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/1254756.... Jesus the median is now $1.14m.
In 2019-2020 just 38 of this class of visa was approved, which seems to be about the average per year over the last decade. It was just 16 in 2020-2021.
I don't think these people are buying decrepit Auckland villas, two bedroom semi-detached or tiny one bedroom apartments, given they have $10 million spare to invest.
Prices are also driven by cheaper interest rates domestically.
And yes, the prices can be driven up by cheap loans, but from memory they were already rising steadily before the covid stimulus measures.
I am still unconvinced that there exists in NZ a mechanism that can generate so much money and drive up the prices to these levels. Haven't been back for a while but family and friends back there are just as bewildered as I am with these price rises.
Say a town has 1,000 houses worth $200k each. The housing stock is worth $200m. If 10 houses sell for $220k, those 10 buyers spent an extra $200k split between them, but the notional value of the housing stock went up by $20m.
There doesn’t actually have to be an extra $20m in the economy if the town. It only takes a few people with money to invest to drive house prices sky high.
It is entirely unsustainable. But we've been saying this for 15 years now.
Also, rent here is so expensive that most Singaporeans still stay with their parents even in their late 20s~30s. (Most people renting a room or apartment are none-Singaporeans (30% of the population).) So buying a house makes perfect economical sense if you are married and can somehow cover the down payment.
I wonder if this is becoming a trend across all first-world countries, as the world gets less predictable and people get more risk-adverse. Esp when rents are driven up by none-citizens so it becomes economical to buy instead of rent.
Housing is basically a govt supported investment program in Singapore. Not that different than most Western countries, just different mechanism.
HDB certainly helps to lower the barrier to entry in home ownership. But I don't think most forms of HDB purchases are investment-orientated. ROI for second-hand HDB is not high and buying a good first-hand one is like winning a lucky draw.
I would say HDB is more of the gov's mean to stabilize the housing market and it functions as more like the backbone of the economy. (Or you end up with runaway prices like in Hong Kong.)
HDBs are similar to property in most countries. It’s bought primary as a place to live but also as a store of value. The govt will buy out your HDB for cash in order to fund your CPF. The govt also constrains the supply of HDBs which pushes up values.
But you are right about the lucky draw. Someone people win BTO lottery and make out like bandits with new developments in mature estates.
Maybe another factor is that people who are not first time buyers now have a lot more money from the sale of their previous house. We always focus on the first time buyers, but those are only a small part of the market, and for couples with two high incomes, houses are affordable still. So maybe higher assortative mating leads to higher spending potential in first time buyers, and the rest of the money just comes from people selling their first houses and upgrading. It's quite hard to model though, I don't really see a way to test this hypothesis in a few spare minutes here or there like many simpler theories are.
If you can borrow 800k based on your income and you accept 200 square metres for that price, and there is such scarcity (100 viewings per home, 2% success rate) that you're unable to find a home, it may lead you to accept a 190 square metre home at the same 800k price.
If such a trend continuous for a decade, you may see that suddenly people accept to pay 800k for a 100 square metre home (such as happened in Amsterdam, the Netherlands).
The net effect is that housing prices per square metre doubled: a 100 square home went from 400k to 800k, and a 200 square home went from 800k to 1.6m.
No change in financing capacity is necessary for this to occur. Only a shortage of homes creating a cycle where people keep accepting less space at the same price, thereby increasing the prices per square metre throughout the entire market, thereby pushing prices of homes up.
I believe that's what's happening. The media fuels this process by constantly writing articles about shortages (even though objectively speaking, in the past decades home sizes have sharply increased while household size (persons-per-home) has decreased, i.e. there is objectively more housing per person than ever before).
Of course there is a limit to this logic. But in the Netherlands for example, the average space per person is about 50% higher than in Germany (culturally quite similar country). So there seems room for Dutch to accept smaller homes. And there's some examples (e.g. Hong Kong) that show that a high-income country with housing shortages also can push people to accept smaller homes in their budget.
