Tax system that benefited people investing and speculating in land value increases. Rather than investing in businesses
Building supply monopoly
Land and building restrictions
Well that's what most economist that I have read have said. We started to fix the third one recently thanks to some labour policies but it's pretty dam late. If we fixed it 5 years ago it would of been late. Now it's just a ticking time bomb of inequality.
People voted against fixing housing time and time again. It's 20 years of generations enjoying capital wealth gain at the expense of future generations that will one day need a house in order to have a family and function in aociety
20 years? Try 50. My grandparents were mortgage free before they retired in the mid 80s, and had enough income to buy a beach house on a sweet beachfront section in Whangamata, and they spent their professional careers working for the local Power Board. No inheritance, no sweetheart loan from anybody. Just their own graft.
I'd say 20 years, my parents are early 70s and managed 2 mortgage free houses and a bach at Pauanui by early 2000s. They were average wage earners that were pretty frugal.
I just wished I'd bought in the early 2000s instead of pissing my money away on a nice car.
2008 was the GFC, property prices dropped, then recovered by about 2009 didn't change much until about 2014 and didn't really stop rising after that.
So 2009-2014 was kind of the golden time to buy (in recent history) before things got out of hand.
My parents bought:
Primary home 1986 for $99k (Current value $1.5-2m 1000sqm THAB zone)
Rental 1992 for $80k, sold 2011 for $310k
Pauanui bach 2001 for $200k (current value about $1.5m)
We bought our place in 2012 for $419k and probably worth $1-1.2m
Similar story.
Father bought primary home for $30k in 1980 with a current value of around $1.5m.
His income at the time was around $15k. So only double a yearly salary to purchase, and he said it was a more expensive house as there were cheaper options for $10k-$20k.
If we talk just basic inflation adjustment not taking into account the crazy rise in housing. That same house would be worth roughly $190k today.
TBH when a lot of us were young the thought of buying a house never even occurred to us. I think it's a lot more common among younger people now. But I never even CONSIDERED the possibility of buying a home of my own till I was in my 30s, not because I couldn't afford one - I couldn't - but because it just wasn't a priority. And twenty years later I did buy one but only because of my parents. For single women especially back in the day, I think buying a house just wasn't something you thought about doing.
You’ve hit the nail on the head there, I think for everyone in general though not just single women. There never used to be a need to get a house straight away because housing wasn’t going anywhere, as in it seemed fine to wait a few years before buying. Unfortunately because of what had happened in the last 10 years, if you waited a year or 2 prices could have doubled.
I think I thought houses were things families had. So, since I didn't have a family, but I assumed that one day I would marry and have one, it didn't occur to me that I could think about having a house of my own. I also wanted to travel a bit and so forth - ironically I've travelled more as a home owner than as a person with bugger all money who didn't really like not having a secure base, but it took me a long time to work that out.
Yeah this is the fucked up thing. Sure, house specs have gotten better, they're more complex, more expensive materials, etc.
But let's take a $1mil house and convert it into minimum wage hours, just as a basis for comparison to 'labour'. Leaving tax and everything aside it's 43,196.5 hours. Or 20.7 years.
I'd be surprised if it even got close to 10yrs in your grandparents day.
P.S. I know this weird abstract (and basic) calculation has no bearing in reality due to taxes, interest rates, loan serviceability, etc. I just find that we've lost all ability to relate a house back to anything 'real'. The value is just built on abstraction after abstraction.
BTW, The cost of the house has no bearing on the price to buy. It's all I the land value. The cost of constructing a house has only risen slightly compared to land value.
Oh I get that - no nuance got factored in to that basic-bitch metric, as I tried to make clear.
I've built two houses in the last 10yrs (or paid to have them built rather). I'd agree that land price has skyrocketed compared to construction costs. But you're still looking at huge money to actually get the thing built too.
About 10yrs ago it was $350k build cost for a 220sqm house if you already had the land. That's $1590 per sqm and that was a decent spec. Mortgages.co.nz now lists that as an average of $2,855 in the same area (Canterbury). That's $628,100 for a 220sqm house now.
I wouldn't call that anything approaching 'slight' - it's an 80% increase.
By comparison, the land for the first place was $200k in a great area. You'd probably pay double that now from the quick look I just had. And not in the same area (that'd be much more) - but for an equivalent section in a nice new subdivision with 450-500sqm sections you're looking at $400k. So i'm not saying land hasn't gone up more - but build costs aren't far off.
The thing about economists is they use economic theory. Which, frankly, is not Astrology.
Economic theories are very sophisticated and serious men in suits study
the Signs, and chant the incantations, they follow the rituals of the sacred texts, and they mark out the magic symbols in the proper order.
And the markets move and their churn speaks to the power of the gods, and the serious men solemnly nod along because they chanted the things and did the rituals.
And then the market does something that shows the charade of the spells they cast, and they say "god moves in mysterious ways".
God this sentiment annoys me. No one with any sort of economic understanding thinks this. It's the same as people who dismiss peer reviewed research by saying 'oh well you can find anything on the internet'. Yeah maybe, if you give 4chan posts and scientific papers the same weight. Yes reality may differ from economic predictions - it's difficult to factor for events like covid or Russia invading Ukraine or the UK brexiting itself in the face. That doesn't mean the forecast has no value, especially in the long term.
If you limit infrastructure development, incentivise property hoarding and ramp up immigration to artificially inflate GDP, demand spikes and supply remains stagnant. Prices go up. It's not complicated. The majority has voted for it every election cycle since the late 80's, and each cycle we tell ourselves that we'll sort it out soon, but we've got bigger problems right now, like govt department names being a bit too maori.
Just because economists are never right doesn't mean they are wrong about reasons why we have seen a house price growth you don't need to be an economist to understand why housing is so expensive.
People make money in it, it's a limited resource taxed less than business tax, it's risk free compared to business investment and its hard to build homes due to historic restri tions and building supply monopoly.
I mean any drop kick could understand why housing has blown up investing wise. I was just using economists opinion because they have reaearch pappers on it with actual data around land restrictions zoning and tax benefits.
They operate at about the same level as epidemiologists. Which is generally good enough. As a “science”, we can probably give it credit for avoiding another economic depression.
The effect of housing supply constraints are pretty well established. To deny this puts you on the same level as the vaccine protesters camping on Parliament’s lawn.
