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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

#151

Post by Tiktaalik »

weberc2 wrote: post #113
Tiktaalik wrote: post #61

Earlier quoted context omitted.

Skin in the game means participating in the community and the local economy. An investor doesn't buy groceries at the local store, doesn't go to local music venues etc. They help out the construction industry and the FIRE (finance, insurance, real estate) industry, but local neighbourhoods weakly benefit.

That's not what "skin in the game" means, and presumably these properties are being rented, in which case the renters are still buying groceries, etc.? Again, I'm not advocating for foreign investors; just trying to understand the problem.

The properties may not be being rented. Due to data that showed a notable amount of vacant properties Vancouver, another area with high amounts of foreign capital infusion enacted a vacant property tax.

Even if these properties are being rented out, persons with foreign capital buying power that exceeds that of locals have a distortionary and, from the point of view of a local, a negative impact on the real estate market, as they are able to out compete locals and bid up the price of housing. A person which may have normally been able to buy a home can no longer buy, and now has to devote more of their income to renting from a foreigner. Why would any local support this state of affairs?

At a high level "skin in the game" means involvement and having some commitment. That can mean monetary involvement or otherwise and I'd use the broader definition. An absentee foreign buyer has tenuous involvement in a city beyond the impact of their foreign capital. Sure they've risked their capital on an investment, but from a locals point of view they have no real personal stake in the community.

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

#152

Post by peterashford »

kovrik wrote: post #149
TheSpiceIsLife wrote: post #148

Earlier quoted context omitted.

> Let's increase salaries to poor workers, let's give them houses, let's increase maternity leave etc. New Zealand is a very wealth country by most metrics. It can definitely afford these things. When I say "it" I mean: the people of New Zealand can afford to redistribute some of their wealth so the country can avoid the worst types of poverty, and probably a whole lot more. https://en.wikipedia.org/wiki/List_of_coun…

The thing I don't get though is: why build houses? Why not apartment complex? That'll be much cheaper and much more effective.

Its not an either / or thing. Lots more apartments are being built as well

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

#153

Post by peterashford »

kovrik wrote: post #140
Tade0 wrote: post #139

Earlier quoted context omitted.

Coming from Poland I had a very similar fist impression when I started living in-and-out in Italy. Nevertheless at some point I started thinking: Maybe these guys are right and I'm wrong? Maybe there's more to life than this "fight for survival" and I shouldn't value my ability to do so so highly? There's a level of, for lack of a better word, satisfaction I see on people's faces daily in Italy that I know I won't ac…

Yes, when I first started living in NZ I was baffled by completely alien culture and the way of living. But then I began to understand it, like it, enjoy it (to some extent)! And I respect people if they choose to live this way, not fight for survival, enjoy their lives. But I don't think it is fair if later they start complaining about lack of money, lack of career and expensive houses they can't afford and start as…

Its not a matter of asking other people to pay, it's a matter of there not being enough housing stock and houses being seriously unaffordable relative to wages. BTW: NZ workers do the OECD average amount of work per year.

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

#154

Post by ShorsHammer »

kovrik wrote: post #149
TheSpiceIsLife wrote: post #148

Earlier quoted context omitted.

> Let's increase salaries to poor workers, let's give them houses, let's increase maternity leave etc. New Zealand is a very wealth country by most metrics. It can definitely afford these things. When I say "it" I mean: the people of New Zealand can afford to redistribute some of their wealth so the country can avoid the worst types of poverty, and probably a whole lot more. https://en.wikipedia.org/wiki/List_of_coun…

The thing I don't get though is: why build houses? Why not apartment complex? That'll be much cheaper and much more effective.

You'll find serious resistance by existing residents to even moderately increased density, that isn't solely a NZ phenomenon either. People are fiercely protective of anything which may affect the value of their property.

Logic has gone out the window regarding sensible planning, it's all politicised and no longer serves the greater good.

House prices could be slashed overnight with the stroke of a pen in many cities on earth.

