Justcol

Property has doubled in value on average every 7 years to 9 years,
always has done and always will.
The thing i take credit for is having the foresight and determination to ensure
i was in a position to take advantage of this constant spiral.


When i was younger and planning to get married, at a time when my mates
were buying flash cars, taking lots of holidays, buying the latest fashions,
I and my wife to be were both working in relatively low paid jobs.
we took home less than £80 a week between us in the early mid to late 80's.
we worked every hour we could and picked up extra work where we could.
Everything we made went into savings to get us our first home, a run down
terrace in a run down area. we fixed it up and made a little money on the sale.
We used that as a bigger deposit on a better home, took out a big mortgage
and worked like trojans to pay extra on top of the mortgage.
This hard work has now payed off and when we arrived in NZ we were able to
buy a lovely new house and enjoy the fruits of our labour.
Another thing you may like to know is that when buying in NZ we chose a house
that a builder had had for sale for almost a year before we arrived. it had sat
empty for a year.
We used this fact to negotiate on the price and ended up paying over $80000
less than the asking price. The real estate agent, who is now a very close family friend
could not believe we got the house for the price we did.
So you can see, i did not pay "top dollar" for anything and any kiwi who thought
the house was out of their price range could, if they were prapared to do a little
research, have bought the house for the same price we did.
Now onto your other point, i have no beef with people who rent,
my parents rented, i was raised in a council house as was my wife. My beef is with
those who whinge and whine about house prices and fools like you who try to
take the moral highground to make people like me feel bad for working hard to
get the things i want.
As i see it i have EARNED the right to tell anyone who thinks my position on the property ladder
has been nothing but good fortune to get ****** and that
includes pseudo socialists like you.

Reading fan

Kija

Thanks for the advice kiwi child and thank you for being so gracious, I honestly meant no offence to anyone. Of course we would rent till we familiarised ourselves with the area and got jobs this would take at least a year or maybe more.

Countries are so different, here in Egypt they're only starting the mortgage system. The real estate market is out of control, property is very expensive in relation to wages. We're not a credit driven society, hence my many questions about mortgages etc, I'm clueless . We have a nice house but not much in the bank! It's all we've got so we're very scared of selling, spending the money in NZ and ending up totally skint so ideally we'd like to use it on a house so our capital doesn't get spent.

People who rent are definitely not losers, it's all very subjective. Ideally we would have liked to rent and not sell our house in Egypt but we wouldn't be able to afford to do that in the long run.

lapsed kiwi

Nicely put. It's easy to get peed off with those vultures circling the property market, trying to talk it into a crash and hoping those of who worked and saved hard in our early days will lose our equity to make up for others' fecklessness.

lardyl

Hate to say it but there is more than one way of looking at the property escalator and the more I look at it the more I am coming round to the Bernard Hickey view that all this profiteering and the daft tax system we have in NZ is bad for us, bad for our kids and is probably going to take the economy down in the end.
I have money tied up in property and have made some equity from price rises but I fail to see that anyone has the right to do so and that somehow they have earned it by saving and paying their mortgage.
I'd agree that some people who spend all they earn on "fecklessness" get what they deserve, but that is not everyone and if affordability keeps heading in the wrong direction then we are more at risk of losing our kids to more affordable places to live/work. If you are all happy with that then I'd think again and ask yourselves where all the tax dollars will come from to fund NZ when you are retired? Nowhere if all the graduates and qualified people can't afford to live here because house price inflation has pushed them out. And then there are all the essential workers who need housing to be affordable.
Property values in NZ are now at their highest ever - again - and this will in the end mean more pain for us with interest rates being artificially high, the overheating property market being reigned in using that blunt instrument and manufacturing going to the dogs. All so that we can keep "investing" in homes, rentals and batches rather than putting our savings somewhere that can be a use to the companies and entrepeneurs of NZ - and I am not talking the real estate companies.
Let's face it we live in a low-cost economy, in terms of the OECD anyway, but if housing costs take up too much of people's income then it will be bad for the nation. The bind in NZ is that so many people take the state tax breaks so they can make money in property off the income tax system and so many people have their savings and even borrowed money tied up in this. Which means if there is a correction it will hit all those investing landlords in the pocket. But from what I can see many of them couldn't really complain as they have been taking their cash off the system hand over fist for long enough.
Indeed I know kiwis who's job it is to sell property investments for companies that use leverage just to make money, well a capital gain at least, whilst making a loss on the rental and so avoiding tax. Of course you can then claim benefits from Work and Income and/or tax credits from IRD and be quids in. All down to Aunty Helen raising the rate of income tax and allowing "negative rental gearing" - making a loss on rents to offset against your income tax liabilities.