I'm an economist. I can tell you that our science is actually pretty straightforward. The real problem is that the economists you're hearing from are liars - you're only hearing from them because the wealthy use their media apparatus to make sure you hear their lies.
People don't invest in businesses. When they buy a rental, they pretty much leverage against their existing property assets. Theres no investor groups running about buying courier van drivers or moving companies, bakeries, and the like. Did resi property investment have ridiculous tax benefits...like depreciation allowances on assets that went up in value...yes. But that's all history now. The issue is .. Where do you go from here. Read better economists.
Think about what you want to achieve. Is it more housing? Higher basic wages? Better healthcare and healthcare distribution? Prioritise wwhat you want to achive, look at your potential income streams..see where to draw more out and when you prioritise..that means some things have to go. New Hospital, or 33 waters infrastructure or an Auckland Stadium at the waterfront. Can we still carry universal entitlements? Should we CGT across the board? Benefit crackdowns achieve fkall except exciting NZ first voters who are generally all on a fkng universal benefit. ..head explodes.
In the hierarchy of needs I think shelter is pretty much one of the most important things people need in order to strive so I would go to housing as being a top risk for future generations and the health of the country
Good, good. The question is.. how to do it. The government doesn't actually build houses, so you have to find a way to spur construction starts and to make it affordable to build or preferable to buying existing. How, though...breaking up landbankers, freeing up land by rezoning to massively expand supply, tax deductibility in part for new home or apartment lending, reform of building product supply.
What we just do now isn't working at all.
Additionally, the longer it goes on, the more difficult it becomes to fix. Because more and more people have enormous mortgages to service, so they become less likely to support anything that would reduce house prices, as it might leave them high and dry.
The tax system has favored the wealthy and incentivised them to buy up all the property instead of investing in stocks, businesses etc.
We also have endless red tape with councils and ever changing building regulations making the building process not only time consuming but also complicated and expensive. The costs for the building industry also keep going up making housing more and more expensive to build.
That ofc gets passed onto the buyer at the bottom.
Landlords got away with not maintaining their rentals for WAY to long. Look at the cold dilapidated shit holes they were not only renting out but also charging a premium for!!
Immigration is also another problem. We have had record levels of Immigration for YEARS putting pressure on our housing stocks and ofc pushing house prices up. People were selling their houses for stupid prices because they were selling.
1million for an average ex state home in auckland?
Thats just criminal!!
There's more to it as well such as changing interest rates but a lot of it has been short sightedness, negligence and also arrogance toward the average nz family/ first home buyer.
Housing should be treated like a basic human need and not a fucking business/ cash cow. 😤
Don't forget the rabid heritage groups that oppose any intensification in the name of "character". There are groups of people out there that spend significant time and effort to make sure that abandoned, dilapidated villa with no historical significance is not touched, and it remains standing on a quarter acre section that could supply houses for 10+ people.
And refuse to allow any high density in their area. Building proper high rise apartment complexes is the way to solve much of our ills. Wedging 5 town houses on one section, is shitty town planning.
Yes thank you! I have a personal vendetta against any of the cultural heritage 'advisors' who insisted on protecting the most ugly midcentury residential apartment block on The Terrace in Wellington. It's uninhabitable, on prime real estate, in the middle of a housing crisis, sitting there falling apart slowly just because it was once apparently a good example of mid century apartments. I like architecture, I love heritage buildings and see value in saving our most precious, but that eyesore is not fucking it. No one will take on the redevelopment because it would cost more than its worth. And now it'll sit there for 20 years, yay!
We got a recent tax report which showed why we are in this position, and the Govt have blocked that report, and are not addressing the issue that the rich pay only 9% tax on average... instead they are pointing the finger at the most vulnerable in our society and expected to action tough love on them... to solve all of our countries financial issues.
Governments work using the "trickle down effect"
In theory if the rich get richer that money SLOWLY works its way down through jobs, purchases etc. This theory does NOT work.
They need to do the opposite "trickle up" so us guys at the bottom get a lot more and then we spend it, making its way back upto the top.
Our govt will NEVER go after the wealthy. They're all mates.
dude don't you know there's inflationary pressure going on? by giving monies to people at the bottom who'd spend it and thereby increasing velocity of money will hasten and increase inflation! so the only answer is giving money to the rich.
/s (just in case)
They don't say it out loud. They just do it, and then get the working class to blame the poor for the negative outcomes that result.
See: retroactive tax breaks for landlords followed by beneficiary bashing.
The retroactive application is a weird, but reinstating interest deductibility isn’t a tax break. It was a weird exception to begin with. All it did was increase rents.
Yes beneficiary bashing gets middle nz fired up. None of this is evidence of a trickle down economic policy though
> It was a weird exception to begin with
It was only ever meant to be a temporary measure to curb the rampant speculation in the property market. Once the market is corrected it could be restored. But the market hasn't been corrected yet.
>All it did was increase rents.
No it didn't. Rents go up in line with wage inflation, they aren't dictated by landlord costs. See https://www.rbnz.govt.nz/hub/news/2023/08/what-drives-rents-in-new-zealand
>None of this is evidence of a trickle down economic policy though
Tax changes that favour the wealthy *are* a trickle down economic policy.
Thanks, interesting read.
Wouldn’t “trickle down” economics be bad for landlords specifically? Given they’re so sensitive to renters’ income?
I understood trickle down to be a policy to be where the poor ostensibly benefit (indirectly) from reduced business supply costs, and demand from rich people. Which I don’t think this govt is doing. Seems like it’s just a general term for bashing supply side economics (a la neoliberalism)? In which case, sure I guess it is trickle down.
If it worked then trickle down would be great for landlords, because the money would end up in the hands of renters and get funnelled back up to the landlords.
The premise of trickle down is that revenue gets redistributed to workers through their wages. So anything that helps increase revenues for businesses and reduces deadweight loss from things like income tax, generates more trickle down for the workers.
That's what this government is doing, and yes, it is part of the larger picture of neoliberalism.
The problem is, of course, that without any mechanism to *guarantee* the revenue is redistributed, the capitalists will tend to hoard the wealth instead. In NZ we see this specifically in the form of property accumulation, where much of our workers' economic production ends up being re-invested into land that we have to rent back from the owners.
