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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

#171

Post by user5994461 »

InitialLastName wrote: post #135
user5994461 wrote: post #93

Earlier quoted context omitted.

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.

It's almost like that problem would be partially solved if the US had a system where you could get healthcare without needing it to be tied to full-time employment.

It's not just an insurance problem. I assume accidents are already covered as part of your construction work.

When you are in your 20's. You fall from a ladder, break some bones, you heal and get back on your feet one year later. When you are in your 50's, you are more fragile and less resilient, same thing happens, you might never be able to work again. It's brutal.

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

#172

Post by pc86 »

saltcured wrote: post #137
indemnity wrote: post #118

Earlier quoted context omitted.

I don’t understand when people believe this - as an owner of an investment property in Auckland, NZ, I almost never can just pass on increases to my tenants, unless I want long stretches of no tenants, even with the shortage as it stands. The market dictates what I can charge. And if I have good tenants I’d rather keep them than immediately try to recover costs.

You might buffer changes in costs and provide some stability to the tenants just as they can provide some to you by extending a lease rather than vacating. But, you do need to adjust and pass on the costs, or fail as an investor. In a significant way, the service in a healthy landlord-tenant transaction is for the landlord to accept the liquidity hit and risk of property ownership and redistribute it along with other…

The second point here is the most important. I know a handful of real estate investors and one that is far away the most successful. He buys everything in cash. He has a contracting team on payroll that fixes whatever needs fixing so he's not immediately outlaying any additional funds to fix up a property, other than the opportunity cost of having those employees busy. He hasn't mortgaged a property in probably half a decade or more.

If he thinks a property will appreciate and make money, he will absolutely buy it and let it just sit on his books for a decade while the RE value increases and he waits for an opportune time to develop or rehab it.

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

#173

Post by dllthomas »

ebikelaw wrote: post #79
dllthomas wrote: post #76

Earlier quoted context omitted.

Wouldn't a credible commitment to rapidly building more housing itself crack down on speculators?

The problem is that in many places it is quite unlawful to build housing. The legal regimes exist to protect incumbent land owners. That’s an open invitation to speculators.

In one sense that's not a problem - in most cases the same body passing these laws could make new construction entirely lawful. But it does point at a root problem - that there's a meaningful chunk of the population that more-or-less wants things overpriced.

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

#174

Post by lawnchair_larry »

vanekjar wrote: post #138
lawnchair_larry wrote: post #15

Good move. More cities need to adopt this. There is a flood of foreign capital into major western cities that is hurting those economies. And a lot of denial that this is happening.

I am afraid your math doesn't add up. Influx of foreign capital can never be bad because it fuels the local economy. It brings new jobs in construction and other related services, transtively bringing more money to government because every human activity is taxed. By banning foreign investors you're basically saying: "nah, we don't need more money, we have enough".

It doesn't do any of those things.

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

#175

Post by sjg007 »

Max_aaa wrote: post #166
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.

A 2.4M 2x4 costs almost 10 NZD here. And that is the cheapest lumber. There are huge markups in the local market on building materials due to a duopoly. It is cheaper to fly to Australia buy NZ made siding there and ship it to NZ than to buy it locally.

huh... sounds like an opportunity to ship over some containers from China.

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

#176

Post by isostatic »

spronkey wrote: post #169
isostatic wrote: post #121

Earlier quoted context omitted.

Unless you live in a tiny country like singapore, you have a choice where to live. Economic theory says that if the price is unreasonable, people won't pay it.

You have to live somewhere though, and in NZ cities rents are high enough that they prevent many renters from saving any money at all. So, no, supply and demand theory kinda doesn't stack up when it comes to housing.

2 bed house, $310 a week, that's under half the minimum wage. That doesn't seem too extreme to me. That's for a two bed remember, so if you are a couple on median wage, you'll be earning $1800 a week pre tax, about $1500/week take home.

https://www.trademe.co.nz/property/residential-property-to-r...

Should be able to save $450 a week out of that. After 3 years that's $70k, a 20% deposit on https://www.realestate.co.nz/3341361, with a mortgage then costing about $330 a week.

The problem people who complain about house prices seem to have is that they want to live in very specific and desirable locations (Certain parts of Auckland for instance). There is a high demand for these locations, therefore price is high. But clearly the price is reasonable as people can afford to live there, otherwise they wouldn't pay the rent/mortgage.

When people stop paying high prices for rent in aukland, and instead live elsewhere, then companies in Aukland will have to either

1) Relocate to cheaper locations to attract staff

2) Pay staff more so staff can live in the area

It's the same the world over. You can buy a house in the UK half an hour out of two major cities for £125k. That's a £7k deposit (£44/week or £190/month for 3 years) and £550 a month after that.

If you can afford £600 a month for housing costs (£400 rent plus £200 deposit), you can rent for 3 years, then buy, within 35 minutes of Leeds and Manchester. Minimum wage is about £1200 a month after tax.

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

#177

Post by isostatic »

lostlogin wrote: post #147
isostatic wrote: post #128

Earlier quoted context omitted.

You want somewhere that's affordable for 1x yearly wage? Care to point to some time in history that was possible?

Having New Zealand cities with average prices at 10x yearly average household income and a NZ average at over 6x is a radical departure from NZ’s historically narrow rich/poor divide. https://www.interest.co.nz/property/house-price-income-multi... https://www.google.co.nz/amp/s/amp.theguardian.com/commentis...

Christchurch is 4.87 times median income. New Plymouth 5.03. Hell parts of the capital are under 5x.

That's quite a normal multiplier in today's low interest and 2 income world (in parts of London the multipler is 38!)

What you're saying is that you can't afford to live in nice areas of Auckland. So don't.

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

#178

Post by wepple »

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.

If you dig deep, you may be able to uncover the intention of that sentence. NZ has some of the least affordable property in the world. A tiny nation of 4m with minimal job prospects should never be able to achieve that title.
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