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New Zealand has a similar housing problem. House prices are skyrocketing and pricing out young people. A 25-30% rise in the past year has meant few people are s

New Zealand has a similar housing problem. House prices are skyrocketing and pricing out young people. A 25-30% rise in the past year has meant few people are saving fast enough to get a deposit. But two or three years ago the govt. banned overseas buyers. There is no reason to suggest the ban is not effective. It even bans non-permanent residents, so plenty of legitimate residents (work visas) can't purchase property. We also have strong money laundering laws, to the point of making tech innovation difficult (our prediction market run by a university had to move to the USA). Yet it didn't stop or even dent runaway house prices. Turns out the overseas investors (and immigrants) were just a good scape goats for lots of other problems. Edit: People overseas I have mentioned this struggle to belive it and suggest the ban must not be working. Yet nobody here suggests it is not. We have supply issues, transport issues, ridiculous construction and material costs and lots of regulations. Old houses are sold at prices relative to new houses. If new houses cost more and more, old houses also increase in value, especially since they are on the best land (not in new far away outer suburbs).

redstripe 5y ago
I don't know anything about the situation over there but did they really ban it? For example this bloomberg report talks about foreign ownership via holding companies. So are foreigners not able to hold stakes in NZ companies or are NZ companies not able to hold realestate (doubtful?).
- Mandatum 5y ago
  Yeah all you need now is an IRD number, a NZ bank account or a corporation. All 3 you can setup without setting foot in the country. To those that say that's not possible, it very much is. There's little checks and balances, and COVID's made it even easier. It's lip service and the government does nothing to help track it. The most investigative journalism that's gone into it was a few years where people tried to look up owners of holding companies and based the research on people's last names. You can imagine how well that last bit went down in the media. Well, our trust privacy laws are very strict - so it's near impossible to tell who actually owns the companies if it's director is fronted by a corporate holding firm. These are used to protect property in the event of bankruptcies and debts, but can also be used to hide your residency.
  - thevagrant 5y ago
    Not only that but it is easy to have people who front the purchases on behalf of foreigners. Only have to look at some of the recent OIO cases and news to see that this is exactly what is happening. Govt is a decade behind the ball and not sure they'll ever want to fix it (no matter who you vote for).
jollybean 5y ago
There are several factors driving housing prices, it doesn't mean that one vector shouldn't be regulated. Also, it may be possible for people to side-step regulations as often the reality on the ground tells a different story.
cheesecake_luvr 5y ago
Overseas buyers just get permanent residency and citizenship and buy houses. A few years ago you just needed ~$NZ5m invested in the country and you get permanent residency. There is no way the prices are driven by domestic money. My factory supervisor brother has a house in Mangere Bridge, a blue-collar suburb, built for ~$100k 20 years ago is now well over $1m. It is batshit crazy. I hear of eye-watering prices in Manurewa, Otahuhu, Papakura. Edit: https://www.stuff.co.nz/life-style/homed/real-estate/125475682/heres-what-aucklands-median-house-price-can-buy-around-the-world https://www.stuff.co.nz/life-style/homed/real-estate/1254756.... Jesus the median is now $1.14m.
- crummy 5y ago
  You think the price of 500k houses has been driven to 1m thanks to people who can throw around 25m?
  - deleted 5y ago
    [deleted]
  - eurasiantiger 5y ago
    Yes. Those people buy multiple properties in an effort to launder their drug money. Just look at the situation in Marbella.
    - petre 5y ago
      You probably mean this? https://www.theguardian.com/news/2021/may/20/a-united-nations-of-how-marbella-became-a-magnet-for-gangsters https://www.theguardian.com/news/2021/may/20/a-united-nation...
      - TedDoesntTalk 5y ago
        That’s a great read. Thank you. I was in Marbella in the 1990s, in awe of the ostentatious wealth, but had no idea it was from drug trafficking.
      - 5y ago
spfzero 5y ago
So your theory is that the contained, stable number of housing buyers just decided to start paying 30% more?
- dcolkitt 5y ago
  Why would it be stable? Falling interest rates and rising asset prices in other markets mean that many more people are able to afford higher-priced homes than even a few short years ago. No overseas scapegoats required.
zed88 5y ago
