rates accelerate, prices will drop, motgagors will fall over and I can buy my first home on the cheap.
I hope you are young Zoltuger. You may be waiting a while. I can't see a 'pop' in NZ anytime soon. If you can I think it is more wishful thinking than anything else. The pace of house price inflation will certainly have to slow down but I don't see any reason for sudden, significant price drops in the next few years. Perhaps as interest rates increase house prices will plateau for a period.
Why you think prices will drop gievn the economic outlook?
It just feels surreal - everything points to houses being dramatically overvalued (today's top ten suggests 51%), yet house prices still increase at close to 20% per year.
Something's not right.
I refuse to compromise by buying a small 2 bed unit on literally the outskirts of Auckland, using all my life savings and incurring an enormous mortgage. There must be more to life than property.
Zoltuger, find someone from the baby boomer generation and ask them what they paid for their houses 20, 30, 40 years ago then ask them what those houses are worth now. Go to Sydney, Melbourne, LA, London, Paris and see what they pay for property there. Like it or loathe it it’s important to hedge against it.
With respect that's the problem right there. A 2 bed unit is a great start. The first home I owned was a 1 bed unit. You have to start somewhere! Imagine if you bought a 2 bed unit a year ago. Now imagine in another years time what the price will be then. Alternatively Tokoroa has some bargains.
@zoltuger , I really hope your dream comes true , but the odds are severely stacked against you when it comes to prices falling .
Planeloads of Migrants arriving daily , cheap money , an artifical land shortage with subdivision costs of up to $100k per section , a shortage of builders tradesmen and 10% inflation in the construction sector will keep the secondhand housing market increasing for some time
A dramatic increase in the OCR will be the only thing that causes a fall in prices , and the buyers with access to cheap offshore funding will fill that gap quickly
Even a dramatic increase in the OCR won't trigger house price drops. Prices might stop rising but most property owners will just hold on to their properties until prices pick up again rather than sell at a loss. Furthermore the RB won't raise the OCR so much that it causes the majority of the adult population to lose large sums of money/equity. Mr Wheeler only talks about trying to curb house price inflation not cause house price deflation.
In 1993 in London ppl tried to hold on but had to sell. I think the mortgage rate was something like 19%. Cant see it here however, even if the RB is correct that points at 7% ish for a mortgage.
Otherwise I think its huge wishful thinking on your part....gambling even.
Deflation isnt caused on purpose, its caused by incompetance, dogma or lack of real data. I dont thing the first 2 apply to Dr Wheeler myself.
regards
London 1993? I don't see the relevance. Were they facing a housing shortage also? Were they entering the biggest building boom on record then too? I don't think anyone is predicting 19% interest rates here.
Wishful thinking on my part? Possibly but I don't think so. It's good for me if house prices go up but it won't change my situation one iota if they go down. I have no plans to sell and definitely wouldn't if the market went down. I think this is the same for the majority of people. Sure, some will be overexposed and have to sell but I think most will cope.
I posit that deflation has many more possible causes.
"A dramatic increase in the OCR will be the only thing that causes a fall in prices , and the buyers with access to cheap offshore funding will fill that gap quickly"
That's exactly what foreign buyers want, they make capital gains on the property and yet more profit on a rising NZD.
That's exactly what some of my friends said a while back. I remember one conversation around 2003 about how only an idiot would pay mid $300K's for a Grey Lynn villa. Those that did now have no mortgages and nice houses, those that didn't have big mortgages in outer suburbs.
I am bemused as to how it is expected that LVR would lower prices in the long term. This theory relies on sellers being under pressure to drop prices, whereas the alternative is they hold off giving buyers time to save a little more. So in the short term yes, however, once the higher deposit is saved, they enter the market again, in the meantime others have joined the queue behind them doing their saving.
So short term blip while savings buid up...then away again. All in all a timing matter only. That aside, everything else is deflating, housing can't be an isolated case indefinately.
Was listening to Sean Plunket the other day and he had this amazing epiphany, ban non-resident foreigners from the housing market.
I thought about it for a bit, and after a while, I came to the conclusion, where the hell have you been, Plunket, we've been calling for that since god knows when!!
A while later he interviewed some banking wallah who suggested we should accept that the dream of home ownership may be over and perhaps we should see renting for all of our lives as the way of the future
Had I been able to reach down the radio and bop her one on the nose, I would have. Accept that we should become renters to the foreign house and land owners, not on your bloody Nelly, lady.
Time is well and truly here to do something about the non resident foreign investor, darn it, I wish I could spell properly sometimes, I mean owner.
Its the next generation I worry for.
We're fast becoming a nation of haves and have-nots and this won't be helping - if your parents were savvy enough to own their own home and perhaps and a couple more as rentals then you could be left with a tidy inheritance, if they weren't then your lot will be very different.
Why implement another tax, just enforce current income tax on all capital gains outside the house you live in.
If you own a 2nd house, or 20 extrahouses, and you sell it for a profit (capital gain), shouldnt this just be taxed as income tax? Surely the real issue is that this point is childishly simple to avoid ...."I brought it without the intention of a quick sale...honest" and you pass go.
Sad.
how do you correct for the inflation and other economic environment shifts in the market?
thus we get the system, that if one is trading, or purchase to sell for profit, then it IS ALREADY taxable under current law.
But if I buy a average priced 3bd house for 20k, 50yrs ago, and sold it 49yrs ago for 200k, I'd have made a huge profit and could buy 6+ more houses of the same type.
But if I didn't sell 49yrs ago, and sold today, I might get 350k. It _looks_ like a huge profit (370k ! ) but if I went to buy more houses of the same type.... I'd probably find I couldn't even buy one the same for 350k. So obviously, using trading principles to "replace" my stock/asset, I have actually made a loss!!
Now the usual cry from the illeducated is that we should then tax the rise in value of the asset (asset/land taxes) thus "capture the theft against society"....but answer me this, what part of the property has improved? how is this basic house been valued-added? SImply it hasn't. (and if you talk about improvements in neighbour, that has already been taxed through rates)
It would be nice to capture the real value adds and the homeowner improvements but how would such things be accurately valued from the original effect of inflation etc.
I think the market is near a peak in the seller market expectations and its only going to get more difficult going ahead. Next year with an increase in OCR wil be a the end of low rates for many years to come. Tax on overseas property investors/foreigners buying in the UK is coming. When an Foreign owner wishes to sell the UK property they will have to pay a selling tax as they have not be subject to capital gain tax on the property so this is now changing. New Zealand should follow with capital gain tax on NZ property to foreigners also when they sell.
Is it wrong to suggest we let a free market be a free market? The "shortage" of housing appears to be coming from those complaining they cant find a house in Central Auck for a decent price. Reality check - plenty of affordable houses in Auck - perhaps its expectations that need to be adjusted. If you can afford something, you'll buy it, if you cant you wont
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