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

#155

Post by wepple »

kodablah wrote: post #107
amanaplanacanal wrote: post #85

Earlier quoted context omitted.

Moving farther out has its own set of problems: longer commutes, and much costlier infrastructure. At least in the US, outlying areas frequently don't pay enough in property taxes to maintain the amount of infrastructure necessary to reach those outlying areas, putting strain on municipal budgets. Nobody wants to pay more taxes.

I'm seeing, also at least in the US, a combination of remote work and business moving out of the confines of a large metro's downtown into the sprawl themselves. This reduces commute. I'm also seeing more inter-burb infrastructure becoming private and not relying on funds from the municipalities they traverse. I feel like inner city space is more constrained than outer city budgets.

Yeah, I think that would really be a great solution. With NZs 3 year terms, no govt is prepared to invest heavily in infrastructure, which leaves privatization. Which kiwis really really hate. The insane choke point that is the Auckland harbor bridge could be resolved if a private company put in a second crossing, but nobody is prepared to pay or let it be in their backyard. Having lived in large cities including the US, I do love the attitude to just do stuff.

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

#156

Post by kovrik »

peterashford wrote: post #153
kovrik wrote: post #140

Earlier quoted context omitted.

Yes, when I first started living in NZ I was baffled by completely alien culture and the way of living. But then I began to understand it, like it, enjoy it (to some extent)! And I respect people if they choose to live this way, not fight for survival, enjoy their lives. But I don't think it is fair if later they start complaining about lack of money, lack of career and expensive houses they can't afford and start as…

Its not a matter of asking other people to pay, it's a matter of there not being enough housing stock and houses being seriously unaffordable relative to wages. BTW: NZ workers do the OECD average amount of work per year.

That is what concerns me: if they can't afford a house, then why don't they buy an apartment?

There are apartments in Auckland for $300-400k, which is even cheaper than affordable KiwiBuild houses ($500-650k).

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

#157

Post by jpollock »

sitharus wrote: post #117
jpollock wrote: post #53

Earlier quoted context omitted.

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…

As another New Zealander with an investment property I thought the government closed the loss-making rental loophole s few years back. You can’t use rental losses to offset personal tax so why would you rent at a loss?

http://taxpolicy.ird.govt.nz/news/2018-03-29-issues-paper-lo...

Not yet, but soon. They did tighten up the rules around businesses that _never_ make a profit a while ago (I seem to remember).

CONSULT YOUR ACCOUNTANT.

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

#158

Post by lancewiggs »

kovrik wrote: post #156
peterashford wrote: post #153

Earlier quoted context omitted.

Its not a matter of asking other people to pay, it's a matter of there not being enough housing stock and houses being seriously unaffordable relative to wages. BTW: NZ workers do the OECD average amount of work per year.

That is what concerns me: if they can't afford a house, then why don't they buy an apartment? There are apartments in Auckland for $300-400k, which is even cheaper than affordable KiwiBuild houses ($500-650k).

$3-400k gets a tiny 1 bedroom apartment downtown, which I would have loved early in my career. The kiwibiuild homes are being aimed at families and necessarily much larger.

I do agree that NZers have this strange desire for bungalows in the suburbs, commuting and mowing lawns. I'm in an apartment downtown and love it.

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

#159

Post by lancewiggs »

sitharus wrote: post #114
sgolestane wrote: post #101

Earlier quoted context omitted.

Investor pays property tax without using any of it's benefits.

No they don’t, their tenants pay the property tax. I own a rental property in New Zealand (not out of choice, long story) and the rates are paid from the rent. I don’t chuck in the extra $120/month from my other income.

Investors fight for lower rates, while people who live in the places want better services.

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

#160

Post by lancewiggs »

weberc2 wrote: post #116
kazinator wrote: post #59

Earlier quoted context omitted.

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

So the issue is that foreign investors are significantly driving up the cost of real estate, making home ownership prohibitively expensive for locals? Has anyone quantified the impact in various regions?

That's the issue, and no.
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