New Zealand has cheap credit problem. I personally know folks who have seven to eight houses and they want to buy even more. I mean real estate is the biggest industry in this country, what else can we expect. I am personally so fed up with all this that I am planning to go to Australia next year, yeah it's crazy there, but at least there's a glimmer of hope that I can buy a house there and pay less taxes.
Cyril_HN 5y ago
I believe something like a million kiwis live abroad. It strikes me that one mechanism is: - Kiwis live and work abroad, sometimes earning much more than they would in NZ. - Those kiwis buy houses. And with the pandemic: - More of those kiwis have decided to buy houses in NZ, because it has been very successful at keeping covid and restrictions minimal so far.
- TMWNN 5y ago
  >I believe something like a million kiwis live abroad. For context, New Zealand has 4.9 million people (almost exactly one half that of Los Angeles County). Imagine 60 million Americans living abroad, rather than the actual about 9 million.
Gatsky 5y ago
Just to add that in Australia the housing market is also going nuts and presumably foreign buyers are suppressed or absent due to Covid. It is really quite bad, and nobody knows what to do about it. It is lose-lose now because there are the people who can't buy a house, and then there are those who sacrificed everything to buy a house. You can't help one group without really hurting the other. It will really hit home when the people who can't buy a house get older, and stop work. Two options come to mind: - Adjust policy to slow the rate of increase such that wages and income will catch up. This will take 20 years or more of course, resulting in an 'unhoused' generation of people. - Make some kind of large structural change which reduces prices coupled with debt forgiveness. This will still screw a lot of overcapitalised people. I don't think massively increasing urban density will work in Australia (or NZ, or Canada), which seems to be the Japanese solution. A third option is to try and reduce concentration in major cities, and attract people to regional areas where housing supply and demand are better matched and prices are much lower. There is actually an opportunity to do this because of Covid - more interest in remove work and less migration. Austrlia, NZ and Canada have a lot space after all. But the reality is, our listless government won't do anything, and the political pressure from the older well-housed generations protecting their wealth is too great.
- voisin 5y ago
  > A third option is to try and reduce concentration in major cities, and attract people to regional areas where housing supply and demand are better matched and prices are much lower. In Canada there is essentially no where that fits this description if you look at price to income ratios. The price increases in tiny towns in the middle of nowhere have increased as dramatically as in major centres, from a lower starting point. The locals earn far less and cannot keep up with the prices.
- rtpg 5y ago
  Why don’t you think increasing supply like the Japanese solution would work?
  - Gatsky 5y ago
    In Australia anyway, there is a strongly ingrained cultural norm around the backyard. There is also the NIMBYism in the inner city suburbs which should be densified. These suburbs are filled with wealthy people who will not just acquiesce to high density developments and decades of transport infrastructure revision. Finally there are heritage listings. These are buildings which are designated as having cultural significance. You can't knock them down, they have to be maintained, often at great expense. Councils are militant about protecting heritage listings. On more than one occasion a stalemate develops and the owner of the property lets it sit for years and years until the heritage building essential falls down by itself. Yet when a new building is built, the council is happy for any sort of ugly box. Go figure.
hanselot 5y ago
This is the endgame. Watch as all property becomes leased instead of owned. China will grow larger.
zz865 5y ago
NZ has no capital gains tax, low property taxes and negligible stock market. Its a great way to make money and really the only way to make money.
- arj 5y ago
  Denmark also has no capital gains tax and the housing prices has also gone up like crazy over the last year. I guess the thinking must be that if it were taxed and say you bought a house for 500k and a decade later it is worth 750k and you have to move for another job to a place where a comparable house would also be 750k$, then you can't afford the "same house" any longer because you have to pay tax on the 250k gain. The funny thing is I don't think we would see this kind of increase on the house price if it where taxed, making the point pretty mood. Does anyone know of a country with tax on capital gains from selling a house and how the prices on houses are there?
Cthulhu_ 5y ago