TeamEmbo

What, and then lose our life savings like poor Genesis?

Sorry, I rather not take such a risky option with my future. We work hard, we go without, we constantly juggle to pay our huge mortgage so that we can hopefully one day reap the benefits from all our efforts and own our own home which hopefully we can sell once our kids have flown the nest and we're ready to retire to buy somewhere smaller for just the two of us and have that money to help live off and maybe a slower paced part-time job.

We would have to work equally hard and struggle to pay the equivalent in rent but still have nothing to show for it at the end of the day, except a rich landlord reaping the benefits of our hard work.

I am only talking about one scenario - my personal one - I am not in anyway slatting the need for affordable housing or those that have no other choice but to rent as have been their myself (when my then hubby decided on a newer model and I was out on the streets with 2 little ones but that's a different story entirely).

Justcol

The property market price rises are a global thing, not resticted to NZ or the UK.
It doesnt matter where "our children" want to live it will be just as expensive for
them where ever they go.
Housepriced are driven by the market, we've seen that even with the recent crash in the states.
When new buyers stop buying prices fall, but only to a certain level. Once they reach
that level property developers and speculators step in. they are not resticted by such tight
financial restraints and will purchase with an eye to renting at a proce to cover costs
unitl the market picks up again and they can sell at a profit.
The real winners from this are builders. the cost of materials and labour required to build
a house will not have risen anywhere near as fast as the cost of the finished house on the market.
Thats a hefty profit for those in the construction industry.

kiwi_child

The only advice I can offer is to 'shop around' when it comes to mortgages. See who's offering the best deal. Mortgages are an area that can confound anyone! fixed rate, variable rate, combo and also how you pay them off can save or cost you years and big $$$. Good luck with it all

lapsed kiwi

I agree that the tax system is hopelessly biased towards property investment, and that NZers need to invest their money in NZ business, rather than real estate. Almost everyone I know at work aged 35+ has one or more investment properties, surrounded by a cloud of LAQCs, family trusts etc. I hate to agree with the socialist party, sorry Greens, but I think the following changes are needed:

This just seems so obvious to me. The RBNZ keeps agonising over how to stop property inflation and prevent a credit-fuelled boom without making the dollar strong, and the above seems like the obvious answer

Hokey-pokey

I agree with some of your points. Our Family Trust is primarily set up to protect our children and eventual grandchildren from gold diggers. Remember the law now states that if you live with someone for 2 years they are legally entitled to 50% of your assets ( including inheritances ). A Family Trust will ensure that your hard earned wealth goes to your kids and not their ex boy/ girl friend.
I think a land tax would be a good idea.

Kija

Thanks kiwi child
Yes, it certainly is quite confusing though starting to understand the basic concept, now I'll have to read about these different rates you mentioned

Transient

Good grief. What you are suggesting is that property values are guaranteed to grow at around 9% a year completely independent of the rest of the economy. I can't even begin to explain how broken this view of the world is. Further, even if it were true, I find it very sad that anyone would think that it was a good thing.

I haven't said anything about your "position on the property ladder". I said that the ability to realise profit from the property cycle is not a product of hard-work. It isn't. As for calling me a "psuedo socialist" for pointing out that profiting from asset speculation doesn't give you the right to attack renters for having an opinion on house prices... again, good grief.