This effect isn't immediate because prices are sticky. People cannot accept too much change rapidly without believing its overpriced. Over time, these 'overpriced' price levels are normalised and seen as the new normal, accepted, and a new concept of 'high' emerges. But it's not instant. Second, homes are mortgaged and thus must pass an appraisal. Appraisers also don't accept radical changes as they're based on reference objects of a few months ago, so there's a limit to the speed of price change.
Originally, I also thought that proper restriction of foreign investment might be a good solution. I agree with you that it must be domestic actors that are to drive prices upwards.
On a social level, this is going to generate a lot of problems, as it locks out people w/o access to credit to take part in the market. It is crazy what happens in cities like Berlin in regard to gentrification. But even other cities that do not have a hype status are affected by this.
I think it’s been 40+ years since everyday people without any access to credit had broad practical access to buy housing. (This kind of makes sense. You’re buying something with 50+ years of future utility and probably haven’t saved 25+ years of housing costs to put down in cash.)
Can you elaborate on this?
In the case of Berlin inner city districts like Kreuzberg, Prenzlauer Berg et cetera have been rapidly changing in the last 10 to 20 years. This is in part because population is dying off/moving away, but also because developers are buying apartments and are actively removing the old inhabitants in order to be able to charge higher rents.
There are laws in Germany that regulate the increase in rental payments. However, with the current price levels in housing, only a new contract with a tenant can give an investor an income that justifies the price payed for a property. The 'historic' population that can not afford the new level of rent is pushed out to the outskirts of the city [1].
Other cities of this tier e.g. London have similar population and price effects.
[1] "Plattenbau" in Berlin - not so trendy. See: https://www.bz-berlin.de/media/plattenbau-sanierung-in-marza...
Averages can be a bit misleading as you'd compare average home-owner prices to average household (owner or renter) income. The incomes of owners are typically above this average, for renters below the average, so the price to income is probably not 10x but a bit lower.
Second, I wouldn't be surprised if a lot of wealth flowing into the market is not sourced from overseas wealth by immigrants. As in, the source of the wealth is foreign, but it's spent by people who have migrated to NZ.
https://en.wikipedia.org/wiki/List_of_countries_by_net_migra...
You can see NZ sits in the top 20 in the world in net migration rate. The net migration rate (net, i.e. with the short-term workforce filtered out) probably consists of relatively high-income and high-wealth expats.
Second it seems like home ownership is decreasing in NZ lately. Perhaps the rental market is becoming bigger and homes get bought up by investors. Means less supply in the home owner market. That typically pushes prices up strongly, too. (good for the rental market, bad for homeowner market).
Lastly there's a slight increase in average home sizes. Naturally that should increase prices without it necessarily meaning certain floor space of housing is more expensive.
Still, these figures are quite crazy. I'd make more sense if they were 30% lower. I'd also be quite concerned as NZ seems to run off of variable or short-term fixed interest contracts... corrections and volatility is much bigger in such markets, and given mortgaged RE is by definition leveraged, it can really wipe out large chunks of wealth.
> Still, these figures are quite crazy.
Sounds to me like there is something we do not see.
At least anecdotally (in the United States) I have many friends in their 30s-40s that are buying new homes with money from their parents. Or their parents buy the home and they live in it.
Demographics also plays a role. We saw a massive boom in the 1950s, 1980s, and now in the 2000s. This boom is less sharp, and more spread out then the previous ones.
The war generation all had kids between 1944 and 1950 (5-10 year span). The Boomers all had kids in the mid 70s to mid 80s (10-15 year span). The children of Boomers are now buying houses. So it's a longer cycle, this time around (15-20 year span).
They were sad about it.
It's fucked.
Don't have to answer if you don't want to.
They are putting $200k into an asset which is already 10x+ their income? Ouch. I can't wrap my head around a financial decision like that.
At the end of the day they'd be sitting on a mortgage that's only 2-3x their annual income, that's very reasonable.
If you look at current prices, and think that they can only rise, that's very reasonable. Otherwise, that equity can be wiped out pretty quickly.
I suppose what I find strange is killing it on an investment (turning 400k into 1.5M) then turning around and reinvesting in the same inflated asset-class. Hence my comment regarding buying a more expensive home AND dumping money into it.