Could it be as simple as money being funneled through NZ nationals to buy up houses? I mean housing prices are up everywhere it seems, one could think there's an evil shadowy cabal of rich investors buying up properties. But, and I'm not an economist or anything here, on the other hand there's a few forces pushing average people to it; we've recovered from the housing crisis from 2008 onwards. Savings account interests are on the floor, so people are looking to put their money somewhere else - a house is a great long term investment. another one I heard is that "big" loans from e.g. the European Central Bank are really low interest, pushing banks to lower mortgage rates, which makes people think "now is the time to buy and fix my mortgage rate", which is what I ended up doing a few years ago. And of course there's the 'rona, which has made a lot of well-off people reconsider their overpriced living conditions in the big cities. They can get a real house outside of the big cities for the money they make, and if they can work remote or limit commuting, it makes sense.
- pydry 5y ago
  >I mean housing prices are up everywhere it seems, one could think there's an evil shadowy cabal of rich investors buying up properties. Why would they have to be evil, shadowy or a cabal? All you need is wealth inequality.
- thevagrant 5y ago
  > Could it be as simple as money being funneled through NZ nationals to buy up houses? Yes. OIO appears to have caught some but I suspect a lot gets missed. I would expect locals can be driving up prices too but more as a reaction to what has been happening for 15 years already.
- trainsplanes 5y ago
  My first thought. Pay someone else to buy the house for you and hold onto it. Unless you restrict the number of houses private individuals can own and massively restrict what corporate owners can buy, not much will change.
WanderPanda 5y ago
I don‘t see why foreign investment would be bad for a domestic housing market in the mid/long term. In the end real estate shouldn‘t be bound to a low stock to flow rate, given its (delayed) supply elasticity. Combined with a possible remote working trend this should benefit construction workers etc. a lot medium term.
- concordDance 5y ago
  Two words: planning permission
yardstick 5y ago
I’ve talked with a friend in NZ who have recently purchased 5 houses all to rent, all have mortgages, and none in expensive cities (think South Island outside CHCH and Queenstown). They work full time in Auckland in a business they run. The housing crisis has been this way since at least 2000 or so. It won’t change until: - Stamp duty for buying rentals / converting to rentals, maybe 10-20% - Limit the number of existing residential properties a person can own to 5 (no lower than 3). Maybe allow them to buy more than 5 if they pay a high stamp duty (eg 60%). - No limit to number of new residential properties a person can build (Ie encourage adding new stock to the housing market), so long as it doesn’t involve the demolition of an existing residential property. - Higher buy to let mortgage deposit requirements on existing properties (maybe 60%?) - Higher interest on buy to let mortgages (maybe the govt charges an additional 3% on top of the interest as a form of tax) - Maybe some more draconian stuff like unable to sell a property as a rental if it has been a rental for at least 2 out of the last 10 years. Ie making the only people that could buy it owner-occupiers.
- dillondoyle 5y ago
  Is there a reason increasing supply wouldn't be an easier solution?
  - yardstick 5y ago
    Yes increasing supply will help, and my suggestions encourage increasing supply over turning existing stock into rentals, but if the new supply is all rentals that doesn’t help owner occupiers much. What needs to happen is owner occupiers are given a competitive edge when bidding for a property over a landlord. Hence more taxes and disincentives for buy to let purchasers. So for example a property selling for $1m, what would happen if it actually cost a landlord say $1.5m after taxes, higher interest etc, but an owner occupier would still just have to pay $1m. That gives an advantage to someone who actually needs the home. Edit: Also new supply takes a long time to ramp up, with planning permission, land acquisition, infrastructure, and there are materials shortages (wood especially) and cost overruns rampant at the moment. There is also a potential issue in the quality of supply (see the leaky building crisis in NZ in the 90s, or how small the apartments of the last decade are).
voisin 5y ago
What are interest rates on mortgages, and what percent equity are homebuyers expected to have in order to qualify? I believe foreign buyers is also a scapegoat in Canada. At first I believed it when home prices were only growing at obscene rates in the major cities but now it has spread to every tiny community in the country, literally from Newfoundland to the Yukon. This is a direct consequence of interest rates being too low for too long and capital having run out of good places to go (zero interest rates, equities at peaks, etc).
- zonkd1234 5y ago
