Announcement
Collapse
No announcement yet.
Herald continues to ruffle our feathers
Collapse
X
-
More PROPERTY INVESTING Bashing
Investors now own up to 45 per cent of the houses in New Zealand. Photo / Supplied
The day my son phoned from the auction to say he had a house I felt a surge of pride and relief and wanted to shout the news from the rooftops.
Pride, because I've read how much the dice is loaded against first-home buyers these days, and relief not only that he would no longer be renting but because I feel a sense of guilt at the prices his generation must pay.
One of the saddest sights I've seen in our society is an Auckland house auction. An excited young couple, accompanied by parents for advice and support, were bidding against a dull-eyed, poker-faced investor in rental property. The rentier won.
The agent said they usually did. It is not a fair contest, for reasons well explained by an Auckland accountant, Alan Dudson, in a contributed article published by the Herald a few months ago.
I hope Bill English read it. In my dreams his Budget on Thursday will say something like: "From midnight, interest payments on new loans for residential property will no longer be tax-deductible."
Last edited by donna; 30-06-2013, 02:11 PM."There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx
-
From the above article.
Investors now own up to 45 per cent of the houses in New Zealand
"We read that home ownership rates have declined to 65 per cent," Tim Hazledine said."There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx
Comment
-
Investors now own up to 45 per cent of the houses in New Zealand
Of course they own 'up to'
Its a negative guarantee.
If the only one investor owned just one rented property in NZ, that would be 'up to'.
All he is saying is that investors do not own 46% or more.
I could say that one-legged wombats who suffer from dandruff own up to 45% of the houses in New Zealand.
That would be equally true.
Comment
-
Originally posted by speights boy View Postflyernzl
Back in Feb you said you had sent in a response to the previous articles.
I can't recall you saying that it had been published.
If it wasn't, can you post it here?
Doesn't conform to their prejudices I guess.
Here it is:
"Price and Prejudice in the Auckland Housing Market
There is a wide-ranging public discussion on perceived difficulties in the housing market and the merits of ‘affordable housing’. I find this puzzling. What, exactly is ‘affordable housing’ and, even more importantly, what then is ‘unaffordable housing’?
I can visualize some small-scale builder coming home at the end of the day and excitedly say to his wife “Hey Martha, I’ve got this great idea. For my next job I’m going to build an unaffordable house”. This is nonsense, of course. Any house that is built is affordable to someone, even if that person is Kim Dotcom. So what they really mean is ‘affordable to those of limited financial resources’.
The average price of a house in the Auckland area is quoted as around $584,000, and this is considered to be too high for first home buyers. Of course it is. Look at the number of well-publicized property sales in the multi-million category. There are whole suburbs of Auckland where even a one-bedroom borer-infested shack comes with a million-dollar plus price tag. Logically then, there must be many many houses sold at prices well below the $584,000 mark in order to create that average. I know that there are modestly priced houses in Auckland City. I have personally bought two of them on the open market within the last year. Sure, these houses are not in the Grammar School zone and don’t have sea views but they are well-built stand-alone houses with lawns, clean, tidy, don’t leak, bus stop a few yards away and with a primary school at the end of the street. If need arises I would not be ashamed to live in one of them.
Despite this, various experts offer solutions to the ‘affordable housing’ problem. Most of these solutions seem to involve creating penalties for property investors. All of these solutions suffer from the same error – they fail to distinguish between the different players in the housing market.
There are indeed Speculators. Speculators buy a property on the basis that they can resell that property at some time in the next few years and make a profit on the capital gain. They may rent out the property during the time that they own it in order to reduce their holding costs, but that rental income is incidental to their main aim. Generally their annual holding costs are greater than what they get in rent. They are effectively subsidizing the housing costs of their tenants. These are the people who are the subject of the expert’s wrath.
Then there are Landlords. Landlords buy a property with the intention of getting an income from the rental proceeds. They buy a property, maintain it properly to protect their investment, and hold it for many years. Landlords are very price sensitive, and will not pay more for a property than their budget will allow as this will destroy their projected income. Thus any effect Landlords have on the price of property will tend to be downwards, not inflationary.
