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New Zealand Passes Law to Crack Down on Foreign Home Buyers

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Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#51

Post by weberc2 »

Tiktaalik wrote: post #3

Seems reasonable to me. Housing should be for housing people, not a speculative financial investment. It's reasonable for cities to ask that people show that they have some skin in the game, that they're living, working, paying taxes and contributing to and enhancing the community.

Forgive my ignorance, but if you're investing in property, don't you have "skin in the game"? Presumably it's in your interest that the community thrives, because that will help drive up property values (increasing your ROI)? This is just my naive intuition, so please correct me.

EDIT: Downvoters, what gives? Just asking a question...

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#52

Post by pc86 »

antisthenes wrote: post #30
pc86 wrote: post #18

Earlier quoted context omitted.

Are you suggesting the government steal their property?

I'm not suggesting anything. If you can't respond without libertarian insinuations that government be the bad agent here and simply repossess the property, please don't. Feel free to come up with constructive solutions though.

Saying "what about" the people who have already lawfully purchased property certainly has the implicit assumption that something has to be "done" about them, doesn't it? I didn't insinuate anything.

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#53

Post by jpollock »

user5994461 wrote: post #14
briandear wrote: post #11

Earlier quoted context omitted.

If they own a house, they are paying taxes, so they do have significant skin in the game. They pay property taxes despite not using the local schools or most other city services. As far as not allowing housing as a speculative financial investment, there are some significant unintended consequences there.

The tenant covers all the taxes and costs through his rent.

No, they do not, they only cover a portion. As the owner of a New Zealand investment property...

In NZ, ROI on property is targeted to be around 8% [3]. The owner will take that ROI either in capital increase or in rent. [2]

If the property is appreciating, the rents will be allowed to slow down. If the property stops appreciating, then the rents increase to maintain the ROI. The entire market is targeted at 8%, particularly the property management companies.

Changing the property tax rules changes this equation, with a shift to higher rents.

New Zealand is trying everything to remove demand from the housing market. They first brought in new deposit rules (20% min for owner occupier[4], higher for investment properties 35%+[5]), now they've brought in foreign ownership legislation. It might affect the rate of capital increase, but that will only shift the ROI equation towards rental increases.

The government is looking at building more housing (FINALLY), but they are finding that all the regulations (houses with heating and insulation cost more!) means they can't do it for less that 600-650k [1].

[1] https://www.interest.co.nz/property/95345/housing-minister-s...

[2] https://www.interest.co.nz/saving/rental-yield-indicator

[3] https://www.yourinvestmentpropertymag.com.au/expert-advice/l...

[4] https://sorted.org.nz/guides/home-buying/buying-a-first-home...

[5] https://www.rbnz.govt.nz/education/at-a-glance-series/lvr-re...

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#54

Post by Tiktaalik »

briandear wrote: post #11
Tiktaalik wrote: post #3

Seems reasonable to me. Housing should be for housing people, not a speculative financial investment. It's reasonable for cities to ask that people show that they have some skin in the game, that they're living, working, paying taxes and contributing to and enhancing the community.

If they own a house, they are paying taxes, so they do have significant skin in the game. They pay property taxes despite not using the local schools or most other city services. As far as not allowing housing as a speculative financial investment, there are some significant unintended consequences there.

The problem with absenteeism is that while taxes are still being paid to maintain city services, the city doesn't function correctly, because there's weak street life.

Here's an article about the struggles of retailers in Vancouver's Coal Harbour neighbourhood, which has estimates of around 20-25% empty housing.

https://www.theglobeandmail.com/real-estate/at-vancouvers-co...

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#55

Post by sametmax »

isostatic wrote: post #47
sametmax wrote: post #40

Earlier quoted context omitted.

Local kids can't buy house and is renting forever at unreasonable price. The world is not just about giving everyone the opportunity to become rich. Just making a decent living for most is a nice objective.

Why would they pay an unreasonable price? It's clearly reasonable for the person paying the rent.

You gotta pay back the investment/loan for the new expensive house price, and the rent will match it.

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#56

Post by craftyguy »

twothamendment wrote: post #44
breitling wrote: post #20

Hope the Canadian government learns from this. We desperately need it. (ya, I know I know there will be trickle down impact of so much foreign money pulling out, but average home price of $1.36MM is unbelievable for the local salaries)

If they do, maybe the USA will learn from Canada. In my area the Canadians are the ones buying stuff up. Other than property taxes, their contribution is to all show up on the same weekend and empty the grocery store shelves - and driving up prices.

> maybe the USA will learn from Canada

Has the US ever learned anything from Canada?

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#57

Post by kareemm »

seanmcdirmid wrote: post #23
VectorLock wrote: post #17

Earlier quoted context omitted.

Like property tax?

Ya, property taxes should act against such behavior, but many places like Vancouver lack one. Not sure about NZ, but it seems like property taxes are more of an American thing. Edit: oops, Canada does have a property tax, and New Zealand has something like it. So it’s just Australia (on first residences) and the UK that don’t. Well, China also. I’ll take my downvotes gracefully.

Homeowners do pay property tax in Vancouver:

https://vancouver.ca/home-property-development/property-tax....

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#58

Post by ben_w »

user5994461 wrote: post #36
itake wrote: post #32

Earlier quoted context omitted.

So the property is being occupied, which I don't think they have a problem with. The issue is wealthy investors are coming in, buying up property at above market rate, and then letting it sit empty and driving up the price higher since there is less sellers on the market.

Doesn't matter if it's rented or not, it drives the price up either way.

If it’s rented out to a local or sold to a local, the ratio of buildings to locals is the same. Supply or demand (or things outside this context such was wages) has to change for prices to change.

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#59

Post by kazinator »

weberc2 wrote: post #51
Tiktaalik wrote: post #3

Seems reasonable to me. Housing should be for housing people, not a speculative financial investment. It's reasonable for cities to ask that people show that they have some skin in the game, that they're living, working, paying taxes and contributing to and enhancing the community.

Forgive my ignorance, but if you're investing in property, don't you have "skin in the game"? Presumably it's in your interest that the community thrives, because that will help drive up property values (increasing your ROI)? This is just my naive intuition, so please correct me. EDIT: Downvoters, what gives? Just asking a question...

Some people just want a roof over their head without paying rent to a landlord and being subject to their whims.

Re: New Zealand Passes Law to Crack Down on Foreign Home Buyers

#60

Post by [deleted] »

seanmcdirmid wrote: post #23
VectorLock wrote: post #17

Earlier quoted context omitted.

Like property tax?

Ya, property taxes should act against such behavior, but many places like Vancouver lack one. Not sure about NZ, but it seems like property taxes are more of an American thing. Edit: oops, Canada does have a property tax, and New Zealand has something like it. So it’s just Australia (on first residences) and the UK that don’t. Well, China also. I’ll take my downvotes gracefully.

[deleted]
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