4 ms·

I live in NZ and my home has more than doubled in value over the last 5 years. The rapid increase in prices is scary.

by xupybd 5y ago

mpol 5y ago
Can you explain what the cause of this sharp rise is? The linked article has nothing on that. It even feels a bit alarming without much depth. And is anything being done? In the Netherlands, many investors, big and small, are buying up houses to rent out. Airbnb renting was a part of this as well. Many local governments are now creating rules, like, you have to live in the house when you buy it. Also, some taxes for investors have increased a lot. What is happening in the last few months is that less investors have bought houses and more have been bought by people buying their first home. The sharp rise in prices has been more normalized. Still, there is a shortage of housing and the low interest caused over-bidding by people in a rushed market. The result was that only investors and people which had financial support from their parents could buy houses. Of course somewhat to their own detriment with paying too much and having too big loans.
- berkut 5y ago
  A lot of demand for housing (both to buy and rent), and in my experience (live in Wellington) a lot of the newer apartments being built seem very much architected with buy to let in mind, so I think renting is a large part of it, along with limited supply. The government did tighten the rules a bit several years ago so that effectively (there are ways around it), you needed to be a resident to buy property, but I don't think that had that much impact (although maybe it would be even worse if that wasn't done?)
  - chii 5y ago
    foreign buyers don't truly make up much of the market - any rules set against them is really just there to win political points imho.
- nikanj 5y ago
  New Zealand has built more rules. Maybe they should have built more homes instead.
- zxvvryu 5y ago
  Bank credit creation has inflated prices leaving them relatively untethered from housing supply.
- Negitivefrags 5y ago
  Low interest rates and not enough building have causd prices to increase, of course, just like anywhere else but there was another factor. For some inexplicable reason they decided to remove the LVR requirements for lending in response to covid. This suddenly caused a huge surge in ability for people to buy houses that were previously not able to.
- dzhiurgis 5y ago
  Allowing investors to leverage and buy up existing inventory, immigration and low density Another 20% growth and PM wouldn’t be able to afford her house on $470k a year salary
- nsonha 5y ago
  I'm not a kiwi but I heard until recently, or still, New Zealand either has low or no tax on foreign property investments? If it's true, it's like an open invitation to regional millionaires from a certain country where people can't even legally own properties.
- PickledHotdog 5y ago
  There are no significant taxes on housing investment in Australia and infact there are tax concessions to do so ("Negative Gearing") which no government has the guts to repeal because the largest cohort of voters (people 60+) benefit so much from it that to repeal it is political suicide.
andi999 5y ago
what is the interest rate in NZ?
- ZephyrBlu 5y ago
  Around 4-5% right now I believe.
  - alkonaut 5y ago
    4-5%!? Aren’t central bank rates in the 0-1% range pretty much globally still? My mortgage is usually around one percent over the central bank rate so it’s been hovering around 1-1.5% for years now.
    - ZephyrBlu 5y ago
      Yes. New Zealand has extremely high interest rates. I don't know why. My parents have told me that years ago they used to be even higher (10-15%). See these banks for examples: - https://www.kiwibank.co.nz/personal-banking/home-loans/ https://www.kiwibank.co.nz/personal-banking/home-loans/ - https://www.asb.co.nz/home-loans-mortgages https://www.asb.co.nz/home-loans-mortgages - https://www.westpac.co.nz/home-loans-mortgages/ https://www.westpac.co.nz/home-loans-mortgages/ Also, it appears that our central bank has an interest rate of 1.5%: https://www.cnbc.com/2022/04/13/new-zealand-central-bank-hikes-rates-by-hefty-50-basis-points-as-inflation-worries-grow.html https://www.cnbc.com/2022/04/13/new-zealand-central-bank-hik....
jacquesm 5y ago
What was the inflation rate over that period? Are house prices counted in the inflation?
- sacrosancty 5y ago
  There are multiple measure of inflation - housing, wages, food, etc. Housing inflation is the highest.
Gustomaximus 5y ago
I'm Brisbane outskirts. Moved here to avoid the crazy Sydney prices about 5 years ago. We would expect a bit under double now, maybe 70% up. It's crazy. Great to feel you have more equity on the surface, but it's meaningless really as you have to sell to buy if your moving and then things like rates and stamp duty are higher than ever. I think the best solution is cap how many properties people can own. Homes are good for people or investors, not both. While interest rates are the main driver, a country like Australia has little ability to far steer outside global rates. From that I think the best solution is to place a limit of ~3 residential properties per person, or something like than with a grace period to ease the new rules. Get the big investors out of the market. Make homes for people again. Action should have been 15 years ago before it was todays problem, but was still obviously heading this way. It's going to be hard to unwind now without creating serious pain somewhere.
- PickledHotdog 5y ago
  Unfortunately it's been the policy of successive Australian governments to put "real estate investment" into the engine room of the economy. They didn't do it 15 years ago vecahse they didn't want to. It's going to be an absolute ball-breaker trying to unwind the whole thing, too. If you limit it to 3 houses per person you'll get people buying houses for their three year olds (which already happens). It's an improvement, for sure, but it'll be rorted. What we really need is 1960s Chinese Land Reforms
  - Gustomaximus 4y ago
    > If you limit it to 3 houses per person you'll get people buying houses for their three year olds That's easy enough to rule against, much like they do with income shifting to children. > What we really need is 1960s Chinese Land Reforms Not really into violence. Also where has it landed them 60 years later? The best is sensible structural rules for the long term.