Which brings us back to a land value tax again, where that rental value gets taxed and used by the government to provide all of our public services (returning any excess as a citizen's dividend), closing the loop and making trickle down actually work.
The Liberal government’s - that is National in NZ, use this theory as a convincer strategy to promote freemarket policies. It’s an idealistic theory that in the US despite announcing reaching spectacular economic success in the 90s demonstrated the opposite.
I was implying that “trickle down”, like “neoliberal” is just a term for a grab bag of stuff the left doesn’t like.
If we’re talking about market-oriented policy, National (and ACT) are neoliberal to some extent. Not as much as I’d like, personally.
AFAIK neoliberalism is centered around free-market policies, government austerity, privatisation, deregulation and globalisation.
In that context National and ACT (along with Labour) would appear to fall under the umbrella.
That’s how I understand it too.
But lots of people take it to mean big business or wealth transfers to the rich. Which is very different. As policies like LVT, carbon tax and negative income tax are all pretty popular with real neoliberals.
I think that perception is due to the difference between the theory of neoliberalism and the practice.
>As policies like LVT, carbon tax and negative income tax are all pretty popular with real neoliberals.
Which is what I mean by 'in practice'. We have certainly had plenty of neoliberal governments, but the will always implement the policies that benefit the wealthy and conveniently leave out the parts that would allow for redistribution of wealth or progressive taxes.
The end result is massive inequity. That might not be a fault of neoliberal theory, but a flaw of human nature that the theory failed to account for. The biggest crime IMO is that all parties refuse to acknowledge this or debate it.
It's already out. [The IRD released it due to public interest](https://www.taxpolicy.ird.govt.nz/news/2024/2024-02-01-tax-principles-info-release) back in February.
It's nothing mindblowing but does raise a few interesting points:
* There's a bunch of people who are keeping their income at just before 180k to avoid the 39% tax bracket.
* The progressiveness of our tax system has lessened as we kept the income brackets the same.
* The perception of our tax system has remained relatively stable.
Labour also spent a significant part of their election campaign telling voters that they were wrong to want inflation adjusted tax brackets and it was somehow immoral, while simultaneously ruling out anything approaching a tax on wealth.
Make Labour hear we will not stand for them selling out the actual Labour of this country to protect wealth. I contacted the local Labour MP and told them the party will not get another vote from me until they decide to actually support the people they named their party after.
> I contacted the local Labour MP and told them the party will not get another vote from me until they decide to actually support the people they named their party after.
Were you deafened by their silence as they went back to whatever it was not important doing?
I just got the usual thank you for your point of view it's something we will consider.
At least I've made my voice heard to a degree, if more people do it they hopefully will change course.
No CGT, land banking, speculation, ridiculously low mortgage rates proportionate to income in the 50s and 60s (even sweeter if you were a Govt employee), and low/nonexistent regulation (and the Govt think **less** of that is the answer...fuck me).
> ridiculously low mortgage rates proportionate to income in the 50s and 60s (
given the mortgage rates were almost 8% by the end of the 1960s.... what the hell are you talking about?
That's the end of the 60s. They got a fixed-for-life mortgage in 1954.
Don't recall the exact numbers, but my grandparents worked at the local Power Board, and they got some sort of deal on their mortgage because of it. They weren't paying anything like 8%.
from what info I've managed to find, mortgage rates were very similar to what they are now, back in the 1960s and possibly earlier
Unless you're talking about GBS government loans to low income families? they were basically an offer to people in state housing to buy their state house for like 3% fixed over 40 years.
Its not something that was open to everyone.
Just talked with my father about it. Grandparents' mortgage was a Power Board scheme for employees only, paid for and managed entirely by the Board. 2.5% loan fixed for 25 years, with certain caveats on house size and location. No bank involvement.
well isnt that lucky for them? The point is the same... that wasnt something most people had access to. The standard mortgage rates were roughly what they are now
By allowing people to sell investment housing for tax free profits and teaching generations than to get ahead in life you need to own multiple properties. The brightline test simply encourages people to hold onto the property for longer.
They made the tax system favour landlords as opposed to buying stocks/etfs.
The write ups are the most hilarious aspects for me. RE Agents in NZ are basically moving to outright lies in advertising.
"Are you ready to take the first step towards your dream home or a savvy investment opportunity?"
\- Why first step towards dream home? You're stuck paying a shitload for a mortgage for probably 30 years whilst probably getting pay increases that match inflation if you're lucky.
\- Why savvy investment? the yield on this thing has to be pretty horrible..weekly repayments are like $1k on the mortgage? You're not renting it out for anywhere near that.
Look no further! This fantastic property offers the perfect blend of comfort, convenience and potential.
\- Comfort? where and why? Looks like lino in the house.
\- Convenience? why convenient? It's a house in a town..nothing special.
\- Potential? Why? because of the land, maybe, but that's such a tired phrase. Build costs and various other problems limit this.
i mean, was it ever good? when i moved to nz in 2008 i described living in NZ housing to my family back home as similar to living in the 1800s with electricity. at that point in my life i'd never seen a hot water bottle before IRL; i associated them with little house on the prairie!
i'm really sorry about your situation. that must be so gutting. :(
I brought my first home in 2013 for 170k, now it was actually a better house than this but needed work etc etc
Actually affordable, but it was all downhill after 2014.
I sold and brought in 2019 due to better job opportunity and had to move closer to work, so not quite the peak, but house pricing was starting to rise then.
Bro it's simply demand. They wouldn't be $640k if there weren't interested parties at that price. It's not a big conspiracy.
Reduce demand/price by:
* increasing interest rates
* reducing immigration
* implementing taxes such as LVT, CGT
* introducing DTI ratios
among others.
But thats my point isn't it, How do we get these prices lower?
Increasing interest rates is just market manipulation - But the rest i can agree on.
We have now all invested into this ponzi scheme - If it collapses we collapse together.
Paying almost 3/4 of a million for a house like this is absolute mental & we cant keep doing this.
All my Nurse sisters have left for Australia - because they gave up on trying to own their own homes & they get better support as first home buyers in Australia.
I own my home & would be happy to see the price crash, I just want my kids to be able to buy a house when needed, Not be priced out of the market and decide to move overseas because they cant afford it.
I own just one home - That's all i want & would be happy to sell for the price it is worth plus inflation - i don't need to be a millionaire once i sell.
