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@voodoo Makes sense. Cheap money is cheap money. IO certainly isn't all investor driven. Which begs the question on how the RBNZ gather their data. Nobody wants to declare as an investor due to tax implications. I don't recall anything on S and P agreements, so it must come from the banks, but if I don't borrow to buy, how does anybody know that it was an investment statistically? Probably a small margin but it is there.
Debt data is easy from the banks. Corelogic do it all with properties and that is pretty simple from sales, but where do the "investor" numbers come from to be accurate...I must be missing something obvious there.
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@jc said in Housing hornets' nest:
@snowy Just off out, but the short answer is likely to be non-banks such as building societies and credit unions, who aren’t bound by the LVR rules. They are probably the lifeline for a lot of lending the banks won’t support, like first time borrowers, gig economy workers etc. RBNZ and government actions seem determined to marginalise that sector though, so who knows how long that will last. That’s another story though
Thanks. Makes sense. Didn't even know that those sorts of lenders existed anymore and, yes I think that they must be getting pushed out. I remember Countrywide Building Society but think that they became a bank.
Makes me wonder about some of the peer to peer stuff that I have been lending to. How long will that last. Harmoney already sold out to banks for small loan stuff.
The others are large loans, seriously low LVR though, shorter term loans, secured against first mortgages with good returns, so quite a bit different. Usually builders who are doing spec stuff and need a bit more cash to finish a project, or investors doing renovations, bridging, that sort of thing.Very interesting times economically with some of these new options and some more traditional ones very unattractive.
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Regarding the effect of tax laws and how they influence peoples decisions (see cars 1,2,4 & 10 for example) I have wondered how much of an impact the individual income tax rates during the 2000's influenced the housing situation we're seeing now.
I worked in an accounting firm during the 2000's and it was interesting watching the change in clientele during this time. The accounting firm wasn't one of the big 4 so we did a lot of work with SMEs and Joe public. During this time we had a large increase of people asking about Loss Attributing Qualifying Company's (LAQCs). The main reason why most of Joe public were asking about LAQCs was that they allowed the losses from the company to flow through to the shareholders. The shareholders would then offset these losses against their income and receive decent tax refunds each year.
This all worked really well. People earning over $60K were paying 39% on each $ over $60K and they didn't think it was fair. Now this wasn't the top 5% getting pissed off at paying too much tax, it was police, teachers, nurses, government workers etc. This was a clientele that hadn't previously been that interested in owning a rental property. Higher interest rates had meant a lot of people had been happy to keep their savings in a bank and not risk it elsewhere. This was also a time where rents were low, mortgage rates were moderately high and these LAQCs passed between $5K-$15K of losses back to the shareholders to claim back their tax they had paid. The cherry on top here was the tax free capital gain at the end but the main reason for these people to get into the rental business was the high tax rate that kicked in at such a low rate.
The current situation was always on the cards and you only have to look at the rest of the western world to see that. But I do wonder how much those individual tax rates kicking in at such low bands helped accelerate the situation we find ourselves in now.
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@toddy LAQCs are a really good point. Being able to write off a loss from a company, against personal income doesn't make much sense to me (and yes I still have LAQCs but they make money). That entity must stand on it's own legs or you go backwards. Having loss making businesses to avoid tax still means that you are losing money, but I know that wasn't what you were getting at.
The change of demographic is interesting. A lot more people trying to find somewhere to put money, in a low interest rate environment, with a low top tax bracket. Foreseeable results.
@toddy said in Housing hornets' nest:
The cherry on top here was the tax free capital gain at the end but the main reason for these people to get into the rental business was the high tax rate that kicked in at such a low rate.
Agreed on the tax rate. Got to be a motivating factor to change investment strategies with a LAQC. This has been one of the bones of contention throughout - the capital gain isn't necessarily tax free and markets have out performed property so not much of a net gain for investors anyway, just that some of it may have gone to the government.
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Warren still sticks to his tried and true, invest in what people need. Housing, food, water.
I didn't realise that building costs had gone up so much in the US as well, but he is mostly talking about steel. When he talks I listen.
Personally, I don't like steel as a house framing. It is becoming really popular though. Heaps of them going up around here.We (NZ) still deal mostly in timber which is a nightmare supply wise too now. No easy answers.
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I get emails from both of the major NZ political parties - I try to keep a balanced view - as well as knowing what they are both up to.
I have been going on about this for a while (and it is from the National party). Some disagree on here but this is what they said:
*"Officials told Labour that renters would suffer. Officials cast serious doubt over the effectiveness of the Government’s housing package in the months before its announcement. The advice showed the package wouldn’t make a difference to the supply of housing, instead they would likely increase rents.First home buyers are predominantly renters, any measures that drive up rents only serve to make it harder for first home buyers to put together a deposit, further locking them out of the market."*
Maybe they read my posts. I also have no idea who "officials" might be? It is pretty obvious that shafting renters, is also shafting some first home buyers, and making property investment more difficult doesn't help with rental supply.
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@snowy said in Housing hornets' nest:
Warren still sticks to his tried and true, invest in what people need. Housing, food, water.
