Interest Rates

[Perry]

This issue needs a holistic approach, which takes into consideration any unintended
consequences of implementing the different measures that are being discussed."

I wholeheartedly agree. So let's look at one jaundiced Forumite's view.

Property is an attractive investment to New Zealanders because of the current taxation
system which favour that asset class over all other types of investment, especially savings.

A pessimist's view of the glass is that it is half empty.
An optimist's view is that the glass is half full.
Both are looking at the same glass.

Does the taxation system (referred to) really favour property investment?

Or does the said taxation system disadvantage other types of investment?
(In an unintended way, or otherwise)

Or is that advantage or disadvantage nothing at all to do with the taxation system,
but more a factor of government-induced inflation or other government policies?

As a consequence, we have seen in this country a massive long-term bias towards investment in residential property.

That's little more than explication of the first posit re taxation system 'favours.'

To encourage other types of investments we need a national conversation around
tax incentives for savings and investments in the capital markets, and potentially
disincentives for residential property.

Bollocks.

That premise starts with the pre-conceived notion of favouritism towards residential PI.

How can any "national conversation" that begins with such a prejudicial starting point be
described as "holistic?" Seems more like taxistic, to me.

[BigDreamer]

Eri - I don't even bother reading articles where Shamubeel Eaqub is quoted! I am so fed up with the statements he makes!

[eri]

i'd say

his views are widely shared within gov

and so something a prudent investor should be thinking about

....................

the issue as i see it

is that over the years voters have demanded laws that helped young couples into homes

and if a few retirees chose to put their spare cash into a few flats instead of the sharemarket, good for them

but now

too many of us have realised the benefits and have piled onto the property bus

so many that it's getting dangerous + difficult to control

it's not our fault that;

- finance companies fell over due to greed and/or incompetent managers

- that innocents on the sharemarket got slaughtered by the pros

- that too many young couples hook up later with less cash than before

- that councils decided to spend rates on anything but infrastructure

- that we have correctly put our investment focus on the best choice

not our fault

but it's becoming everyone's problem

so now the property bus is under the microscope

- how can it be slowed down?

- how to get some of the people off the bus and on the train or cycling

[speights boy]

The RBNZ is discussing banking regulation.
A director of a bank says no, we should not worry about any of that, we should talk about tax policy instead.
Classic diversionary tactics which will distract some, but not the person who matters most.

[Perry]

That being . . . ?

[speights boy]

The Governor , Mr Wheeler.

[Davo36]

Good post eri.

With the last crash, I was getting physio from a 20 year old who was telling me about her and her boyrfriend's property investment plans when I realised the whole thing was about to go bust.

With shows like The Block being on 3-4 times a week, other shows like Location, location location and the plethora of other ones around too, I reckon we're just spending far too much time and money doing up, flicking, altering or finding houses.

I'm just waiting for the next crash which won't be too far away now.

[Perry]

With shows like The Block being on 3-4 times a week, other shows like Location,
location location and the plethora of other ones around too, I reckon we're just
spending far too much time and money doing up, flicking, altering or finding houses.

But if there were no buyers (or no profit) wouldn't people stop doing it?

I'm just waiting for the next crash which won't be too far away now.

Make a note: check back in 12 month's time!

Haven't you told us that you were once a financial victim of a failed, rash
crash prediction?

What do you know better, now, that we should know, too?

[Damap]

I think for those of us who went through the financial crisis but who hadn't been investing long enough to have been through a pervious bust we hopefully have learned to prepare for the next bust. If it wasn't for the last 5 years I would still be leveraging up and being aggressive. Instead I am all on P and I and reducing debt as fast as I can and using off shore cash flow to help do that even faster. "Recession proofed (largely), am I"

[Davo36]

But if there were no buyers (or no profit) wouldn't people stop doing it?



Make a note: check back in 12 month's time!

Haven't you told us that you were once a financial victim of a failed, rash
crash prediction?

What do you know better, now, that we should know, too?

Perry:

Yes I understand people are making profits doing up houses. I didn't say they weren't. I guess what I am saying is that I don't believe it can go on forever.

Things may well have not tanked in 12 months time. I don't know when, but maybe in 2-3 years? Impossible to predict of course.

Yes last time I got things wrong, happy to admit it. I saw a crash coming, correctly, sold up and waited with cash, which turned out to be disastrous because commercial/industrial property which I invest in actually went up in value. Still find that strange, but there you go.

I don't think I know anything better this time around. I guess I'm always just a bearish investor. I tend to think if you are continually holding large debts you'll come a croppa at some point.

So if the 2 options are to a) Buy heaps of property and have lots of debt, or b) Have some debt but a relatively small amount compared to equity, I'm in the second camp because with the first one, you can do really well if things go well but lose the lot if things go badly, and in the second case, the worst that can happen is you miss out on some gains should prices keep going up.

[Davo36]

[Perry]

Yes, last time I got things wrong.

I wasn't seeking to point-the-finger. More to emphasise
the almost impossibility of making prosperity predictions.
If I recall aright, you had advice you had from a certain
guru that gave you a bum steer, too.

So if the 2 options are to
a) Buy heaps of property and have lots of debt, or
b) Have some debt but a relatively small amount compared to equity.
I'm in the second camp.

Agreed - me, too.

[Bob Kane]

More to emphasise
the almost impossibility of making prosperity predictions.

It not impossible to see where NZ house prices will go.
It's possible there might be a glitch sometime but generally it's a one way direction.
(...sits back waiting for the outrage to start...)

[Perry]

I did phrase that badly - yes.

The average trend is up, if for
no other reason than gummint-
driven inflation.

What I should've said was get-
ting the peaks and troughs in
that average is very difficult.

[Davo36]

David Cameron reckons we're in for another recession: http://www.theguardian.com/world/201...on-g20-warning

Which is probably very good evidence for their not being one!