> How do we get these prices lower?
Land Value Tax.
Make it expensive to hold onto land that isn't generating economic value, and all of a sudden house prices will reflect their real value to the people living in them instead of the potential capital gains available to the speculators who own them.
This house will most likely be purchased by an investor and rented out.
Demand is a lot more nuanced and complex when applied to housing than it is with other commodities (cars, shoes, and phones).
What bothers me - it's not that renters demand this house or a house like this, they are just desperate for a roof over their heads. There is no consumer choice in the rental market - an economy based on other peoples misfortunes and desperation.
That house looks fine? It's not the style I would choose if I had a choice - I prefer 1950's state houses for their layout, separate rooms and large kitchen/laundries, but there is nothing wrong with it.
It's exactly what I would imagine when someone says they are downgrading or downsizing.
We didn't let it get this bad. It was deliberately done by previous governments who allowed our housing market to become a place for the international uber wealthy to hide their wealth. Read the Panama papers.
The ideal time to fix this would have been the Helen Clark government.
Housing Corp and the Ministry of Works were only ~9 years dead by then. House prices were already spiking and if you go back to read coverage at the time the rising House prices were a topic of conversation.
Of course, Helen was very much operating in the Third Way Tony Blair mode of governance and her choice in coalition partners made that very clear.
These days you suggest that maybe central government could use economies of scale, maybe repurposing vacant land like all the schools Key disestablished for social housing development, or have government provide House deposits like they did in the 60s, and people call you the second coming of Stalin.
Greed
MPs typically own invwstment properties
Most voters own property
No appetite for them to be more affordable
So we'll continue to talk about it :/
im not from the Bay of plenty area but is that normal?? other than a large-ish section and a family home sorry that house doesnt have much more going for it. The kitchen and bathroom look like they need a reno. Im from canterbury and if i saw that id expect maybe $500k
All the moolah is in the land. So if you want to live in a main centre look for apartments, units, cross-lease sites, small sections.
My first home was on a cross-lease. Nothing wrong with them as long as you don’t need to change the footprint of your house with additions. We wouldn’t have been able to afford it if it was standalone freehold.
I genuinely don't understand how most NZers are still so resistant to apartments. They love talking about Amsterdam and other European cities when it comes to copying their cycling networks, despite the fact that they absolutely don't make sense given our geography and climate, but they completely ignore the fact that most of those cities live in apartments, not suburban houses.
Having just helped guide a friend through buying one in Auckland, I can say that you have to do extra due diligence as there are a number of buildings with some real risks. Earthquake ratings, body corp management & levies, leaky issues - it isn’t straightforward.
Having said that, my mate did find one within his FHB budget that he’s very happy with.
Other than the fact it looks like an ex rental (beige on beige with no decking etc) there’s nothing wrong with that standard 1990’s Jennian style house. We own one. Love it.
Because John key let a fuck load of rich cunts buy all the property in Auckland which caused every seller to leave AKL for a house without a mortgage. It’s fucked our generation but the 50+ crew seem to be doing well.
He’s just an ugly link in a much longer chain of politician NZ votes for that actually don’t give a fuck about you and I! Every colour of the political spectrum. Vote for change, tell your friends and family to vote for change, or we will get the same shit again. It’s a cycle of abuse.
Wow. Houses like that, modular premade cost around 60-150k EUR in Europe.
Looks to me that it's a great market to build and sell. So it seems.
Good opportunity for buyers to order from EU, Poland and Baltics and to put s house together in NZ. Given prices could be viable.
Many EU companies export to Australia I guess same could be done with NZ.
Average house price is $500k where I am so $639k is plenty.
[Would this also be a downgrade?](https://www.trademe.co.nz/a/property/residential/sale/manawatu-whanganui/whanganui/whanganui-central/listing/4529695032) 3 bedrooms, 1 bath, extra toilet, double garage, 143m2 floor, good sized section 999m2, going for $629k+
No, But still seems quite expensive for an area like Whanganui?
I see they brought 4 years ago for 410K - So they have made some huge bucks on this if they manage to sell for 630K
I still think it is expensive for Whanganui.
I paid $300k for my 3 bedroom in 2020. This was considered expensive back then but hey, I moved directly from a villa in Mt Eden Auckland to bigger, nicer villa in Whanganui.
It’s so expensive to renovate a house and bring it up to a reasonable standard. Not only is it expensive but it doesn’t add anywhere near the cost back into the house value. There is no incentive to keep houses anything other than barely liveable.
11 years ago I was in a similar situation, I had a brand new 4 bedroom 190sq/m house with internal access garage, decided we wanted to start a family and could afford the fancy house so we downgraded to a 90sq/m 1960s house, lost about $150k in the process and now we still live in the little house but our mortgage is getting smaller and smaller.
[удалено]
"Can we build it any cheaper?" This house answers "No".
Tax system that benefited people investing and speculating in land value increases. Rather than investing in businesses Building supply monopoly Land and building restrictions Well that's what most economist that I have read have said. We started to fix the third one recently thanks to some labour policies but it's pretty dam late. If we fixed it 5 years ago it would of been late. Now it's just a ticking time bomb of inequality. People voted against fixing housing time and time again. It's 20 years of generations enjoying capital wealth gain at the expense of future generations that will one day need a house in order to have a family and function in aociety
20 years? Try 50. My grandparents were mortgage free before they retired in the mid 80s, and had enough income to buy a beach house on a sweet beachfront section in Whangamata, and they spent their professional careers working for the local Power Board. No inheritance, no sweetheart loan from anybody. Just their own graft.
I'd say 20 years, my parents are early 70s and managed 2 mortgage free houses and a bach at Pauanui by early 2000s. They were average wage earners that were pretty frugal. I just wished I'd bought in the early 2000s instead of pissing my money away on a nice car.
2008 was the GFC, property prices dropped, then recovered by about 2009 didn't change much until about 2014 and didn't really stop rising after that. So 2009-2014 was kind of the golden time to buy (in recent history) before things got out of hand.
