4 ms·

The tenant covers all the taxes and costs through his rent.

itake 8y ago
So the property is being occupied, which I don't think they have a problem with. The issue is wealthy investors are coming in, buying up property at above market rate, and then letting it sit empty and driving up the price higher since there is less sellers on the market.
- user5994461 8y ago
  Doesn't matter if it's rented or not, it drives the price up either way.
  - ben_w 8y ago
    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.
    - moorhosj 8y ago
      You assume that the ratio of buildings to locals is the sole input for real estate prices. If an external rentier enters the market and realizes yield, other rentiers will follow. This increases demand for housing assets, not necessarily housing utility. this is the problem they are trying to solve.
    - user5994461 8y ago
      Foreign buyers increase the supply of cash. It drives buy prices up, which in turns drives rent up slightly.
jpollock 8y ago
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%, particularly the property management companies. Changing the property tax rules changes this equation, with a shift to higher rents. New Zealand is trying everything to remove demand from the housing market. They first brought in new deposit rules (20% min for owner occupier[4], higher for investment properties 35%+[5]), now they've brought in foreign ownership legislation. It might affect the rate of capital increase, but that will only shift the ROI equation towards rental increases. The government is looking at building more housing (FINALLY), but they are finding that all the regulations (houses with heating and insulation cost more!) means they can't do it for less that 600-650k [1]. [1] https://www.interest.co.nz/property/95345/housing-minister-says-because-kiwibuild-homes-are-more-affordable-they-will-be-safe https://www.interest.co.nz/property/95345/housing-minister-s... [2] https://www.interest.co.nz/saving/rental-yield-indicator https://www.interest.co.nz/saving/rental-yield-indicator [3] https://www.yourinvestmentpropertymag.com.au/expert-advice/lindy-lear/rental-yields--are-they-the-best-indicator-of-a-good-investment-178106.aspx https://www.yourinvestmentpropertymag.com.au/expert-advice/l... [4] https://sorted.org.nz/guides/home-buying/buying-a-first-home/ https://sorted.org.nz/guides/home-buying/buying-a-first-home... [5] https://www.rbnz.govt.nz/education/at-a-glance-series/lvr-restrictions-at-a-glance https://www.rbnz.govt.nz/education/at-a-glance-series/lvr-re...
- user5994461 8y ago
  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.
  - dahdum 8y ago
    Rents are definitely linked, until discretionary income for the local people goes to zero they can still pay more. Housing prices also affect mortgage payments, which rise in tandem. Looking it up, I see USA is somewhere around 30% of income [1] as housing cost, while NZ is about 17% [2]. Seems to indicate there is room to grow under tight supply conditions. [1] https://www.businessinsider.com/how-to-save-more-money-2017-8 https://www.businessinsider.com/how-to-save-more-money-2017-... [2] https://www.stats.govt.nz/information-releases/household-income-and-housing-cost-statistics-year-ended-june-2017 https://www.stats.govt.nz/information-releases/household-inc...
    - deleted 8y ago
      [deleted]
- sjg007 8y ago
  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.
  - Max_aaa 8y ago
    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.

So the property is being occupied, which I don't think they have a problem with. The issue is wealthy investors are coming in, buying up property at above market rate, and then letting it sit empty and driving up the price higher since there is less sellers on the market.

user5994461 8y ago
Doesn't matter if it's rented or not, it drives the price up either way.
- ben_w 8y ago
  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.
  - moorhosj 8y ago
    You assume that the ratio of buildings to locals is the sole input for real estate prices. If an external rentier enters the market and realizes yield, other rentiers will follow. This increases demand for housing assets, not necessarily housing utility. this is the problem they are trying to solve.
  - user5994461 8y ago
    Foreign buyers increase the supply of cash. It drives buy prices up, which in turns drives rent up slightly.

jpollock 8y ago

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%, particularly the property management companies. Changing the property tax rules changes this equation, with a shift to higher rents. New Zealand is trying everything to remove demand from the housing market. They first brought in new deposit rules (20% min for owner occupier[4], higher for investment properties 35%+[5]), now they've brought in foreign ownership legislation. It might affect the rate of capital increase, but that will only shift the ROI equation towards rental increases. The government is looking at building more housing (FINALLY), but they are finding that all the regulations (houses with heating and insulation cost more!) means they can't do it for less that 600-650k [1]. [1] https://www.interest.co.nz/property/95345/housing-minister-says-because-kiwibuild-homes-are-more-affordable-they-will-be-safe https://www.interest.co.nz/property/95345/housing-minister-s... [2] https://www.interest.co.nz/saving/rental-yield-indicator https://www.interest.co.nz/saving/rental-yield-indicator [3] https://www.yourinvestmentpropertymag.com.au/expert-advice/lindy-lear/rental-yields--are-they-the-best-indicator-of-a-good-investment-178106.aspx https://www.yourinvestmentpropertymag.com.au/expert-advice/l... [4] https://sorted.org.nz/guides/home-buying/buying-a-first-home/ https://sorted.org.nz/guides/home-buying/buying-a-first-home... [5] https://www.rbnz.govt.nz/education/at-a-glance-series/lvr-restrictions-at-a-glance https://www.rbnz.govt.nz/education/at-a-glance-series/lvr-re...

user5994461 8y ago
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.
- dahdum 8y ago
  Rents are definitely linked, until discretionary income for the local people goes to zero they can still pay more. Housing prices also affect mortgage payments, which rise in tandem. Looking it up, I see USA is somewhere around 30% of income [1] as housing cost, while NZ is about 17% [2]. Seems to indicate there is room to grow under tight supply conditions. [1] https://www.businessinsider.com/how-to-save-more-money-2017-8 https://www.businessinsider.com/how-to-save-more-money-2017-... [2] https://www.stats.govt.nz/information-releases/household-income-and-housing-cost-statistics-year-ended-june-2017 https://www.stats.govt.nz/information-releases/household-inc...
  - deleted 8y ago
    [deleted]
sjg007 8y ago
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.
- Max_aaa 8y ago
  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.