  I agree. This is likely a result of central bank policies pushing rates down for so long. I bought recently because rates are so extremely low and the govt has committed to keeping them low for a long time. Rates went up very slowly after the Great Recession and this time will probably be the same. Add to that a growing population (here in Canada) and housing prices will probably keep going up a lot.
- ZephyrBlu 5y ago
  Interest rates are 2-5% right now I think, minimum equity is 20% in most cases.
contingencies 5y ago
AU/NZ/DE citizen here. Passed up buying a bit of bush in Northland (NZ's "subtropical" region, if you believe the kiwis) a few years ago, after the real estate agent advised us not to buy there due to the number of nutcases running around shooting pigs with shotguns. Might have made some money, but not 30% in a year like Sydney...
mercy_dude 5y ago
That is exactly why I am against “point based” immigration whatever that means. It essentially translates to saying we only bring in wealthy immigrants. Both Canada and NZ have similar problems, their point based immigration system disproportionately favor more financially well off class of people, in many cases the investor class loophole basically allows to buy citizenship. Add to that the number of immigrants is federally controlled, the government has no say in where the incoming immigrants settle which in many cases end up being big cities such as Toronto or Vancouver. And then the international student visa scheme. Many universities basically use them as their lifeline. Concordia University in Montreal for example has over 50% of their registered students being international. I am in much more favour of the old system where the applicant applies through a provincial (state) immigration and each state gets to set their quota. Once approved the immigrant has to settle in the province they apply for and live there for certain number of years. This allowed even distribution and not put pressure on already tight housing supply in major big cities such as Toronto. But the federal government in Canada in 2015 removed this provincial cap and instead introduced a point based lottery system where both the lottery cap and applicant selection through point score threshold is done by the federal government. EDIT: Also the point based system allows abuse in countries where we’ll connected people can basically buy “accredited” credentials such as relevant accredited experience in professions. I know someone who doesn’t know a thing about welding, but they moved here with credentials. Government has no way to verify these accreditation in many cases for many countries.
- 908B64B197 5y ago
  > am in much more favour of the old system where the applicant applies through a provincial (state) immigration and each state gets to set their quota. Isn't it still like that in Quebec? Incidentally, the party they voted for has almost no support from immigrant communities. > Also the point based system allows abuse in countries where we’ll connected people can basically buy “accredited” credentials such as relevant accredited experience in professions. I know someone who doesn’t know a thing about welding, but they moved here with credentials. Government has no way to verify these accreditation in many cases for many countries. I constantly see resumes for Canadian "engineers" with foreign diploma. Not a single position at a Canadian company despite having lived there for 10+ years. Wonder why...
slothtrop 5y ago
It will take a multi-pronged effort to fix because there are several different pressures. The rate of immigration in Canada has been increased, and will increase again, without any intervention to fix housing regulations and incentivize rate of creating new structures. Since the demand is growing faster than the supply, you can both a) curb the demand, by lowering the ludicrous immigration rate, b) fix regulations and impose other restrictions on foreign ownership. And if you refuse to do 'a', then you have to double-down on 'b'.
- C19is20 5y ago
  Why 'ludicrous'?
opportune 5y ago
My hunch is that this is true in the US too. There are a few cities where I think foreign buyers may actually be buying condos and leaving them vacant (namely the nice parts of Manhattan and Miami) but it’s a very small portion of the total housing supply. I think we want to pretend foreign buyers are the problem because it’s much easier to understand and try to stop than wealth/income inequality, access to credit, and low interest rates.
sjg007 5y ago
>Old houses are sold at prices relative to new houses. If new houses cost more and more, old houses also increase in value, especially since they are on the best land (not in new far away outer suburbs). This is basically the reason... it's location right? Older houses may have bigger lots and better offsets etc... Yes you can get newer going further out but you can also remodel.
2ion 5y ago
> House prices are skyrocketing and pricing out young people Oh I'm already priced out in Europe. I'm not going into debt for 20-50 years just to pay for _one_ thing.