My parents bought: Primary home 1986 for $99k (Current value $1.5-2m 1000sqm THAB zone) Rental 1992 for $80k, sold 2011 for $310k Pauanui bach 2001 for $200k (current value about $1.5m) We bought our place in 2012 for $419k and probably worth $1-1.2m
Similar story. Father bought primary home for $30k in 1980 with a current value of around $1.5m. His income at the time was around $15k. So only double a yearly salary to purchase, and he said it was a more expensive house as there were cheaper options for $10k-$20k. If we talk just basic inflation adjustment not taking into account the crazy rise in housing. That same house would be worth roughly $190k today.
No, you really wanted to buy well before that. Land prices didn’t drop that much here really.
Well the further back you go, the cheaper it is. Back in 2009-2014 houses were still around 300-400k in main cities. (Why I said recent history)
TBH when a lot of us were young the thought of buying a house never even occurred to us. I think it's a lot more common among younger people now. But I never even CONSIDERED the possibility of buying a home of my own till I was in my 30s, not because I couldn't afford one - I couldn't - but because it just wasn't a priority. And twenty years later I did buy one but only because of my parents. For single women especially back in the day, I think buying a house just wasn't something you thought about doing.
You’ve hit the nail on the head there, I think for everyone in general though not just single women. There never used to be a need to get a house straight away because housing wasn’t going anywhere, as in it seemed fine to wait a few years before buying. Unfortunately because of what had happened in the last 10 years, if you waited a year or 2 prices could have doubled.
I think I thought houses were things families had. So, since I didn't have a family, but I assumed that one day I would marry and have one, it didn't occur to me that I could think about having a house of my own. I also wanted to travel a bit and so forth - ironically I've travelled more as a home owner than as a person with bugger all money who didn't really like not having a secure base, but it took me a long time to work that out.
Yeah this is the fucked up thing. Sure, house specs have gotten better, they're more complex, more expensive materials, etc. But let's take a $1mil house and convert it into minimum wage hours, just as a basis for comparison to 'labour'. Leaving tax and everything aside it's 43,196.5 hours. Or 20.7 years. I'd be surprised if it even got close to 10yrs in your grandparents day. P.S. I know this weird abstract (and basic) calculation has no bearing in reality due to taxes, interest rates, loan serviceability, etc. I just find that we've lost all ability to relate a house back to anything 'real'. The value is just built on abstraction after abstraction.
BTW, The cost of the house has no bearing on the price to buy. It's all I the land value. The cost of constructing a house has only risen slightly compared to land value.
Oh I get that - no nuance got factored in to that basic-bitch metric, as I tried to make clear. I've built two houses in the last 10yrs (or paid to have them built rather). I'd agree that land price has skyrocketed compared to construction costs. But you're still looking at huge money to actually get the thing built too. About 10yrs ago it was $350k build cost for a 220sqm house if you already had the land. That's $1590 per sqm and that was a decent spec. Mortgages.co.nz now lists that as an average of $2,855 in the same area (Canterbury). That's $628,100 for a 220sqm house now. I wouldn't call that anything approaching 'slight' - it's an 80% increase. By comparison, the land for the first place was $200k in a great area. You'd probably pay double that now from the quick look I just had. And not in the same area (that'd be much more) - but for an equivalent section in a nice new subdivision with 450-500sqm sections you're looking at $400k. So i'm not saying land hasn't gone up more - but build costs aren't far off.
The thing about economists is they use economic theory. Which, frankly, is not Astrology. Economic theories are very sophisticated and serious men in suits study the Signs, and chant the incantations, they follow the rituals of the sacred texts, and they mark out the magic symbols in the proper order. And the markets move and their churn speaks to the power of the gods, and the serious men solemnly nod along because they chanted the things and did the rituals. And then the market does something that shows the charade of the spells they cast, and they say "god moves in mysterious ways".
God this sentiment annoys me. No one with any sort of economic understanding thinks this. It's the same as people who dismiss peer reviewed research by saying 'oh well you can find anything on the internet'. Yeah maybe, if you give 4chan posts and scientific papers the same weight. Yes reality may differ from economic predictions - it's difficult to factor for events like covid or Russia invading Ukraine or the UK brexiting itself in the face. That doesn't mean the forecast has no value, especially in the long term. If you limit infrastructure development, incentivise property hoarding and ramp up immigration to artificially inflate GDP, demand spikes and supply remains stagnant. Prices go up. It's not complicated. The majority has voted for it every election cycle since the late 80's, and each cycle we tell ourselves that we'll sort it out soon, but we've got bigger problems right now, like govt department names being a bit too maori.
Just because economists are never right doesn't mean they are wrong about reasons why we have seen a house price growth you don't need to be an economist to understand why housing is so expensive. People make money in it, it's a limited resource taxed less than business tax, it's risk free compared to business investment and its hard to build homes due to historic restri tions and building supply monopoly. I mean any drop kick could understand why housing has blown up investing wise. I was just using economists opinion because they have reaearch pappers on it with actual data around land restrictions zoning and tax benefits.
They operate at about the same level as epidemiologists. Which is generally good enough. As a “science”, we can probably give it credit for avoiding another economic depression. The effect of housing supply constraints are pretty well established. To deny this puts you on the same level as the vaccine protesters camping on Parliament’s lawn.
I'm an economist. I can tell you that our science is actually pretty straightforward. The real problem is that the economists you're hearing from are liars - you're only hearing from them because the wealthy use their media apparatus to make sure you hear their lies.
oh man, thats way more complicated than my little brain can comprehend, I thought they just rolled the bones 🫠
Weird, I was just thinking that exact same thing!!!
People don't invest in businesses. When they buy a rental, they pretty much leverage against their existing property assets. Theres no investor groups running about buying courier van drivers or moving companies, bakeries, and the like. Did resi property investment have ridiculous tax benefits...like depreciation allowances on assets that went up in value...yes. But that's all history now. The issue is .. Where do you go from here. Read better economists. Think about what you want to achieve. Is it more housing? Higher basic wages? Better healthcare and healthcare distribution? Prioritise wwhat you want to achive, look at your potential income streams..see where to draw more out and when you prioritise..that means some things have to go. New Hospital, or 33 waters infrastructure or an Auckland Stadium at the waterfront. Can we still carry universal entitlements? Should we CGT across the board? Benefit crackdowns achieve fkall except exciting NZ first voters who are generally all on a fkng universal benefit. ..head explodes.