Justcol

As an example, i owned a house in the 80's that cost 18k to buy.
my neighbour who had bought his (same) house 4 years earlier paid 12k.
I sold my place for 42K in less than two years later.
that was the peak of that particular property boom. Shortly afterwards house
prices in that area fell by around 10k and stayed at that level for about 4 years.
Then came the next rise in prices and my old house went up in values to the high 80's.
then another drop and period of stagnation followed by another price increase
this time properties in the same street (all the same terraced houses) reached 170k.
They have now (again) dropped back but this time not by such large amounts.
I have just had a look on "rightmove" and the same houses are cuurently on the
market for 160-165k. Without doing the maths those increases would back up
back up my statement about doubling in price. And certainly if you choose to
look further back i know those same terraced houses would have been worth
somewhere in the 2 to 3k mark in the 70's.
So yes unfortunately if you look forward the average priced home of lets say $450k,
will be costing around the $1million dollar mark in around 10 years time.
PLease dont be naive and think this wont happen. I bought in NZ just before the slump in prices.
Now there are houses that are smaller and have less bedrooms on smaller sections
being built around me. These new houses (mine is only 2 years old) are now
selling for more than i paid for my bigger, and higher spec home.
So you can see that the price of property never stands still it will continue to grow
at a far faster rate than the ecconomy.
None of this is my doing, i have however as stated previously worked bloody hard
to get to the position i am in know. i have thought carefully about the route i wanted
to take and have focussed on it.
i have not indulged in silly boy toys that stroke my ego. I know people who
rent and have a $50K boat on their front lawn that they use 2 or 3 times a year.
When i've asked why they rent they say they cant afford to buy, yet they pay over $350 a week in rent.
Well i'm sorry but in my eyes thats simply irresponcible.
His $50k boat will be worth $20k very soon whereas my
house will have made me another $100k in the same period of time.



I'm not going to carry on with this debate as i think we're looking at it from
completely different standpoints and i dont think there is any point in both of
us simply going re stating our views on the matter.

lardyl

Several fallacies here.

First, how does living in a house for x years "make you" anything? Unless you sell the property to buy something cheaper, then a rising bubble market only makes you a loss as you have to spend more to buy the next property "up" as the differential in price increases along with the "value". Increased values make for increased differentials and make for higher costs for you, the person on "the ladder". More money for Real Estate Agents, Lawyers, Developers, Land Bankers/Other Speculators, the banks, builders, etc...less disposible income and affordability for the rest of us.

How can the price of property grow sustainably "faster than the economy"? Unless you sell off your country to rich foreigners (or returning ex-Pats) who bring in welath from overseas or you borrow lots from overseas and suck money from other areas to service the debt then there can't be sustainable growth that is not in line with the base economy, unless of course the previous values were lower than they "naturally" should be. In NZ I'd suggest that values are (and have been since values shot up 5-10 years ago), above the "natural" rather than below it. So NZ property values are over-inflated, fuelled in part by the subsidies that Lapsed-Kiwi described. These are outdated, like MIRAS was in the UK and it was phased out. These tax breaks and loopholes will be closed even though the government that does it will be unpopular. That set of drivers for property inflation will be sorted out, in the not too distant future, I hope.

The whole thing seems to be a method for tax avoidance, short-term profiteering and making money using someone else's money. In fact there are businesses out there that are called just that and their schemes involve property developers, financiers, sales people and sell this to the middle-income clients telling them they will be getting money back in tax breaks due to depreciation, income tax write-offs and capital gains.
All legal but all damaging to the country - IMO. It would be far better if NZers spread their investments more widely - then we would not have so much foreign debt for our companies and foreign captial underpinning the housing bubble in NZ. Nor would large sections of the population be unable to afford to buy their homes, and don't suggest that this is because they all live a lavish lifestyle....it isn't.

And don't be naiive enough to think that the sort of growth that we have seen over the past 30 years worldwide, or in the past 10 years in NZ is sustainable. The credit crunch has shown that it is not. Period.

george toni

dont have a clue on the economics of house buying selling but I reckon buying property and sitting on it will always in the end be a good way of securing a profit in the future.

just a case of holding in there untill it will rise in value again and they always do.heck in the eighties uk it all went belly up but that didnt stop it going crazy again years later.

investors buying houses dont stop people getting on the housing ladder attitudes do.if you really want to then save for a deposit might take many years but IMO thats life full stop.