redstripe 5y ago

I don't know anything about the situation over there but did they really ban it? For example this bloomberg report talks about foreign ownership via holding companies. So are foreigners not able to hold stakes in NZ companies or are NZ companies not able to hold realestate (doubtful?).

Mandatum 5y ago
Yeah all you need now is an IRD number, a NZ bank account or a corporation. All 3 you can setup without setting foot in the country. To those that say that's not possible, it very much is. There's little checks and balances, and COVID's made it even easier. It's lip service and the government does nothing to help track it. The most investigative journalism that's gone into it was a few years where people tried to look up owners of holding companies and based the research on people's last names. You can imagine how well that last bit went down in the media. Well, our trust privacy laws are very strict - so it's near impossible to tell who actually owns the companies if it's director is fronted by a corporate holding firm. These are used to protect property in the event of bankruptcies and debts, but can also be used to hide your residency.
- thevagrant 5y ago
  Not only that but it is easy to have people who front the purchases on behalf of foreigners. Only have to look at some of the recent OIO cases and news to see that this is exactly what is happening. Govt is a decade behind the ball and not sure they'll ever want to fix it (no matter who you vote for).

jollybean 5y ago

There are several factors driving housing prices, it doesn't mean that one vector shouldn't be regulated. Also, it may be possible for people to side-step regulations as often the reality on the ground tells a different story.

cheesecake_luvr 5y ago

Overseas buyers just get permanent residency and citizenship and buy houses. A few years ago you just needed ~$NZ5m invested in the country and you get permanent residency. There is no way the prices are driven by domestic money. My factory supervisor brother has a house in Mangere Bridge, a blue-collar suburb, built for ~$100k 20 years ago is now well over $1m. It is batshit crazy. I hear of eye-watering prices in Manurewa, Otahuhu, Papakura. Edit: https://www.stuff.co.nz/life-style/homed/real-estate/125475682/heres-what-aucklands-median-house-price-can-buy-around-the-world https://www.stuff.co.nz/life-style/homed/real-estate/1254756.... Jesus the median is now $1.14m.

crummy 5y ago
You think the price of 500k houses has been driven to 1m thanks to people who can throw around 25m?
- deleted 5y ago
  [deleted]
- eurasiantiger 5y ago
  Yes. Those people buy multiple properties in an effort to launder their drug money. Just look at the situation in Marbella.
  - petre 5y ago
    You probably mean this? https://www.theguardian.com/news/2021/may/20/a-united-nations-of-how-marbella-became-a-magnet-for-gangsters https://www.theguardian.com/news/2021/may/20/a-united-nation...
    - TedDoesntTalk 5y ago
      That’s a great read. Thank you. I was in Marbella in the 1990s, in awe of the ostentatious wealth, but had no idea it was from drug trafficking.
    - 5y ago

spfzero 5y ago

So your theory is that the contained, stable number of housing buyers just decided to start paying 30% more?

dcolkitt 5y ago
Why would it be stable? Falling interest rates and rising asset prices in other markets mean that many more people are able to afford higher-priced homes than even a few short years ago. No overseas scapegoats required.

zed88 5y ago

New Zealand has cheap credit problem. I personally know folks who have seven to eight houses and they want to buy even more. I mean real estate is the biggest industry in this country, what else can we expect. I am personally so fed up with all this that I am planning to go to Australia next year, yeah it's crazy there, but at least there's a glimmer of hope that I can buy a house there and pay less taxes.

