NZ 1st homebuyers are ScReWeD...

[JBmurc]

Quite an interesting comment to look back on - made on the first page of this thread in 2007.

Yes but sadly many New and old investors think Property can only continue to rise ,,,

if the lowest lending rates went back to 7% and stayed there for next decade I can promise you NZ home prices would not double .. well not unless we have massive inflation in wage growth....now if rates went Negative and we got paid interest for having debt then yes we could keep the Bubble growth in play

[unhuman]

Doubles in price every 10 years? ie about 7% per year

Thats a new one Duncan. It used to be 10% a year - ie doubles in price every 7 years.

Do you still reckon property has doubled every 10 years from 1066 to 2006 and will do so from 2006 to 2056?

Year average house price
2006....400k
2016....800k
2026....1.6 m
2036....3.2 m
2046....6.4m
2056....12.8m

A house is considered expensive if it is 7 times the average wage.

What are the chances of the average wage being $229,000 (1.6m/7 = 229k) in 2026?

Pretty slim I'd say.

If house prices keep doubling every 10 years no one will be able to afford to buy them.

I like to refer back to this post from 2007 every couple of years to check how NZ's unaffordable housing is tracking.

Article on stuff this morning stating houses have doubled in the last 10 years: https://www.stuff.co.nz/money/350176...an-it-continue

Before the OCR hikes NZ looked on track to get to the 1.6m by 2026.

QV only has the average house price at 950K~ish now though so some way off right now.

Between the flood of migrants and (eventually) decreasing interest rates still a chance to get to 1.6m. Most economists seem to think housing on the rebound this year.

The housing ponzi scheme still going strong.

[JBmurc]

I like to refer back to this post from 2007 every couple of years to check how NZ's unaffordable housing is tracking.

Article on stuff this morning stating houses have doubled in the last 10 years: https://www.stuff.co.nz/money/350176...an-it-continue

Before the OCR hikes NZ looked on track to get to the 1.6m by 2026.

QV only has the average house price at 950K~ish now though so some way off right now.

Between the flood of migrants and (eventually) decreasing interest rates still a chance to get to 1.6m. Most economists seem to think housing on the rebound this year.

The housing ponzi scheme still going strong.

Not going to happen by 2026 IMHO .. unless the NZD goes even further down in value because rates drop to near zero again... middle-class Kiwis just aren't making enough $$$ after ever increasing living costs ...FHB having to stump up even more for a first home unit etc ..

[Aaron]

Not going to happen by 2026 IMHO .. unless the NZD goes even further down in value because rates drop to near zero again... middle-class Kiwis just aren't making enough $$$ after ever increasing living costs ...FHB having to stump up even more for a first home unit etc ..

RBNZ guarantees at least a 1-3% rise each year although as unhuman points out the RBNZ has spectacularly out performed their inflation targets with asset prices. Although assets do not form a big part of the CPI so maybe they do not measure it.

Interest deductibility will return soon thanks to Chris and the team. I agree with it though, it is inflation targeting that seems to be what distorts things.

This guy has an interesting take on things although he is talking about Australia.

"The rental property sector in Australia is not a net tax payer. The deductions actually exceed the income.

and that is with a capital gains tax.

https://www.abc.net.au/news/2024-02-...ears/103465044

Hopefully Chris can get the rental market back in order so landlords can get back to contributing very little to the nation. Guaranteed 2% tax free capital gains probably more like 7% and with Adrian at the helm mortgages are 6-7% easier to pay off each year, although the current return of interest rates has many moaning.

[Aaron]

Anecdotal admittedly, sad but I am reluctant to say true. As there is still the possibility of home ownership, but as sailorRob points out not a good investment and relies on current monetary policy settings to keep interest rates low and push up house prices faster than CPI inflation.

National's policies will only exacerbate the problem, but what is the solution? I would suggest a 0% inflation target as a first start. Cut immigration to the bone. Look at a capital gains tax and investing that in housing. Sounds too hard and no political will to change as a certain sector of society is doing just fine.

https://www.stuff.co.nz/nz-news/3501...t-afford-house

Australia but just some confirmation bias.

https://www.youtube.com/watch?v=qsE_-Fp6BQM

[JBmurc]

RBNZ guarantees at least a 1-3% rise each year although as unhuman points out the RBNZ has spectacularly out performed their inflation targets with asset prices. Although assets do not form a big part of the CPI so maybe they do not measure it.

Interest deductibility will return soon thanks to Chris and the team. I agree with it though, it is inflation targeting that seems to be what distorts things.

This guy has an interesting take on things although he is talking about Australia.

"The rental property sector in Australia is not a net tax payer. The deductions actually exceed the income.

and that is with a capital gains tax.

https://www.abc.net.au/news/2024-02-...ears/103465044

Hopefully Chris can get the rental market back in order so landlords can get back to contributing very little to the nation. Guaranteed 2% tax free capital gains probably more like 7% and with Adrian at the helm mortgages are 6-7% easier to pay off each year, although the current return of interest rates has many moaning.

the assets aren't going up in value ... the NZD is dropping in value ..it's heading southwards and will continue to unless interest rates go high enough to make that NZD value higher say we had 10-15% interest rates etc

Just think of the value lost in the NZD.. if I had a million NZD 25 years ago in Queenstown I'd be so rich could buy a nice property in a great location and a couple of Queenstown rental homes earning 7-8% return(I recall it well as I had a contract on a property for 3bd freehold house for $173k in sunshine bay in year 2000)..and still have enough funds to invest in the market and pick up great stock for peanuts ...

Fast forward to the present mass dilution of the value of the NZD YOY...

that same NZD $1mill today in Qtn wouldn't get me home anywhere in Qtn ... but a 1-2 bed shoebox unit that would return 3-4%

[rmbbrave]

How fast have house pices gone up?

It depends how you look at it.

In the UK in 1985 a house cost 3.4 times the average wage.

In 2005 a house cost 6.1 times the average wage.

Conclusion in the last twenty years house price in the UK have not even doubled in price.

I.E gone up 3-4% a year.

http://news.bbc.co.uk/2/shared/spl/h...l/nn2page1.stm

[Steve]

SC, I did it this way as I did not really have the means to move in outright and this way I also received the benefit of tax deductability of the costs such as interest/rates/insurance etc.

It was just a means to the end.

The most difficult bit is getting the initial deposit...

[Crypto Crude]

I see your point macdunk...other peoples money or not... it dont matter.. us newbies are priced out of the market, so it doesnt matter where the money came from....
My point is that 1st homebuyers are screwed...(usually the younger ones)
My deposit for a house has gone all into shares... I can afford a deposit, but I cannot afford 15, 20, plus years... or in my example 30 years...

hey Rmb... u raised a good point.... and that is that we are less likely to get 100% capital growth from property than ever before..

our property market is run by foreigners that buy up our houses, push up prices, and yet the new generation coming through are screwed on like 11, 12,13 dollars an hour...
what good can you do with $400 after tax per week... and $512 weekly loan payments is too large even with two flatmates...
so house prices have been rising through more wealthier internationals..who consider our property cheap... cheap for them expensive for us... expensive for us unless you are already on the property wave of course....
Government raised minimum wage last year and in April this year, and propose again next year... this is a clear signal... lower paid jobs are at the lower aged end of the market...
and the youth need all the help they can get if property is their life long debt ridden goal

[duncan macgregor]

SHREWD CRUDE, Most people start with nuthing everyone leaves with nuthing, its what you do in between. The cream always reaches the top my friend in any generation. MACDUNK