I didn't realise that building costs had gone up so much in the US as well, but he is mostly talking about steel. When he talks I listen.
Personally, I don't like steel as a house framing. It is becoming really popular though. Heaps of them going up around here.We (NZ) still deal mostly in timber which is a nightmare supply wise too now. No easy answers.
Soon we will be living in mud huts. Its like the Greens wet dream
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@canefan said in Housing hornets' nest:
Soon we will be living in mud huts. Its like the Greens wet dream
I'm a "greenie" in ecological and environmental terms, but I don't listen to the Greens. Solar panels, electric cars, I'm all in. A shame that we can't have both (yet anyway).
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@snowy said in Housing hornets' nest:
I get emails from both of the major NZ political parties - I try to keep a balanced view - as well as knowing what they are both up to.
I have been going on about this for a while (and it is from the National party). Some disagree on here but this is what they said:
*"Officials told Labour that renters would suffer. Officials cast serious doubt over the effectiveness of the Government’s housing package in the months before its announcement. The advice showed the package wouldn’t make a difference to the supply of housing, instead they would likely increase rents.First home buyers are predominantly renters, any measures that drive up rents only serve to make it harder for first home buyers to put together a deposit, further locking them out of the market."*
Maybe they read my posts. I also have no idea who "officials" might be? It is pretty obvious that shafting renters, is also shafting some first home buyers, and making property investment more difficult doesn't help with rental supply.
Changing taxation and interest write-offs is not meant to target supply, it's meant to target demand. The supply side is building. So, that's not really any sort of insight, it's just the usual opposition whinge.
What are the numbers on rent increases following the announcements? It certainly wouldn't surprise me, particularly anyone who has bought recently needs a massive rent to deal with the big capital outlay - but show us some figures - and then answer whether it is a greater increase than the highest ever monthly increase in rents, which occurred before the announcements?
Politicians are so disappointing. Labour wants to centralise the polytechs, centralise health admin, cut out a heap of bureaucracy - implementation may prove to be shit, but it's almost inarguably a sound idea. But National rail against the principle of it, despite it being both sensible and what they are meant to stand for - small government and efficiency etc - but of course Labour said it, so we must oppose it. Listening to either party is a waste of bloody time. -
@reprobate said in Housing hornets' nest:
@snowy said in Housing hornets' nest:
I get emails from both of the major NZ political parties - I try to keep a balanced view - as well as knowing what they are both up to.
I have been going on about this for a while (and it is from the National party). Some disagree on here but this is what they said:
*"Officials told Labour that renters would suffer. Officials cast serious doubt over the effectiveness of the Government’s housing package in the months before its announcement. The advice showed the package wouldn’t make a difference to the supply of housing, instead they would likely increase rents.First home buyers are predominantly renters, any measures that drive up rents only serve to make it harder for first home buyers to put together a deposit, further locking them out of the market."*
Maybe they read my posts. I also have no idea who "officials" might be? It is pretty obvious that shafting renters, is also shafting some first home buyers, and making property investment more difficult doesn't help with rental supply.
Changing taxation and interest write-offs is not meant to target supply, it's meant to target demand. The supply side is building. So, that's not really any sort of insight, it's just the usual opposition whinge.
What are the numbers on rent increases following the announcements? It certainly wouldn't surprise me, particularly anyone who has bought recently needs a massive rent to deal with the big capital outlay - but show us some figures - and then answer whether it is a greater increase than the highest ever monthly increase in rents, which occurred before the announcements?
Politicians are so disappointing. Labour wants to centralise the polytechs, centralise health admin, cut out a heap of bureaucracy - implementation may prove to be shit, but it's almost inarguably a sound idea. But National rail against the principle of it, despite it being both sensible and what they are meant to stand for - small government and efficiency etc - but of course Labour said it, so we must oppose it. Listening to either party is a waste of bloody time.They may want to centralise, but I severely doubt that Labour will be cutting the bureaucracy anytime soon. I do agree there are lots of theoretical upsides to doing so, but it will all fail in the execution.
As far as capital gains taxes are concerned, as a home owner and small time investor, I have no major problem with such a tax. People who buy more and more houses are not producing anything of value to the economy, they don't manufacture, they don't provide services per se. And they serve to drive up property prices out of the reach of people who aren't yet in the market, making the supply discrepancy even worse. It might not be a popular view, but it's mine
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@reprobate
I have not read the entire thread but this problem is something close to my heart, having being priced out of living in Auckland.Aside from building more houses, theoretically, what are the things can be done now to redress this problem. Or is it too late?
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@mariner4life said in Housing hornets' nest:
@kirwan said in Housing hornets' nest:
@snowy tax...tax....taxinda!
i fucking hate tax as a deterrent
i hate it because all it does is governments more to spend on dumb shit
i hate it because governments are addicted to taxation, so even if it's not working, it'll never get rolled back
i hate it because it always always targets the less fortunate, because rich guys have better accountants (who often work for the same firms that wrote the tax code)
I hate it because governments would rather tax easy shit like this, or booze, or gambling, rather than actually making everyone pay their fair share.Yeah, I hate the way cigarettes are taxed. Like, I get the rationale for it, but I would question the efficacy in deterring smoking as opposed to the public health campaigns warning of the associated health dangers. The taxation of cigarettes just does more to make poor people spend more of what little they have of one of the few things that might give them a small amount of pleasure in their lives (not saying only poor people smoke, but that the exorbitant taxation affects them disproportionately).