Cyril_HN 5y ago

I believe something like a million kiwis live abroad. It strikes me that one mechanism is: - Kiwis live and work abroad, sometimes earning much more than they would in NZ. - Those kiwis buy houses. And with the pandemic: - More of those kiwis have decided to buy houses in NZ, because it has been very successful at keeping covid and restrictions minimal so far.

TMWNN 5y ago
>I believe something like a million kiwis live abroad. For context, New Zealand has 4.9 million people (almost exactly one half that of Los Angeles County). Imagine 60 million Americans living abroad, rather than the actual about 9 million.

Gatsky 5y ago

Just to add that in Australia the housing market is also going nuts and presumably foreign buyers are suppressed or absent due to Covid. It is really quite bad, and nobody knows what to do about it. It is lose-lose now because there are the people who can't buy a house, and then there are those who sacrificed everything to buy a house. You can't help one group without really hurting the other. It will really hit home when the people who can't buy a house get older, and stop work. Two options come to mind: - Adjust policy to slow the rate of increase such that wages and income will catch up. This will take 20 years or more of course, resulting in an 'unhoused' generation of people. - Make some kind of large structural change which reduces prices coupled with debt forgiveness. This will still screw a lot of overcapitalised people. I don't think massively increasing urban density will work in Australia (or NZ, or Canada), which seems to be the Japanese solution. A third option is to try and reduce concentration in major cities, and attract people to regional areas where housing supply and demand are better matched and prices are much lower. There is actually an opportunity to do this because of Covid - more interest in remove work and less migration. Austrlia, NZ and Canada have a lot space after all. But the reality is, our listless government won't do anything, and the political pressure from the older well-housed generations protecting their wealth is too great.

voisin 5y ago
> A third option is to try and reduce concentration in major cities, and attract people to regional areas where housing supply and demand are better matched and prices are much lower. In Canada there is essentially no where that fits this description if you look at price to income ratios. The price increases in tiny towns in the middle of nowhere have increased as dramatically as in major centres, from a lower starting point. The locals earn far less and cannot keep up with the prices.
rtpg 5y ago
Why don’t you think increasing supply like the Japanese solution would work?
- Gatsky 5y ago
  In Australia anyway, there is a strongly ingrained cultural norm around the backyard. There is also the NIMBYism in the inner city suburbs which should be densified. These suburbs are filled with wealthy people who will not just acquiesce to high density developments and decades of transport infrastructure revision. Finally there are heritage listings. These are buildings which are designated as having cultural significance. You can't knock them down, they have to be maintained, often at great expense. Councils are militant about protecting heritage listings. On more than one occasion a stalemate develops and the owner of the property lets it sit for years and years until the heritage building essential falls down by itself. Yet when a new building is built, the council is happy for any sort of ugly box. Go figure.

hanselot 5y ago

This is the endgame. Watch as all property becomes leased instead of owned. China will grow larger.

zz865 5y ago

NZ has no capital gains tax, low property taxes and negligible stock market. Its a great way to make money and really the only way to make money.

arj 5y ago
Denmark also has no capital gains tax and the housing prices has also gone up like crazy over the last year. I guess the thinking must be that if it were taxed and say you bought a house for 500k and a decade later it is worth 750k and you have to move for another job to a place where a comparable house would also be 750k$, then you can't afford the "same house" any longer because you have to pay tax on the 250k gain. The funny thing is I don't think we would see this kind of increase on the house price if it where taxed, making the point pretty mood. Does anyone know of a country with tax on capital gains from selling a house and how the prices on houses are there?