They are borrowing $300k I guess (1.5m + 0.2m, less 1.4m), and will likely sell their new house for far more than $1.5m when they sell again in another dozen years.
Why do you assume this to be the case? It has been the story of the last 20 years or so, sure. But it could be a complete aberration in the historical timeline of real estate, which for many decades had real rates of return around 1% annually. Houses were not investments.
It's wild that people now assume it's "normal" that you buy a house a triple your money in a decade.
How can you be so sure? With the way mortgages work, and the way people who bought starter homes ~10 years ago are more than capable of affording a downpayment on a bigger home, you don't actually need a large amount of domestic money for housing prices to be bid up into the stratosphere.
https://www.theguardian.com/news/2021/may/20/a-united-nation...
https://i.stuff.co.nz/national/politics/300223358/reserve-ba...
With birth tourism, just transfer some assets to your nephew, a full born citizen of $country_of_conveinience and have him purchase the property.
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.
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.
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.
I haven’t been able to find reliable numbers on the number of new condos coming in, but looking around the city it’s hard to believe that we would not be increasing supply. For example, I live in a condo / townhouse development that has 450 units; before this was built, there were 4 single family homes on the same land.
Stats Canada is starting to put out information on multiple house owners. The majority of the multiple unit owners own within the same city as their primary residence. People who see the headlines speculate it’s cottage owners, but it’s really not the case.
From anecdotes, the other driver of non-owner occupied apartments are people who live at home but are able to buy an apartment to rent out. They do this because housing keeps going up here and they want to build equity to be able to afford a house once they are married and move out of the family home.
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.
People blame internation investors, but that is only a small problem.
People say we should build more homes, but Ontario already has 10s of thousands of approved homes to build, that have not yet been started. Lack of skilled trades. Developers that are just sitting on the permits as they finish other projects.
I think the simple solution is an extra tax on people that own more than 2 homes. An even higher tax if you own more than 3 homes, and so on. Keep increasing the tax rate, on each home a person owns.
These stories are not referring to "growth in Ontario" but unoccupied multi-million dollar homes in Vancouver with questionable ownership, and paid in cash.
If anybody doesn’t make SV money and wants a good tip: Consider an early inheritance of your parent’s home if you can build them an addition. That’s what we are doing. Took out a small mortgage to buy out my sister and we are now raising a family with grandma nice and close. We’ll assist her through old age and the entire thing feels very, I don’t know, European I guess?
[1] https://mikepmoffatt.medium.com/ontarians-on-the-move-2021-e...
Good advice on co-housing - intergenerational sharing makes a ton of sense for so many reasons.
There's no magic way around these economic laws.
Of course if demand grows faster, then prices still go up. But in absence of supply increases it'd be even worse. Supply definitely helps.
Not necessarily. By the UK Government's own estimate [1], 1-in-20 homes in West and Central London (the more expensive parts) are empty. The story I've heard is owners who use them as a store of wealth safe from their own government's hands (usually Russia, China, or places in the Middle East). They prefer not to have tenants because it adds risk and complexity. I'm not saying this is the true story, but it's what I've heard, and there are definitely lots of expensive, empty apartments.
[1] https://theconversation.com/londons-extraordinary-surplus-of...
But beyond that I find it's a minor problem that gets broad attention in the media. There've been lots of studies around vacancies, but they usually don't amount to anything close to the media narrative.
For example, most real estate investors discount their expected rental income by 10% for expected vacancy, because they know tenants come and go, it takes time to find/review/place new tenants, some tenants fall through, and sometimes there's a no alignment between a tenant leaving and a tenant being available on short-term. 8 or 10% is a very standard industry figure people often use for quick calculations. In the US I think the average is about 7% for example.
Now if you find that 1 in 20 homes, in a particular high-class area known for vacancy, of a particular city known for this problem discussed intensively in media/politics, are vacant... that's entirely within normal parameters. That's 5%, and supposedly it's the most incendiary piece of data they could find.
In other words, quite normal figures that have a straightforward solution (>3 or >6 month vacancy leads to hefty pentalties/fines/taxes). I'm not saying the problem is completely non-existent, but it's not that big a deal as people often think and repeat.
