Financial advice for a fellow ferner
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<blockquote class="ipsBlockquote" data-author="JC" data-cid="596949" data-time="1468626344">
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<p>Because I can't see any way of increasing the supply of housing so fast that all of a sudden people are discouraged from buying the existing houses that go to market.</p>
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<p>There is a generational transition still to occur. I can't speak to NZ, but anecdotally almost every boomer I know still lives in the same 4 bedder they raised their three kid family in. Many of these have been empty-nesters for 5-10 years. They all stay for some reason or another can't be arsed moving, still have transient kids coming and going, took equity out of the house to help kids purchase, still think the market is going to run - whatever reason.</p>
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<p>It's fine an manageable at 55, 60, 65 even - but at some point boomers have to sell and downsize. Now it is a choice - eventually it will be a necessity. They will either to fund their lifestyle in retirement because they have not enough super and the pension won't cut it or for medical reasons.</p>
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<p>Immigration obviously changes the equation a lot, but given who comprises domestic home ownership in Aus/NZ I can't see how their won't be a natural increase of supply in line with the Baby Boomer birth curve. What knock on effect that has if we get a flat or heaven forbid a down year I don't know...</p> -
<blockquote class="ipsBlockquote" data-author="rotated" data-cid="596968" data-time="1468629101"><p>
There is a generational transition still to occur. I can't speak to NZ, but anecdotally almost every boomer I know still lives in the same 4 bedder they raised their three kid family in. Many of these have been empty-nesters for 5-10 years. They all stay for some reason or another can't be arsed moving, still have transient kids coming and going, took equity out of the house to help kids purchase, still think the market is going to run - whatever reason.<br><br>
It's fine an manageable at 55, 60, 65 even - but at some point boomers have to sell and downsize. Now it is a choice - eventually it will be a necessity. They will either to fund their lifestyle in retirement because they have not enough super and the pension won't cut it or for medical reasons.<br><br>
Immigration obviously changes the equation a lot, but given who comprises domestic home ownership in Aus/NZ I can't see how their won't be a natural increase of supply in line with the Baby Boomer birth curve. What knock on effect that has if we get a flat or heaven forbid a down year I don't know...</p></blockquote>
True, but that doesn't change the supply side at all, that's simply a reorganisation of existing supply. Until the overall supply of housing stock increases of course, but it doesn't seem as though we have the capacity within the building industry to sin crease that supply at such a rate as to crash the market. I'd bet there will be a levelling off of prices in Akl followed by a modest drop which will look worse when compared to inflation. And that is exactly what we want. A crash would be hellish for the entire country. -
<br><blockquote class="ipsBlockquote" data-author="mariner4life" data-cid="596486" data-time="1468467997"><p>tinder is a fuck-ton cheaper than buying 12 RTDs and 2 shots of tequila as well</p></blockquote>
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Finding new chemists for rohypnol is a hassle, too... -
<blockquote class="ipsBlockquote" data-author="JC" data-cid="596973" data-time="1468630135"><p>
True, but that doesn't change the supply side at all, that's simply a reorganisation of existing supply. Until the overall supply of housing stock increases of course, but it doesn't seem as though we have the capacity within the building industry to sin crease that supply at such a rate as to crash the market. I'd bet there will be a levelling off of prices in Akl followed by a modest drop which will look worse when compared to inflation. And that is exactly what we want. A crash would be hellish for the entire country.</p></blockquote>
That is operating under the assumption that the current market is a product of chronic under supply and not rampant speculation. Demographics could well produce that first domino.<br><br>
Housing inventory to population has been increasing in all these red hot markets (Sydney, Auckland, Vancouver etc) yet prices increase at even higher rates.<br><br>
Ireland was massively oversupplied for years as the market raged on. They key is getting a glut of supply big enough to cause a downturn in pricing enough to spook the speculators. Then captiulation. -
<blockquote class="ipsBlockquote" data-author="Baron Silas Greenback" data-cid="596965" data-time="1468628646"><p>Ok, so your statement was bullshit. <br>
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No Auckland suburb dropped by anywhere near 25%</p></blockquote> You must be the angriest poster on here -
<blockquote class="ipsBlockquote" data-author="JC" data-cid="596973" data-time="1468630135"><p>
True, but that doesn't change the supply side at all, that's simply a reorganisation of existing supply. Until the overall supply of housing stock increases of course, but it doesn't seem as though we have the capacity within the building industry to sin crease that supply at such a rate as to crash the market. I'd bet there will be a levelling off of prices in Akl followed by a modest drop which will look worse when compared to inflation. And that is exactly what we want. A crash would be hellish for the entire country.</p></blockquote>
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It changes the supply if the boomers are moving into rest homes though, as that's new supply. -
<blockquote class="ipsBlockquote" data-author="rotated" data-cid="596981" data-time="1468633630"><p>
That is operating under the assumption that the current market is a product of chronic under supply and not rampant speculation. Demographics could well produce that first domino.<br>