Cthulhu_ 5y ago

Could it be as simple as money being funneled through NZ nationals to buy up houses? I mean housing prices are up everywhere it seems, one could think there's an evil shadowy cabal of rich investors buying up properties. But, and I'm not an economist or anything here, on the other hand there's a few forces pushing average people to it; we've recovered from the housing crisis from 2008 onwards. Savings account interests are on the floor, so people are looking to put their money somewhere else - a house is a great long term investment. another one I heard is that "big" loans from e.g. the European Central Bank are really low interest, pushing banks to lower mortgage rates, which makes people think "now is the time to buy and fix my mortgage rate", which is what I ended up doing a few years ago. And of course there's the 'rona, which has made a lot of well-off people reconsider their overpriced living conditions in the big cities. They can get a real house outside of the big cities for the money they make, and if they can work remote or limit commuting, it makes sense.

pydry 5y ago
>I mean housing prices are up everywhere it seems, one could think there's an evil shadowy cabal of rich investors buying up properties. Why would they have to be evil, shadowy or a cabal? All you need is wealth inequality.
thevagrant 5y ago
> Could it be as simple as money being funneled through NZ nationals to buy up houses? Yes. OIO appears to have caught some but I suspect a lot gets missed. I would expect locals can be driving up prices too but more as a reaction to what has been happening for 15 years already.
trainsplanes 5y ago
My first thought. Pay someone else to buy the house for you and hold onto it. Unless you restrict the number of houses private individuals can own and massively restrict what corporate owners can buy, not much will change.

WanderPanda 5y ago

I don‘t see why foreign investment would be bad for a domestic housing market in the mid/long term. In the end real estate shouldn‘t be bound to a low stock to flow rate, given its (delayed) supply elasticity. Combined with a possible remote working trend this should benefit construction workers etc. a lot medium term.

concordDance 5y ago
Two words: planning permission

yardstick 5y ago

I’ve talked with a friend in NZ who have recently purchased 5 houses all to rent, all have mortgages, and none in expensive cities (think South Island outside CHCH and Queenstown). They work full time in Auckland in a business they run. The housing crisis has been this way since at least 2000 or so. It won’t change until: - Stamp duty for buying rentals / converting to rentals, maybe 10-20% - Limit the number of existing residential properties a person can own to 5 (no lower than 3). Maybe allow them to buy more than 5 if they pay a high stamp duty (eg 60%). - No limit to number of new residential properties a person can build (Ie encourage adding new stock to the housing market), so long as it doesn’t involve the demolition of an existing residential property. - Higher buy to let mortgage deposit requirements on existing properties (maybe 60%?) - Higher interest on buy to let mortgages (maybe the govt charges an additional 3% on top of the interest as a form of tax) - Maybe some more draconian stuff like unable to sell a property as a rental if it has been a rental for at least 2 out of the last 10 years. Ie making the only people that could buy it owner-occupiers.

dillondoyle 5y ago
Is there a reason increasing supply wouldn't be an easier solution?
- yardstick 5y ago
  Yes increasing supply will help, and my suggestions encourage increasing supply over turning existing stock into rentals, but if the new supply is all rentals that doesn’t help owner occupiers much. What needs to happen is owner occupiers are given a competitive edge when bidding for a property over a landlord. Hence more taxes and disincentives for buy to let purchasers. So for example a property selling for $1m, what would happen if it actually cost a landlord say $1.5m after taxes, higher interest etc, but an owner occupier would still just have to pay $1m. That gives an advantage to someone who actually needs the home. Edit: Also new supply takes a long time to ramp up, with planning permission, land acquisition, infrastructure, and there are materials shortages (wood especially) and cost overruns rampant at the moment. There is also a potential issue in the quality of supply (see the leaky building crisis in NZ in the 90s, or how small the apartments of the last decade are).

voisin 5y ago

What are interest rates on mortgages, and what percent equity are homebuyers expected to have in order to qualify? I believe foreign buyers is also a scapegoat in Canada. At first I believed it when home prices were only growing at obscene rates in the major cities but now it has spread to every tiny community in the country, literally from Newfoundland to the Yukon. This is a direct consequence of interest rates being too low for too long and capital having run out of good places to go (zero interest rates, equities at peaks, etc).