I live in NZ and my home has more than doubled in value over the last 5 years. The rapid increase in prices is scary.

by xupybd 5y ago

I live in NZ and my home has more than doubled in value over the last 5 years. The rapid increase in prices is scary.

mpol 5y ago

Can you explain what the cause of this sharp rise is? The linked article has nothing on that. It even feels a bit alarming without much depth. And is anything being done? In the Netherlands, many investors, big and small, are buying up houses to rent out. Airbnb renting was a part of this as well. Many local governments are now creating rules, like, you have to live in the house when you buy it. Also, some taxes for investors have increased a lot. What is happening in the last few months is that less investors have bought houses and more have been bought by people buying their first home. The sharp rise in prices has been more normalized. Still, there is a shortage of housing and the low interest caused over-bidding by people in a rushed market. The result was that only investors and people which had financial support from their parents could buy houses. Of course somewhat to their own detriment with paying too much and having too big loans.

berkut 5y ago
A lot of demand for housing (both to buy and rent), and in my experience (live in Wellington) a lot of the newer apartments being built seem very much architected with buy to let in mind, so I think renting is a large part of it, along with limited supply. The government did tighten the rules a bit several years ago so that effectively (there are ways around it), you needed to be a resident to buy property, but I don't think that had that much impact (although maybe it would be even worse if that wasn't done?)
- chii 5y ago
  foreign buyers don't truly make up much of the market - any rules set against them is really just there to win political points imho.
nikanj 5y ago
New Zealand has built more rules. Maybe they should have built more homes instead.
zxvvryu 5y ago
Bank credit creation has inflated prices leaving them relatively untethered from housing supply.
Negitivefrags 5y ago
Low interest rates and not enough building have causd prices to increase, of course, just like anywhere else but there was another factor. For some inexplicable reason they decided to remove the LVR requirements for lending in response to covid. This suddenly caused a huge surge in ability for people to buy houses that were previously not able to.
dzhiurgis 5y ago
Allowing investors to leverage and buy up existing inventory, immigration and low density Another 20% growth and PM wouldn’t be able to afford her house on $470k a year salary
nsonha 5y ago
I'm not a kiwi but I heard until recently, or still, New Zealand either has low or no tax on foreign property investments? If it's true, it's like an open invitation to regional millionaires from a certain country where people can't even legally own properties.
PickledHotdog 5y ago
There are no significant taxes on housing investment in Australia and infact there are tax concessions to do so ("Negative Gearing") which no government has the guts to repeal because the largest cohort of voters (people 60+) benefit so much from it that to repeal it is political suicide.

andi999 5y ago

what is the interest rate in NZ?

ZephyrBlu 5y ago
Around 4-5% right now I believe.
- alkonaut 5y ago
  4-5%!? Aren’t central bank rates in the 0-1% range pretty much globally still? My mortgage is usually around one percent over the central bank rate so it’s been hovering around 1-1.5% for years now.
  - ZephyrBlu 5y ago
    Yes. New Zealand has extremely high interest rates. I don't know why. My parents have told me that years ago they used to be even higher (10-15%). See these banks for examples: - https://www.kiwibank.co.nz/personal-banking/home-loans/ https://www.kiwibank.co.nz/personal-banking/home-loans/ - https://www.asb.co.nz/home-loans-mortgages https://www.asb.co.nz/home-loans-mortgages - https://www.westpac.co.nz/home-loans-mortgages/ https://www.westpac.co.nz/home-loans-mortgages/ Also, it appears that our central bank has an interest rate of 1.5%: https://www.cnbc.com/2022/04/13/new-zealand-central-bank-hikes-rates-by-hefty-50-basis-points-as-inflation-worries-grow.html https://www.cnbc.com/2022/04/13/new-zealand-central-bank-hik....

jacquesm 5y ago

What was the inflation rate over that period? Are house prices counted in the inflation?

sacrosancty 5y ago
There are multiple measure of inflation - housing, wages, food, etc. Housing inflation is the highest.

Gustomaximus 5y ago

I'm Brisbane outskirts. Moved here to avoid the crazy Sydney prices about 5 years ago. We would expect a bit under double now, maybe 70% up. It's crazy. Great to feel you have more equity on the surface, but it's meaningless really as you have to sell to buy if your moving and then things like rates and stamp duty are higher than ever. I think the best solution is cap how many properties people can own. Homes are good for people or investors, not both. While interest rates are the main driver, a country like Australia has little ability to far steer outside global rates. From that I think the best solution is to place a limit of ~3 residential properties per person, or something like than with a grace period to ease the new rules. Get the big investors out of the market. Make homes for people again. Action should have been 15 years ago before it was todays problem, but was still obviously heading this way. It's going to be hard to unwind now without creating serious pain somewhere.

PickledHotdog 5y ago
Unfortunately it's been the policy of successive Australian governments to put "real estate investment" into the engine room of the economy. They didn't do it 15 years ago vecahse they didn't want to. It's going to be an absolute ball-breaker trying to unwind the whole thing, too. If you limit it to 3 houses per person you'll get people buying houses for their three year olds (which already happens). It's an improvement, for sure, but it'll be rorted. What we really need is 1960s Chinese Land Reforms
- Gustomaximus 4y ago
  > If you limit it to 3 houses per person you'll get people buying houses for their three year olds That's easy enough to rule against, much like they do with income shifting to children. > What we really need is 1960s Chinese Land Reforms Not really into violence. Also where has it landed them 60 years later? The best is sensible structural rules for the long term.