Housing inventory to population has been increasing in all these red hot markets (Sydney, Auckland, Vancouver etc) yet prices increase at even higher rates.<br>
Ireland was massively oversupplied for years as the market raged on. They key is getting a glut of supply big enough to cause a downturn in pricing enough to spook the speculators. Then captiulation.</p></blockquote>
Not really. The under supply at the moment doesn't seem to be chronic, even in Auckland, but there is evidently enough of an undersupply to move the prices upwards. But my point isn't really about the the how under supplied the market is now, it's about how much and how fast that would have to change to precipitate a crash of, as one poster suggested, 25%. All things being equal industry will eventually build enough houses, and enough people will leave Auckland, and enough boomers will downsize, to create an oversupply, but so long as that is orderly it doesn't need to be catastrophic.<br><br>
Boomers may relocate or downsize but you'd need to know what's driving it to understand the likely impact. If people truly want smaller homes there will be a different impact to what you'd see if they wanted the same size house but smaller gardens for example. If their kids and families have moved away they may be inclined to follow, but might want to stay put if the kids are close. We don't know. But the chances of everybody doing the same thing and selling up at the same time seems comparatively unlikely unless, as I say, there is an external shock that triggers people into action. -
<blockquote class="ipsBlockquote" data-author="JC" data-cid="597366" data-time="1468669052">
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<p>Boomers may relocate or downsize but you'd need to know what's driving it to understand the likely impact. If people truly want smaller homes there will be a different impact to what you'd see if they wanted the same size house but smaller gardens for example. If their kids and families have moved away they may be inclined to follow, but might want to stay put if the kids are close. We don't know. But the chances of everybody doing the same thing and selling up at the same time seems comparatively unlikely unless, as I say, there is an external shock that triggers people into action.</p>
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<p>Does it affect their pensions or other government benefits in any way?</p>
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<p>Here, some Boomers AREN'T downsizing because primary residence isn't means-test for pension. So you've got a few old duffers living in Rose Bay in multi-million dollar houses, still getting a part pension because they've squirreled their cash into the house or elsewhere.</p> -
<blockquote class="ipsBlockquote" data-author="NTA" data-cid="597375" data-time="1468673134"><p>
Does it affect their pensions or other government benefits in any way?<br><br>
Here, some Boomers AREN'T downsizing because primary residence isn't means-test for pension. So you've got a few old duffers living in Rose Bay in multi-million dollar houses, still getting a part pension because they've squirreled their cash into the house or elsewhere.</p></blockquote>
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NZ Super isn't means or asset tested, so there's no impact from that perspective. However, rest home subsidies are means and asset tested, so eventually they will probably have to sell. -
<blockquote class="ipsBlockquote" data-author="Godder" data-cid="597456" data-time="1468711314">
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<p>NZ Super isn't means or asset tested, so there's no impact from that perspective. However, rest home subsidies are means and asset tested, so eventually they will probably have to sell.</p>
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<p>If they don't gift the house to their kids..?</p> -
<a data-ipb='nomediaparse' href='http://i.imgur.com/2AnXF27.gifv'>http://i.imgur.com/2AnXF27.gifv</a>
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<blockquote class="ipsBlockquote" data-author="antipodean" data-cid="597464" data-time="1468712631"><p>
If they don't gift the house to their kids..?</p></blockquote>
MSD take that into account when determining the subsidy levels, and likewise for gifting into trusts.<br><br>
Exempt gifting is $6000 per partner, per year for 5 years, and then $27000 per year after that. Anything above that is added back onto the available assets for the financial means assessment. -
<blockquote class="ipsBlockquote" data-author="antipodean" data-cid="597463" data-time="1468712569">
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<p>If they don't gift the house to their kids..?</p>
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<p>In Oz I think there are rules about gifting - because the pension is gauged primarily against non-residential assets, a single person can have around $190K in e.g. cash, while a couple can have about $80K more than that.</p>
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<p>I looked into this when my Dad passed away to ensure my Mum wasn't going to get stung.</p>
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<p>If they start gifting money off to keep that amount down, I think its capped at $10K per year before they start paying tax or losing part of their pension.</p> -
<blockquote class="ipsBlockquote" data-author="reprobate" data-cid="597496" data-time="1468716907"><p>
how much is that subsidy worth?</p></blockquote>
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Varies by region, but around $900 per week. <a class="bbc_url" href="https://www.gazette.govt.nz/notice/id/2016-go3295">https://www.gazette.govt.nz/notice/id/2016-go3295</a> has the actual amounts. -
<blockquote class="ipsBlockquote" data-author="Godder" data-cid="597607" data-time="1468734647">
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<p>Varies by region, but around $900 per week. <a class="bbc_url" href="https://www.gazette.govt.nz/notice/id/2016-go3295">https://www.gazette.govt.nz/notice/id/2016-go3295</a> has the actual amounts.</p>
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<p>sweet thanks, sponge baths here i come.</p>