Also I've heard about apartments and commercial rental space staying empty because people can borrow money against the 'value'. If rents drop that value shrinks. If it sits empty, no such problem. You still borrow against that commercial property that rents for $5000 a month. You were just unlucky finding a tenant the past 5 years.
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).
A vibrant rental market is a great thing for many reasons (e.g. look up any study on labour mobility). Not sure why we should have tax advantages for home owners and tax disadvantages for the rental market. It's certainly not equitable to the renter class. And there's tons of evidence that home owner tax advantages flow mostly to incumbent home owners who gain the proceeds from any tax advantages spent to help new home owners get into the market.
I'm personally supportive of housing as a human right and think it's worth it and actually stimulating all around, turns out removing stresses of life is good for the economy and people.
I think we did this backwards with stimi. Should have written checks to renters directly. The programs we do have for relief are woefully behind with hundreds of millions outstanding huge red tape.
Giving all renters point blank could maybe help start balancing the scales just a tiny bit.
Yes I agree some rentals are necessary given the practical nature of the housing system. But once they become the cause of people being unable to afford to buy their own home it is an issue that needs addressing.
What I'm trying to say is that if the government is manipulating the market by giving tax advantages to the homeowner market, and tax disadvantages to the rental market, that it's not a good way to spend public funds.
Home ownership is exactly cheaper because it's so subsidised through various ta breaks. That makes renting more expensive vis-a-vis owning, which hurts the class of people who can't rent or has a different preference around life (e.g. more transient, more mobile, less fixed, travel for work, seasonal work etc). Then concluding 'oh owning is cheaper, but it's less accessible, let's give even more tax breaks and stimulus and make renting even more expensive' only exacerbates the problem, it doesn't solve it.
I’m also not sure how government policies that deprive people of the ability to own their own home (since they are priced out of the market by landlords, and landlords now own way too much of the housing stock) is a good thing.
Right now in NZ about 1/3 of people rent [1]. It’s an all time high across all age groups.
I’ve got nothing to back this up, but seems reasonable for people given the choice to own their property vs pay someone else, that they would want to own the property. Yes there are some that want to rent but i seriously doubt it’s anywhere near 1/3rd of the population. I also suspect a significant number of people who prefer to rent would not have this opinion anymore if house prices were not so inflated. Maybe 20-25% but no way the 1/3 of all Kiwis that we are seeing now.
Also does 1/6th of all residential property NZ need to be owned by someone with 20+ properties under their belt? [2] Is it good use of public funds to allow such behaviour rather than say encouraging (non residential rental) businesses to grow and expand
I’m not calling for elimination of rental properties, just a fair limit on them. In my opinion it’s more important every person is able to buy a single home than every landlord be able to buy as many homes as they want.
1. https://www.stats.govt.nz/assets/Uploads/Reports/Housing-in-...
2. https://www.newstalkzb.co.nz/news/business/mum-and-dad-landl...
It's not, but giving tax breaks to home owners is. Giving tax cuts to home owners and not home renters is by definition not equitable, you'd be favouring one group of people over the other. And if you look at who has it economically better, you'd statistically favour to give tax cuts to the economically better-off group most of the time in almost all countries. If you then, on top of that, tax landlords, it leads to even higher rents and even larger disadvantages for the renter class. That's something you haven't acknowledged, except by saying 'perhaps some of these renters can become owners, too!' -- and that's a fair point, but also wholly insufficient. We know not everyone can, needs or wants to be an owner. We know a rental market is important. Yet the tax manipulation you suggest very much disadvantages the usually poorer-than-average income rental group and favours the richer-than-average owner group.
> I’m also not sure how government policies that deprive people of the ability to own their own home (since they are priced out of the market by landlords, and landlords now own way too much of the housing stock) is a good thing.
What policies are you talking about that would deprive people of the ability to own a home?
> Right now in NZ about 1/3 of people rent [1]. It’s an all time high across all age groups.
Just like in the US. Just like in my country in Western-Europe. I'm not sure how large you think it should be, more, less? Should we strive towards anything at all?
