Earlier quoted context omitted.
Investments aren't meant to be risk free.
That's exactly it though. For many it's as much a home as an investment.
That is what is wrong with using housing as an investment class.
New Zealand plunges into recessionary spiral
121–128 of 128 posts
Re: New Zealand plunges into recessionary spiral
#122Earlier quoted context omitted.
Yes. But there will be losers. Some of this I'm fine with but hurting first home buyers and those who need a home to live in is crap.
So what happens when your house mortgage is in negative equity? Just means you’ll need to hodl longer?
Yes.
Those with negative equity are likely to pay down debt faster rather than consuming (hang on to the car for another year, or not repaint, for example), so there is some effect on aggregate demand over time.
Re: New Zealand plunges into recessionary spiral
#123Earlier quoted context omitted.
> What to do? Make housing less attractive as an investment vehicle. In my opinion the best way to do this is with the tax system (which, in NZ, currently favours property investment to a large extent). Two proposals that are often discussed are a capital gains tax (CGT) and a land value tax (LVT). Personally I would prefer a LVT. A CGT would be an improvement on the current situation, but it would be a big impedimen…
I am a strong opponent to CGT for businesses. I suspect it would be hard to introduce CGT just for real estate. Reasons for hating on CGT: 1. in NZ we need more investment in businesses, and less in real estate. I think introducing CGT would decrease business initiation and growth. 2. Most businesses fail i.e. your expected returns are often negative. The power law returns mean your expected return is highly dependen…
I don't think it would be hard to apply a CGT to real estate only, as all transactions are centrally recorded, but it would disincentivise exchange (which presumably occurs when the buyer sees a more valuable use for the land), unless it is charged on unrealised gains, which is a can of worms.
Other possible measures:-
Stamp duty, as in the UK. Also disincentivises exchange.
Unimproved land value tax (Georgism). (Would need to apply to alienable land only, or there would be significant impact on rural iwi, and possibly a threshold of say $100k/ha unimproved land value since farmers whinge so loudly.) Fewest problems in tax policy terms.
Revise zoning. Change residential to mixed use (light traffic commercial, up to 25 employees, say), allow up to four storey and multiple-household buildings, prohibit "amenity" and "character" objections to consents (apart from noise and smell) and building size/usage/land use covenants near (I agree that we need to build capital for business investment. Tax policy (and middle class culture, as embodied in zoning rules and district plans) is heavily tilted against that. Been that way my whole life.
Re: New Zealand plunges into recessionary spiral
#124Earlier quoted context omitted.
Assuming you are American, do you also get confused with Bank of America, or US Bank? Most countries have a retail bank that uses the name of the country or region, even if they aren't the central bank.
England, France, Spain, Germany and Italy have f"Bank of {country}" as central bank. I stopped looking after these 5.
Euro countries: 11/25 are named "Bank of " (or other language version thereof)
Source: https://en.wikipedia.org/wiki/European_Central_Bank#Capital_...
Re: New Zealand plunges into recessionary spiral
#125Earlier quoted context omitted.
Well my call to waka kotahi cost me 90 euros last week. 30 minute wait time and 6 minute convo. Turns out calls outside EU while roaming is priced at a whopping 2.5 eur a minute.
Skype call credit can certainly help you out when calling home from overseas!
Yeah Skype is actually expensive for what you can find elsewhere (Toolani was good). I was expecting it to cost extra, maybe 50ct, not 2.5 eur.
Re: New Zealand plunges into recessionary spiral
#126Earlier quoted context omitted.
In New Zealand, all mortgages are approximately at a floating interest rate. You can lock in a rate for up to 5 years (with the majority choosing 1 or 2 years), but after that “fixed” period completes, you now renew your interest rate at whatever the current market is. Most mortgages are signed up for a term of decades (mine is 30 years, and I signed up at age 50), so although you might use “fixed” rates for a few ye…
That's wild. In the US, a fixed-rate 30 year is pretty common, particularly when rates were I suspect a rates go up, ARMs (adjustable rate mortgage) become more common, in the hopes that rates come down and the homeowner see that upside.
You can generally refinance though even with a fixed rate. (There is more overhead though than just going with whatever the current adjustable rate is though.)
Re: New Zealand plunges into recessionary spiral
#127Earlier quoted context omitted.
That's wild. In the US, a fixed-rate 30 year is pretty common, particularly when rates were I suspect a rates go up, ARMs (adjustable rate mortgage) become more common, in the hopes that rates come down and the homeowner see that upside.
You can generally refinance though even with a fixed rate. (There is more overhead though than just going with whatever the current adjustable rate is though.)
Yeah, borrowers can refinance in the US. We have a few times as rates dropped. Now that they’re going up, we’re locked in at a great rate and don’t have to worry.
Re: New Zealand plunges into recessionary spiral
#128Earlier quoted context omitted.
How do you mean it is regulated this way? RBC lists a 25-year fixed right now - https://www.rbcroyalbank.com/mortgages/mortgage-rates.html#p... . It isn't competitive (9.75% vs 6.2% on a 5 year), but it's there.
Woah, that’s strange. I just bought a house and the mortgage guy I was dealing with said anything more than 7 years is prohibited in Canada unless you go to an unregulated B-lender. Clearly I stand corrected!
I don’t know if they actually sell a 25, or just post a rate for some other reason. But I know I locked in for 10 my first contract.