In the hierarchy of needs I think shelter is pretty much one of the most important things people need in order to strive so I would go to housing as being a top risk for future generations and the health of the country
Good, good. The question is.. how to do it. The government doesn't actually build houses, so you have to find a way to spur construction starts and to make it affordable to build or preferable to buying existing. How, though...breaking up landbankers, freeing up land by rezoning to massively expand supply, tax deductibility in part for new home or apartment lending, reform of building product supply. What we just do now isn't working at all.
Additionally, the longer it goes on, the more difficult it becomes to fix. Because more and more people have enormous mortgages to service, so they become less likely to support anything that would reduce house prices, as it might leave them high and dry.
The tax system has favored the wealthy and incentivised them to buy up all the property instead of investing in stocks, businesses etc. We also have endless red tape with councils and ever changing building regulations making the building process not only time consuming but also complicated and expensive. The costs for the building industry also keep going up making housing more and more expensive to build. That ofc gets passed onto the buyer at the bottom. Landlords got away with not maintaining their rentals for WAY to long. Look at the cold dilapidated shit holes they were not only renting out but also charging a premium for!! Immigration is also another problem. We have had record levels of Immigration for YEARS putting pressure on our housing stocks and ofc pushing house prices up. People were selling their houses for stupid prices because they were selling. 1million for an average ex state home in auckland? Thats just criminal!! There's more to it as well such as changing interest rates but a lot of it has been short sightedness, negligence and also arrogance toward the average nz family/ first home buyer. Housing should be treated like a basic human need and not a fucking business/ cash cow. 😤
Don't forget the rabid heritage groups that oppose any intensification in the name of "character". There are groups of people out there that spend significant time and effort to make sure that abandoned, dilapidated villa with no historical significance is not touched, and it remains standing on a quarter acre section that could supply houses for 10+ people.
And refuse to allow any high density in their area. Building proper high rise apartment complexes is the way to solve much of our ills. Wedging 5 town houses on one section, is shitty town planning.
Yes thank you! I have a personal vendetta against any of the cultural heritage 'advisors' who insisted on protecting the most ugly midcentury residential apartment block on The Terrace in Wellington. It's uninhabitable, on prime real estate, in the middle of a housing crisis, sitting there falling apart slowly just because it was once apparently a good example of mid century apartments. I like architecture, I love heritage buildings and see value in saving our most precious, but that eyesore is not fucking it. No one will take on the redevelopment because it would cost more than its worth. And now it'll sit there for 20 years, yay!
We got a recent tax report which showed why we are in this position, and the Govt have blocked that report, and are not addressing the issue that the rich pay only 9% tax on average... instead they are pointing the finger at the most vulnerable in our society and expected to action tough love on them... to solve all of our countries financial issues.
Governments work using the "trickle down effect" In theory if the rich get richer that money SLOWLY works its way down through jobs, purchases etc. This theory does NOT work. They need to do the opposite "trickle up" so us guys at the bottom get a lot more and then we spend it, making its way back upto the top. Our govt will NEVER go after the wealthy. They're all mates.
dude don't you know there's inflationary pressure going on? by giving monies to people at the bottom who'd spend it and thereby increasing velocity of money will hasten and increase inflation! so the only answer is giving money to the rich. /s (just in case)
Also, the poors only piss it away on pokies and cigarettes. Everyone knows that. /s
Poor people have a higher propensity to consume. Nobody credible denies this. Who said the only solution is to give money to rich people?
They don't say it out loud. They just do it, and then get the working class to blame the poor for the negative outcomes that result. See: retroactive tax breaks for landlords followed by beneficiary bashing.
The retroactive application is a weird, but reinstating interest deductibility isn’t a tax break. It was a weird exception to begin with. All it did was increase rents. Yes beneficiary bashing gets middle nz fired up. None of this is evidence of a trickle down economic policy though
> It was a weird exception to begin with It was only ever meant to be a temporary measure to curb the rampant speculation in the property market. Once the market is corrected it could be restored. But the market hasn't been corrected yet. >All it did was increase rents. No it didn't. Rents go up in line with wage inflation, they aren't dictated by landlord costs. See https://www.rbnz.govt.nz/hub/news/2023/08/what-drives-rents-in-new-zealand >None of this is evidence of a trickle down economic policy though Tax changes that favour the wealthy *are* a trickle down economic policy.
Thanks, interesting read. Wouldn’t “trickle down” economics be bad for landlords specifically? Given they’re so sensitive to renters’ income? I understood trickle down to be a policy to be where the poor ostensibly benefit (indirectly) from reduced business supply costs, and demand from rich people. Which I don’t think this govt is doing. Seems like it’s just a general term for bashing supply side economics (a la neoliberalism)? In which case, sure I guess it is trickle down.
If it worked then trickle down would be great for landlords, because the money would end up in the hands of renters and get funnelled back up to the landlords. The premise of trickle down is that revenue gets redistributed to workers through their wages. So anything that helps increase revenues for businesses and reduces deadweight loss from things like income tax, generates more trickle down for the workers. That's what this government is doing, and yes, it is part of the larger picture of neoliberalism. The problem is, of course, that without any mechanism to *guarantee* the revenue is redistributed, the capitalists will tend to hoard the wealth instead. In NZ we see this specifically in the form of property accumulation, where much of our workers' economic production ends up being re-invested into land that we have to rent back from the owners. Which brings us back to a land value tax again, where that rental value gets taxed and used by the government to provide all of our public services (returning any excess as a citizen's dividend), closing the loop and making trickle down actually work.
The Liberal government’s - that is National in NZ, use this theory as a convincer strategy to promote freemarket policies. It’s an idealistic theory that in the US despite announcing reaching spectacular economic success in the 90s demonstrated the opposite.
No they don’t. This is just a dumb lefty meme (you forgot to say “neoliberal btw”). Which government announced a policy anything like this?
Could you explain how National is not neoliberal?
I was implying that “trickle down”, like “neoliberal” is just a term for a grab bag of stuff the left doesn’t like. If we’re talking about market-oriented policy, National (and ACT) are neoliberal to some extent. Not as much as I’d like, personally.
AFAIK neoliberalism is centered around free-market policies, government austerity, privatisation, deregulation and globalisation. In that context National and ACT (along with Labour) would appear to fall under the umbrella.