I have been a Residential Landlord for over 20 years. During that time I have bought houses but I have not sold a single house. There is a neighbor near one of my rentals He wants me to buy his house, but I will not do so. At the price he wants there is no positive cash flow for me in the deal. An owner-occupier may well be willing to pay that price, I am not.
Current tax law states that if you buy a house with the intention, when you buy it, of reselling that house at a profit, that profit is taxable. It is said that it is very difficult to identify someone’s motives when they buy. I disagree. To me, anyone who buys a rental property that will consistently run at a cash loss from start to finish would have a very difficult time arguing that they entered into the deal for any other reason.
So we don’t need a Capital Gains Tax. We don’t need to fiddle around with the deductibility of interest and other holding costs. All we need is for the IRD to apply the tax law that is, right now, on the books and available.
Peter Lewis is an Aviation Historian and Auckland Landlord"Last edited by flyernzl; 11-05-2013, 06:33 PM.
Comment
-
The tax laws are on the books now.
They are available (now) to be used.
Comment
-
Originally posted by flyernzl View PostNo they did not publish it.
To me, anyone who buys a rental property that will consistently run at a cash loss from start to finish would have a very difficult time arguing that they entered into the deal for any other reason.
That is logical, sensible, and a sound capitalist strategy which has existed for centuries. By contrast buying a property where you lose money is high risk and a recipe for bankruptcy.
Originally posted by flyernzl View PostSo we don’t need a Capital Gains Tax. We don’t need to fiddle around with the deductibility of interest and other holding costs. All we need is for the IRD to apply the tax law that is, right now, on the books and available.
Its far far easier in the public interest to impose a capital gains tax. I don't like it, don't support it, but it might happen.
Comment
-
Originally posted by flyernzl View Post
I can visualize some small-scale builder coming home at the end of the day and excitedly say to his wife “Hey Martha, I’ve got this great idea. For my next job I’m going to build an unaffordable house”. This is nonsense, of course.
Comment
-
First home buyers need to become property investors - that's all there is to it!
cheers,
DonnaEmail Sign Up - New Discussions, Monthly Newsletter, About PropertyTalk
BusinessBlogs - the best business articles are found here
Comment
-
A hypothetical question.
Rental mortgage interest deductions become subject to indexing.
EG. Interest rate 5.5%; General CPI 2.5%; so only an effective 3% interest rate is able to be deducted.
Would it result in a mass selling of rentals ?
If yes, would these be bought by first home buyers; or other investors who perhaps have no or small mortgage; or those who would accept a lower yield ?
Or would it simply result in rental increases ?
Or would it have little effect ?Last edited by speights boy; 11-06-2013, 10:44 PM.
Comment
-
Originally posted by speights boy View PostA hypothetical question.
Rental mortgage interest deductions become subject to indexing.
EG. Interest rate 5.5%; General CPI 2.5%; so only an effective 3% interest rate is able to be deducted.
Would it result in a mass selling of rentals ?
If yes, would these be bought by first home buyers; or other investors who perhaps have no mortgage; or those who would accept a lower yield ?
Or would it simply result in rental increases ?
Or would it have little effect ?
But it would appear to me to favour existing landlords as they are more likely to have a lesser mortgage - though obviously many recent ones wont.
It would also appear to be a barrier to new landlords so I would assume a reduction in supply of rentals over time.
Again, in the current market at least in Auckland and Chch, I can't see that it would result in a noticable increase in house supply and if I am correct in suggesting that it would result in fewer landlords entering the market then over time you may well see an increase in rent - and let's face it, it will require an increase in rent to justify new rentals coming on the market
Comment
-
Originally posted by speights boy View PostA hypothetical question.
Rental mortgage interest deductions become subject to indexing.
EG. Interest rate 5.5%; General CPI 2.5%; so only an effective 3% interest rate is able to be deducted.
Would it result in a mass selling of rentals ?
If yes, would these be bought by first home buyers; or other investors who perhaps have no or small mortgage; or those who would accept a lower yield ?
Or would it simply result in rental increases ?
Or would it have little effect ?You can find me at: Energise Web Design
Comment
Comment