zonkd1234 5y ago
I agree. This is likely a result of central bank policies pushing rates down for so long. I bought recently because rates are so extremely low and the govt has committed to keeping them low for a long time. Rates went up very slowly after the Great Recession and this time will probably be the same. Add to that a growing population (here in Canada) and housing prices will probably keep going up a lot.
ZephyrBlu 5y ago
Interest rates are 2-5% right now I think, minimum equity is 20% in most cases.

contingencies 5y ago

AU/NZ/DE citizen here. Passed up buying a bit of bush in Northland (NZ's "subtropical" region, if you believe the kiwis) a few years ago, after the real estate agent advised us not to buy there due to the number of nutcases running around shooting pigs with shotguns. Might have made some money, but not 30% in a year like Sydney...

mercy_dude 5y ago

That is exactly why I am against “point based” immigration whatever that means. It essentially translates to saying we only bring in wealthy immigrants. Both Canada and NZ have similar problems, their point based immigration system disproportionately favor more financially well off class of people, in many cases the investor class loophole basically allows to buy citizenship. Add to that the number of immigrants is federally controlled, the government has no say in where the incoming immigrants settle which in many cases end up being big cities such as Toronto or Vancouver. And then the international student visa scheme. Many universities basically use them as their lifeline. Concordia University in Montreal for example has over 50% of their registered students being international. I am in much more favour of the old system where the applicant applies through a provincial (state) immigration and each state gets to set their quota. Once approved the immigrant has to settle in the province they apply for and live there for certain number of years. This allowed even distribution and not put pressure on already tight housing supply in major big cities such as Toronto. But the federal government in Canada in 2015 removed this provincial cap and instead introduced a point based lottery system where both the lottery cap and applicant selection through point score threshold is done by the federal government. EDIT: Also the point based system allows abuse in countries where we’ll connected people can basically buy “accredited” credentials such as relevant accredited experience in professions. I know someone who doesn’t know a thing about welding, but they moved here with credentials. Government has no way to verify these accreditation in many cases for many countries.

908B64B197 5y ago
> am in much more favour of the old system where the applicant applies through a provincial (state) immigration and each state gets to set their quota. Isn't it still like that in Quebec? Incidentally, the party they voted for has almost no support from immigrant communities. > Also the point based system allows abuse in countries where we’ll connected people can basically buy “accredited” credentials such as relevant accredited experience in professions. I know someone who doesn’t know a thing about welding, but they moved here with credentials. Government has no way to verify these accreditation in many cases for many countries. I constantly see resumes for Canadian "engineers" with foreign diploma. Not a single position at a Canadian company despite having lived there for 10+ years. Wonder why...

slothtrop 5y ago

It will take a multi-pronged effort to fix because there are several different pressures. The rate of immigration in Canada has been increased, and will increase again, without any intervention to fix housing regulations and incentivize rate of creating new structures. Since the demand is growing faster than the supply, you can both a) curb the demand, by lowering the ludicrous immigration rate, b) fix regulations and impose other restrictions on foreign ownership. And if you refuse to do 'a', then you have to double-down on 'b'.

C19is20 5y ago
Why 'ludicrous'?

opportune 5y ago

My hunch is that this is true in the US too. There are a few cities where I think foreign buyers may actually be buying condos and leaving them vacant (namely the nice parts of Manhattan and Miami) but it’s a very small portion of the total housing supply. I think we want to pretend foreign buyers are the problem because it’s much easier to understand and try to stop than wealth/income inequality, access to credit, and low interest rates.

sjg007 5y ago

>Old houses are sold at prices relative to new houses. If new houses cost more and more, old houses also increase in value, especially since they are on the best land (not in new far away outer suburbs). This is basically the reason... it's location right? Older houses may have bigger lots and better offsets etc... Yes you can get newer going further out but you can also remodel.

2ion 5y ago

> House prices are skyrocketing and pricing out young people Oh I'm already priced out in Europe. I'm not going into debt for 20-50 years just to pay for _one_ thing.