New Zealand Passes Law to Crack Down on Foreign Home Buyers • Hacker News Board

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

#91

Post by user5994461 » Wed, Aug 15, 2018, 6:48 PM UTC

jpollock wrote: post #53

user5994461 wrote: post #14

Earlier quoted context omitted.

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%, part…

This makes no sense. Rents are not linked to the costs of property. They are fixed to as much as local people can pay for a home, roughly 50% of typical household income everywhere in the developed world.

The ROI is the +appreciation + rent - expenses.

If the property depreciates you have least return on investment. There is nothing you can do about it. You can't increase rent to compensate, people can't pay more rent. Your reasoning is absurd, if you could increase rent you should be doing that right now already.

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

#92

Post by peterburkimsher » Wed, Aug 15, 2018, 6:49 PM UTC

ggcdn wrote: post #87

toby wrote: post #70

Earlier quoted context omitted.

Vancouver has a vacancy tax, which strikes me as a really good idea to avoid these problems. Does anyone know why these aren't more popular?

I agree with you that it seems like a good idea. However, the vacancy tax is still in its infancy, so we've yet to fully understand its effectiveness or side-effects. A big issue around the housing discussion in Vancouver is the lack of data and amount of misinformation being injected into the discussion.

The Netherlands has a system where vacant properties may be occupied by squatters after they've been empty for a year. There's an active squatting scene in Amsterdam, particularly OT301 (an abandoned cinema, now an arts centre).

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

#93

Post by user5994461 » Wed, Aug 15, 2018, 6:53 PM UTC

seanmcdirmid wrote: post #90

sjg007 wrote: post #86

Earlier quoted context omitted.

Weird.. you can build a house in the upper midwest USA for 200k. That's land + all of the regulations etc... Condos should be cheaper per unit too. But like everywhere there is a construction labor shortage. I would hope that the kids gets into construction, at least as a summer job or something while pursuing education.

Finding young unskilled apprentices for construction work is easy, finding experienced skilled journeymen is hard because most of them leave the field during each construction bust. You just can’t make a career out of construction with the current boom and bust way the cycle is going.

You can absolutely have a career in construction, as I know many people who have.

The challenge is health. It's a very demanding line of work where you have to carry weight, wake up in the early morning and work in the cold. People don't want to work like that. It's very hard on the body and you're broken when you reach your 50's.

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

#94

Post by ben_w » Wed, Aug 15, 2018, 6:55 PM UTC

dpiers wrote: post #50

goodJobWalrus wrote: post #31

Earlier quoted context omitted.

No, but it could implement hefty property tax on properties owned by non-residents.

And then those hefty taxes will be passed on in the form of rent. The non-resident never ends up on the hook.

I own property which is currently collecting rent.

The rent is set by the market — if I charged a million bucks a month (it’s a one bed flat) it would be empty.

No matter what my costs are, the number chosen by my agent has to be both “as high as possible” and “no higher”.

I do know the government can mess up and if you Google “rent controls” the standard downsides there are real problems if the government goes too far — but there is room to improve the current unreasonable (in my favour) mess.

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

#95

Post by erentz » Wed, Aug 15, 2018, 6:59 PM UTC

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)

Everyone is being too optimistic about this law in NZ. It’s too watered down. Note it only bans existing homes. Foreigners can still buy new homes. (Unless that was changed.) This may have some affect but new houses and existing houses are all in the same market. If foreign buyers all shift to buying in the new construction market they will drive up prices of new houses, force residents that might’ve been looking for a new house to buy an existing house, continuing to drive up prices of all houses.

I think if we see house prices drop significantly in NZ it’ll be more to do with other economic changes than this rule.

(Note: I am in favor of requiring buyers of all property to be residents of the country. I think this should be pretty standard in any country.)

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

#96

Post by Taniwha » Wed, Aug 15, 2018, 7:04 PM UTC

zzleeper wrote: post #41

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.

In many countries, property taxes are local and don't go to schools (which have funding from income taxes i.e. from the state). So it's not like the foreign investors are beneficial in any way, besides maybe paying their bit of water/electricity/police costs (and if they only pay their share, then why bother accomodating all the volatility to house prices they bring?)

Yes this is true in NZ - property taxes here ("rates") pay for roads, water, street lighting, that sort of thing. Not schools, police, or other stuff done by central govt.

Also property taxes here are not tied directly to house valuations - there's a fixed component, plus a component that's calculated from your valuation divided by the sum of the valuations of ALL the properties in the city. That means that if everyone's valuations are doubled your taxes don't change, if your house value goes up faster than the average you do pay more, if it goes up more slowly your taxes go down.

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

#97

Post by user5994461 » Wed, Aug 15, 2018, 7:06 PM UTC

ben_w wrote: post #58

user5994461 wrote: post #36

Earlier quoted context omitted.

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.

Foreign buyers increase the supply of cash. It drives buy prices up, which in turns drives rent up slightly.

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

#98

Post by Taniwha » Wed, Aug 15, 2018, 7:07 PM UTC

sjg007 wrote: post #89

wepple wrote: post #66

To add some context: NZ regularly rates in the top 10 least affordable cities to buy a house. The last stat I saw was that median house prices were 9.7x median salary. That’s absurd for a relatively small city of 1.4m people. It has further negative effects: everyone gets into property as their only real path to financial freedom, with 95% of new loans using family financial assistance. It’s stifling innovation and b…

NZ is a country.. not a city.

Exactly - Auckland is currently a stupid place to try and live in, not somewhere one would move to, the rest of the country is OK

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

#99

Post by nasoieu » Wed, Aug 15, 2018, 7:08 PM UTC

antisthenes wrote: post #16

Sounds like pulling up the ladder after all the people who bought the houses already climbed it. What about all the people who have already purchased and are just holding onto an empty house for speculative reasons?

They can go fuck themselves.

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

#100

Post by onetimemanytime » Wed, Aug 15, 2018, 7:10 PM UTC

Logical. I wonder if it's possible to designate certain parts as investment property...leasehold for 99 years and sell to the rich and tax them more. You want it? Fine, it will cost more both in price and maintenance. Buying homes also is good for the econ...from the builder to the security company later.