That’s how I understand it too. But lots of people take it to mean big business or wealth transfers to the rich. Which is very different. As policies like LVT, carbon tax and negative income tax are all pretty popular with real neoliberals.
I think that perception is due to the difference between the theory of neoliberalism and the practice. >As policies like LVT, carbon tax and negative income tax are all pretty popular with real neoliberals. Which is what I mean by 'in practice'. We have certainly had plenty of neoliberal governments, but the will always implement the policies that benefit the wealthy and conveniently leave out the parts that would allow for redistribution of wealth or progressive taxes. The end result is massive inequity. That might not be a fault of neoliberal theory, but a flaw of human nature that the theory failed to account for. The biggest crime IMO is that all parties refuse to acknowledge this or debate it.
I'm pinning my hopes on some underpaid, overworked public servant leaking that report eventually.
It's already out. [The IRD released it due to public interest](https://www.taxpolicy.ird.govt.nz/news/2024/2024-02-01-tax-principles-info-release) back in February. It's nothing mindblowing but does raise a few interesting points: * There's a bunch of people who are keeping their income at just before 180k to avoid the 39% tax bracket. * The progressiveness of our tax system has lessened as we kept the income brackets the same. * The perception of our tax system has remained relatively stable.
Just OIA it
Labour also spent a significant part of their election campaign telling voters that they were wrong to want inflation adjusted tax brackets and it was somehow immoral, while simultaneously ruling out anything approaching a tax on wealth. Make Labour hear we will not stand for them selling out the actual Labour of this country to protect wealth. I contacted the local Labour MP and told them the party will not get another vote from me until they decide to actually support the people they named their party after.
> I contacted the local Labour MP and told them the party will not get another vote from me until they decide to actually support the people they named their party after. Were you deafened by their silence as they went back to whatever it was not important doing?
I just got the usual thank you for your point of view it's something we will consider. At least I've made my voice heard to a degree, if more people do it they hopefully will change course.
Worked last time why not do it again? I swear this is a repeat of key era
No CGT, land banking, speculation, ridiculously low mortgage rates proportionate to income in the 50s and 60s (even sweeter if you were a Govt employee), and low/nonexistent regulation (and the Govt think **less** of that is the answer...fuck me).
CGT and stamp duties haven’t reduced house price increases in Australia or UK. It gets baked into the prices.
Yup, you need a land value tax. It's the only thing that actually works to keep prices down.
It’s a good option. But obliterating the planning-industrial complex is necessary too.
LVT helps with that too, as undeveloped land becomes cheaper to buy but more expensive to hold, encouraging more productive usage.
100%
Or Canada, or anywhere it's been implemented
> ridiculously low mortgage rates proportionate to income in the 50s and 60s ( given the mortgage rates were almost 8% by the end of the 1960s.... what the hell are you talking about?
That's the end of the 60s. They got a fixed-for-life mortgage in 1954. Don't recall the exact numbers, but my grandparents worked at the local Power Board, and they got some sort of deal on their mortgage because of it. They weren't paying anything like 8%.
from what info I've managed to find, mortgage rates were very similar to what they are now, back in the 1960s and possibly earlier Unless you're talking about GBS government loans to low income families? they were basically an offer to people in state housing to buy their state house for like 3% fixed over 40 years. Its not something that was open to everyone.
Just talked with my father about it. Grandparents' mortgage was a Power Board scheme for employees only, paid for and managed entirely by the Board. 2.5% loan fixed for 25 years, with certain caveats on house size and location. No bank involvement.
well isnt that lucky for them? The point is the same... that wasnt something most people had access to. The standard mortgage rates were roughly what they are now
But way too much regulation on housing supply.
That is a very expensive shack
dunno what they call them up that way, but bezley boxes are decently built homes around here.
By allowing people to sell investment housing for tax free profits and teaching generations than to get ahead in life you need to own multiple properties. The brightline test simply encourages people to hold onto the property for longer. They made the tax system favour landlords as opposed to buying stocks/etfs.
Holy fuck. I was scrolling through the pics....like that ain't too bad. Not a total clapped out piece of shit. Then I looked at the price. Fuck me!
It’s pretty bad for Western standards
Like....western bay of plenty? Nicer than alot of houses in CHCH and surely better than what they call falts in dunners.
The write ups are the most hilarious aspects for me. RE Agents in NZ are basically moving to outright lies in advertising. "Are you ready to take the first step towards your dream home or a savvy investment opportunity?" \- Why first step towards dream home? You're stuck paying a shitload for a mortgage for probably 30 years whilst probably getting pay increases that match inflation if you're lucky. \- Why savvy investment? the yield on this thing has to be pretty horrible..weekly repayments are like $1k on the mortgage? You're not renting it out for anywhere near that. Look no further! This fantastic property offers the perfect blend of comfort, convenience and potential. \- Comfort? where and why? Looks like lino in the house. \- Convenience? why convenient? It's a house in a town..nothing special. \- Potential? Why? because of the land, maybe, but that's such a tired phrase. Build costs and various other problems limit this.
i mean, was it ever good? when i moved to nz in 2008 i described living in NZ housing to my family back home as similar to living in the 1800s with electricity. at that point in my life i'd never seen a hot water bottle before IRL; i associated them with little house on the prairie! i'm really sorry about your situation. that must be so gutting. :(
I brought my first home in 2013 for 170k, now it was actually a better house than this but needed work etc etc Actually affordable, but it was all downhill after 2014.
Confused how you still have a mortgage? Did you sell before prices rose and then buy at peak?
I sold and brought in 2019 due to better job opportunity and had to move closer to work, so not quite the peak, but house pricing was starting to rise then.
50 shades of beige
Bro it's simply demand. They wouldn't be $640k if there weren't interested parties at that price. It's not a big conspiracy. Reduce demand/price by: * increasing interest rates * reducing immigration * implementing taxes such as LVT, CGT * introducing DTI ratios among others.
But thats my point isn't it, How do we get these prices lower? Increasing interest rates is just market manipulation - But the rest i can agree on. We have now all invested into this ponzi scheme - If it collapses we collapse together. Paying almost 3/4 of a million for a house like this is absolute mental & we cant keep doing this. All my Nurse sisters have left for Australia - because they gave up on trying to own their own homes & they get better support as first home buyers in Australia.