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@junior said in Housing hornets' nest:
@mariner4life said in Housing hornets' nest:
@kirwan said in Housing hornets' nest:
@snowy tax...tax....taxinda!
i fucking hate tax as a deterrent
i hate it because all it does is governments more to spend on dumb shit
i hate it because governments are addicted to taxation, so even if it's not working, it'll never get rolled back
i hate it because it always always targets the less fortunate, because rich guys have better accountants (who often work for the same firms that wrote the tax code)
I hate it because governments would rather tax easy shit like this, or booze, or gambling, rather than actually making everyone pay their fair share.Yeah, I hate the way cigarettes are taxed. Like, I get the rationale for it, but I would question the efficacy in deterring smoking as opposed to the public health campaigns warning of the associated health dangers. The taxation of cigarettes just does more to make poor people spend more of what little they have of one of the few things that might give them a small amount of pleasure in their lives (not saying only poor people smoke, but that the exorbitant taxation affects them disproportionately).
I'd like to know how much of that tax money is actually used in smoking cessation initiatives....
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@canefan said in Housing hornets' nest:
As far as capital gains taxes are concerned, as a home owner and small time investor, I have no major problem with such a tax. People who buy more and more houses are not producing anything of value to the economy, they don't manufacture, they don't provide services per se. And they serve to drive up property prices out of the reach of people who aren't yet in the market, making the supply discrepancy even worse.
People who buy more and more houses are classified as traders and are already taxed. It's all there earlier in the thread, with quotes from the IRD website. The same applies to people who do too many (in IRD eyes) share transactions. It is the same as any investment.
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@reprobate said in Housing hornets' nest:
@snowy said in Housing hornets' nest:
I get emails from both of the major NZ political parties - I try to keep a balanced view - as well as knowing what they are both up to.
I have been going on about this for a while (and it is from the National party). Some disagree on here but this is what they said:
*"Officials told Labour that renters would suffer. Officials cast serious doubt over the effectiveness of the Government’s housing package in the months before its announcement. The advice showed the package wouldn’t make a difference to the supply of housing, instead they would likely increase rents.First home buyers are predominantly renters, any measures that drive up rents only serve to make it harder for first home buyers to put together a deposit, further locking them out of the market."*
Maybe they read my posts. I also have no idea who "officials" might be? It is pretty obvious that shafting renters, is also shafting some first home buyers, and making property investment more difficult doesn't help with rental supply.
Changing taxation and interest write-offs is not meant to target supply, it's meant to target demand. The supply side is building. So, that's not really any sort of insight, it's just the usual opposition whinge.
What are the numbers on rent increases following the announcements? It certainly wouldn't surprise me, particularly anyone who has bought recently needs a massive rent to deal with the big capital outlay - but show us some figures - and then answer whether it is a greater increase than the highest ever monthly increase in rents, which occurred before the announcements?
Politicians are so disappointing. Labour wants to centralise the polytechs, centralise health admin, cut out a heap of bureaucracy - implementation may prove to be shit, but it's almost inarguably a sound idea. But National rail against the principle of it, despite it being both sensible and what they are meant to stand for - small government and efficiency etc - but of course Labour said it, so we must oppose it. Listening to either party is a waste of bloody time.Agree with the political whinge bit and obviously not fixing supply. I listen to it because I have to vote for one of them and prefer to know what I am voting for. So not a waste of time in my view. A lot (not you) don't seem to, they just vote for a party because they, or their family always have voted one way. It actually makes it quite difficult being informed because some policies from both sides I will agree with and others not.
https://www.interest.co.nz/charts/real-estate/median-rents-nz
Data is from Dept building and housing. Quite a spike there. Median, not average of course. Only goes back 4 years and having a bigger data set would be good, but does show that it is out of the norm for increases.
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@junior Ministry of Health say tax rises are the most effective way of getting people to kick the habit. Apparently every time the excise increases about 25K Kiwi's give up.
I understand why people would be against it on principle though. I have a fair number of staff that smoke and all of them are those least able to afford it.
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@dogmeat said in Housing hornets' nest:
@junior Ministry of Health say tax rises are the most effective way of getting people to kick the habit. Apparently every time the excise increases about 25K Kiwi's give up.
I understand why people would be against it on principle though. I have a fair number of staff that smoke and all of them are those least able to afford it.
my wife used to smoke, but gave up a few years back. i thought it was expensive then. when my mate who has just quite told me how much he was paying i nearly coughed up a lung.
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@mariner4life I annualise it for the people here who smoke ($15K /yr for a pack a day habit) and they go holy fuck I could buy a house. Then they just swap to a cheaper brand.
Housing hornets' nest