> but seems reasonable for people given the choice to own their property vs pay someone else, that they would want to own the property.
That doesn't seem reasonable at all. Would you say the same for example, in a world with a shrinking population, large amounts of vacant land and cheap technology to mass-construct homes? In such a world, property prices would (ceteris paribus) drop over-time. Most people would be entirely disinterested in owning a home in such a world. Why not simply cheaply rent, wherever you decide to live, move as often as you want, as often as your tastes or moods change. Of course this world is hypothetical, but I use it to show that the choice to own a home isn't natural, it's conditional.
Now I agree that in the current market, it's preferred to own a home, because prices and rents are going up, but a mortgage can be more or less locked in. Of course people prefer a 30y mortgage contract at 2k per month and see their home equity triple in 30y, than to rent at 2k and see their rents triple in 30 years, for example. But the point is that this ownership preference is thereby conditional on what the market does. At the same time, every academic study, every central bank etc in the world is saying that low interest rates and tax breaks are pushing prices up. That means you're doing two things. The very condition you have that says 'owning is preferred' is in fact exacerbated by your policy to subsidise owning (with public funds), which screws over the rental market and everyone unable to own (which has always been 20-30% of the population, typically the poorest one). And second, you're favouring this generation over a future generation. That subsidy isn't sustainable, but creates massive wealth for current owners (who bought into a market at $200k homes) at the expense of future owners who are born into a market where a home costs $1 million. That also is poor public policy.
> Also does 1/6th of all residential property NZ need to be owned by someone with 20+ properties under their belt? [2] Is it good use of public funds to allow such behaviour rather than say encouraging (non residential rental) businesses to grow and expand
I don't really see the big issue with minor property concentration. They all must rent out at market rates. Someone with 20 properties (in a country with a few million properties) is not setting the price levels, but just following them, just like anyone with 1 property would. Would it help if the company or person who owned 20 properties, would instead be 5 companies or persons who owned and rented out 4 properties?
> Is it good use of public funds to allow such behaviour rather than say encouraging (non residential rental) businesses to grow and expand
I don't see what spending of public funds you're referring to, thereby also not sure how that prevents businesses to grow and expand.
possible solutions for the inaccessible housing issue:
- make it so the people profit from housing prices rising -> minimize building and housing regulation, forbid foreign ownership of the land(like at least 50% should be owned by a local) and by taxes and loans make it more likely that a lot of people will own some land then small percentage of the people own a lot of land, specify that all those rules are going to apply for 20 years(number of years calculated to the point when the land of the nation is owned by the nation and more or less even), and it will be a completely free market afterwards(so investors are not afraid to invest) — in a society with high income inequality will require either high taxes for landowners and/or long time to achive high level of land ownership
- government built, controlled and owned housing for the people(like singopore), — has a high potential for corruption, any country with weak institutions has a huge risk to end up without housing and with high corruption, income inequality etc
> and by taxes and loans make it more likely that a lot of people will own some land then small percentage of the people own a lot of land
This is what my original comment is all about. Except no 20yr limit, any investor who is banking on capital gains from house price increases will have no problem waiting 20 years to sell.
Edit: re height limits, they are important to preserve views and ambience of the local area (London has some rules for instance where St Paul’s cathedral must be visible from certain other major landmarks), avoid too dense housing if it will cause undue issues with infrastructure (insufficient sewage capacity in the area for example), transport on an already congested road etc, and preserve the general vibe of the area (to a degree, people accept gradual change a lot better than a Big Bang approach), also sunlight issues for neighbouring properties. Building a 30 story apartment block in a suburb of 2-3 story houses is just out of place. Building slightly up to 6 stories is not so bad.
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.
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.
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...
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?
- 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.
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.
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).
Also, it may be possible for people to side-step regulations as often the reality on the ground tells a different story.
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'.
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.
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.
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.
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.
Why would they have to be evil, shadowy or a cabal? All you need is wealth inequality.
Unless you restrict the number of houses private individuals can own and massively restrict what corporate owners can buy, not much will change.
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).