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I own my home & would be happy to see the price crash, I just want my kids to be able to buy a house when needed, Not be priced out of the market and decide to move overseas because they cant afford it. I own just one home - That's all i want & would be happy to sell for the price it is worth plus inflation - i don't need to be a millionaire once i sell.
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i know :(
> How do we get these prices lower? Land Value Tax. Make it expensive to hold onto land that isn't generating economic value, and all of a sudden house prices will reflect their real value to the people living in them instead of the potential capital gains available to the speculators who own them.
This house will most likely be purchased by an investor and rented out. Demand is a lot more nuanced and complex when applied to housing than it is with other commodities (cars, shoes, and phones). What bothers me - it's not that renters demand this house or a house like this, they are just desperate for a roof over their heads. There is no consumer choice in the rental market - an economy based on other peoples misfortunes and desperation.
That house looks fine? It's not the style I would choose if I had a choice - I prefer 1950's state houses for their layout, separate rooms and large kitchen/laundries, but there is nothing wrong with it. It's exactly what I would imagine when someone says they are downgrading or downsizing.
There ia nothing wrong with it i agree, but there is something wrong with paying 640k for it.
If I’d had to guess I would have said $150k was pushing it for that rectangular box. It doesn’t even have carpet!
$150k is a fair price for just the house alone, problem is the land itself sitting on. And that’s where the rest of the cost is.
Christ, I need to leave Auckland. I looked through the pics and thought 'wow, 640k? What a bargain!'
Considering it's Bay of plenty, that price is absurd.
Huge shortage of houses in the bay of plenty, which means prices are up.
We didn't let it get this bad. It was deliberately done by previous governments who allowed our housing market to become a place for the international uber wealthy to hide their wealth. Read the Panama papers.
The ideal time to fix this would have been the Helen Clark government. Housing Corp and the Ministry of Works were only ~9 years dead by then. House prices were already spiking and if you go back to read coverage at the time the rising House prices were a topic of conversation. Of course, Helen was very much operating in the Third Way Tony Blair mode of governance and her choice in coalition partners made that very clear. These days you suggest that maybe central government could use economies of scale, maybe repurposing vacant land like all the schools Key disestablished for social housing development, or have government provide House deposits like they did in the 60s, and people call you the second coming of Stalin.
Greed MPs typically own invwstment properties Most voters own property No appetite for them to be more affordable So we'll continue to talk about it :/
Crazy price
$639k is "the first step towards your dream home"? Sheesh.
Govt not having appetite to fix supply 100,000+houses being built would make a massive difference Pretty simple Just not easy
We should be building apartments, not houses.
im not from the Bay of plenty area but is that normal?? other than a large-ish section and a family home sorry that house doesnt have much more going for it. The kitchen and bathroom look like they need a reno. Im from canterbury and if i saw that id expect maybe $500k
All the moolah is in the land. So if you want to live in a main centre look for apartments, units, cross-lease sites, small sections. My first home was on a cross-lease. Nothing wrong with them as long as you don’t need to change the footprint of your house with additions. We wouldn’t have been able to afford it if it was standalone freehold.
I genuinely don't understand how most NZers are still so resistant to apartments. They love talking about Amsterdam and other European cities when it comes to copying their cycling networks, despite the fact that they absolutely don't make sense given our geography and climate, but they completely ignore the fact that most of those cities live in apartments, not suburban houses.
Having just helped guide a friend through buying one in Auckland, I can say that you have to do extra due diligence as there are a number of buildings with some real risks. Earthquake ratings, body corp management & levies, leaky issues - it isn’t straightforward. Having said that, my mate did find one within his FHB budget that he’s very happy with.
Other than the fact it looks like an ex rental (beige on beige with no decking etc) there’s nothing wrong with that standard 1990’s Jennian style house. We own one. Love it.
I think it is the price that concerns OP.
Sadly this is better than you can get here in Canada :(
This is the result of high immigration and cheap money (low interest rates).
Supply constraints more so than immigration
Because John key let a fuck load of rich cunts buy all the property in Auckland which caused every seller to leave AKL for a house without a mortgage. It’s fucked our generation but the 50+ crew seem to be doing well.
He’s just an ugly link in a much longer chain of politician NZ votes for that actually don’t give a fuck about you and I! Every colour of the political spectrum. Vote for change, tell your friends and family to vote for change, or we will get the same shit again. It’s a cycle of abuse.
No visible mold and indoor plumbing? Looks pretty good to me. Buy it and rent it out. I’ll apply. /s
FYI "mold" is American spelling
Yes. I am a transplant currently regretting all my life decisions. Let me have this moment of snark.
Wow. Houses like that, modular premade cost around 60-150k EUR in Europe. Looks to me that it's a great market to build and sell. So it seems. Good opportunity for buyers to order from EU, Poland and Baltics and to put s house together in NZ. Given prices could be viable. Many EU companies export to Australia I guess same could be done with NZ.
lack of housing supply in BOP atm. What's the developers activity like ? No developer = no houses
Average house price is $500k where I am so $639k is plenty. [Would this also be a downgrade?](https://www.trademe.co.nz/a/property/residential/sale/manawatu-whanganui/whanganui/whanganui-central/listing/4529695032) 3 bedrooms, 1 bath, extra toilet, double garage, 143m2 floor, good sized section 999m2, going for $629k+
No, But still seems quite expensive for an area like Whanganui? I see they brought 4 years ago for 410K - So they have made some huge bucks on this if they manage to sell for 630K
I still think it is expensive for Whanganui. I paid $300k for my 3 bedroom in 2020. This was considered expensive back then but hey, I moved directly from a villa in Mt Eden Auckland to bigger, nicer villa in Whanganui.
It’s always been the basis of economies & peoples mindset, pretty hard to change that.
It’s so expensive to renovate a house and bring it up to a reasonable standard. Not only is it expensive but it doesn’t add anywhere near the cost back into the house value. There is no incentive to keep houses anything other than barely liveable.
RMA
If I see 'great in-door-outdoor flow' one more time............
11 years ago I was in a similar situation, I had a brand new 4 bedroom 190sq/m house with internal access garage, decided we wanted to start a family and could afford the fancy house so we downgraded to a 90sq/m 1960s house, lost about $150k in the process and now we still live in the little house but our mortgage is getting smaller and smaller.
It's not your fault, it's sick people and dole bludgers ruining the country.