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In NZ we have created a culture that obsesses with house prices. It's been this way since at least 2000, if not earlier. Many peoples retirements plans hinge on

In NZ we have created a culture that obsesses with house prices. It's been this way since at least 2000, if not earlier. Many peoples retirements plans hinge on them being landlords or holding large amounts of property. The NZ share market is a joke. Pretty much any serious global company that started in NZ moves away from NZ without even entering our sharemarket. There are a few exceptions of course, but by and large it's a dull, depressing market and there are very few incentives to invest in businesses rather than property. NZ's tax regime also actively discourages investment outside of NZ. Holding growth shares in US tech stocks will result in annual wealth taxes, even if you hold and never sell. No wonder property is easier and more profitable. Last year a friend was gloating at how they purchased 5 rental properties in the South Island (with mortgages of course). Yes a degree of rental properties is required but what we're doing in NZ is way out of proportion.

mrep 4y ago
> Holding growth shares in US tech stocks will result in annual wealth taxes, even if you hold and never sell. Can you explain this more?
- sgt 4y ago
  I wonder about this as well. Let's say Amazon did really well for 5 years and you paid significant wealth tax from these shares. Then Amazon plummets and you lose 50% and then you sell shares. Would the NZ government reimburse a part of the wealth taxes you already paid?
- yardstick 4y ago
  It’s NZ’s CFC/FIF rules. See https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/types-of-business-income/foreign-investment-funds-fifs https://www.ird.govt.nz/income-tax/income-tax-for-businesses... https://taxsummaries.pwc.com/new-zealand/individual/income-determination https://taxsummaries.pwc.com/new-zealand/individual/income-d... No I don’t believe you can get tax credits for paper loses. But you definitely do have to pay for paper gains. Most financial firms in NZ wrap US/growth stocks in a special type of investment called a PIE, which essentially they handle the tax issues for you (Ie your net % gain includes after this wealth tax is taken into account).
Bilal_io 4y ago
How is the startup scene in NZ? I wonder if local investors could focus on that, even if they have to import talent. Perhaps there are regulations preventing this? But, of course I am saying this realizing startups are not a "quick buck" like real estate.
- yardstick 4y ago
  There is a decent bootstrapping startup scene in NZ. Not too many active investors, and if they are they aren’t the same nature as you would find in the US. Less risk takers, more property buyers. The problem is most NZ startups don’t have the hockey stick growth due to our isolated market. We have to spend a lot more on sales before network effects kick in. The Internet can only help soo much.
bigDinosaur 4y ago
House prices are like car dependency in that when it becomes an issue it makes so many conversations so boring. Housing and traffic. Exciting! People become obsessed and then it's all downhill.
richbell 4y ago
> In NZ we have created a culture that obsesses with house prices. It's been this way since at least 2000, if not earlier. Many peoples retirements plans hinge on them being landlords or holding large amounts of property. Canada and New Zealand are similar in that respect. There are a sizable number of people with "investment properties", but the majority of homeowners own a single home and are counting on the price to rise indefinitely to fund their retirement. Economists and politicians regularly brag about how much 'wealth' the average Canadian has; in reality, being able to sell your house for 1.5MM isn't that much of a windfall when other houses are at least 1MM and rising rapidly, and renting is more expensive than having a mortgage.
- cuddlybacon 4y ago
  > in reality, being able to sell your house for 1.5MM isn't that much of a windfall when other houses are at least 1MM and rising rapidly, and renting is more expensive than having a mortgage. This is starting to hit a lot of my parent's social circle. They are retiring, mostly from the edge of a big city. About half plan to or have retired in a small town. In that case they are able to get something with the $1.5M they sold for, but they are driving prices up in those towns in a way locals can't afford. The other half wants something else in the city. Some remaining in the suburbs, others move more into the city, others "in the sticks" and are all surprised that that's going to use up all of their $1.5M. They expect to buy something for $200k and have the rest for retirement lol.

mrep 4y ago

> Holding growth shares in US tech stocks will result in annual wealth taxes, even if you hold and never sell. Can you explain this more?

sgt 4y ago
I wonder about this as well. Let's say Amazon did really well for 5 years and you paid significant wealth tax from these shares. Then Amazon plummets and you lose 50% and then you sell shares. Would the NZ government reimburse a part of the wealth taxes you already paid?
yardstick 4y ago
It’s NZ’s CFC/FIF rules. See https://www.ird.govt.nz/income-tax/income-tax-for-businesses-and-organisations/types-of-business-income/foreign-investment-funds-fifs https://www.ird.govt.nz/income-tax/income-tax-for-businesses... https://taxsummaries.pwc.com/new-zealand/individual/income-determination https://taxsummaries.pwc.com/new-zealand/individual/income-d... No I don’t believe you can get tax credits for paper loses. But you definitely do have to pay for paper gains. Most financial firms in NZ wrap US/growth stocks in a special type of investment called a PIE, which essentially they handle the tax issues for you (Ie your net % gain includes after this wealth tax is taken into account).

Bilal_io 4y ago

How is the startup scene in NZ? I wonder if local investors could focus on that, even if they have to import talent. Perhaps there are regulations preventing this? But, of course I am saying this realizing startups are not a "quick buck" like real estate.

yardstick 4y ago
There is a decent bootstrapping startup scene in NZ. Not too many active investors, and if they are they aren’t the same nature as you would find in the US. Less risk takers, more property buyers. The problem is most NZ startups don’t have the hockey stick growth due to our isolated market. We have to spend a lot more on sales before network effects kick in. The Internet can only help soo much.

bigDinosaur 4y ago

House prices are like car dependency in that when it becomes an issue it makes so many conversations so boring. Housing and traffic. Exciting! People become obsessed and then it's all downhill.

richbell 4y ago

> In NZ we have created a culture that obsesses with house prices. It's been this way since at least 2000, if not earlier. Many peoples retirements plans hinge on them being landlords or holding large amounts of property. Canada and New Zealand are similar in that respect. There are a sizable number of people with "investment properties", but the majority of homeowners own a single home and are counting on the price to rise indefinitely to fund their retirement. Economists and politicians regularly brag about how much 'wealth' the average Canadian has; in reality, being able to sell your house for 1.5MM isn't that much of a windfall when other houses are at least 1MM and rising rapidly, and renting is more expensive than having a mortgage.

cuddlybacon 4y ago
> in reality, being able to sell your house for 1.5MM isn't that much of a windfall when other houses are at least 1MM and rising rapidly, and renting is more expensive than having a mortgage. This is starting to hit a lot of my parent's social circle. They are retiring, mostly from the edge of a big city. About half plan to or have retired in a small town. In that case they are able to get something with the $1.5M they sold for, but they are driving prices up in those towns in a way locals can't afford. The other half wants something else in the city. Some remaining in the suburbs, others move more into the city, others "in the sticks" and are all surprised that that's going to use up all of their $1.5M. They expect to buy something for $200k and have the rest for retirement lol.