While we await the final results of last weekend's general election, this month's Home Loan Affordability Report looks at how housing affordability changed under both the previous Labour and National-led governments.
The report has been tracking the monthly movements in the main measures of affordability such as housing prices, incomes and mortgage interest rates since 2004, and how these affect the ability of first home buyers to purchase a home of their own.
This month we take a look at how those measures changed over the six years from September 2011 to September 2017, when a National-led government was at the helm, and then how affordability fared from September 2017 to September 2023 under a Labour-led government.
September 2011 to September 2017
John Key was Prime Minister for most of this time with Bill English taking over that role in 2016.
Although this was a National Government it was supported by confidence and supply agreements with ACT, United Future and the Maori Party and for its first three years even had a memorandum of understanding with the Greens.
The first thing to look at from this period is the movement in house prices, particularly the lower quartile dwelling price, which represents the bottom end of the market which is the entry point for first home buyers.
From September 2011 to September 2017, the REINZ's national lower quartile selling price increased from $247,000 to $350,000, up 42% over the six years.
However the real action was in the country's largest housing market - Auckland - where the REINZ's lower quartile price increased from $345,000 to $650,160 over the same period, up a whopping 88%.
So there was reasonably strong house price inflation over those six years with extremely strong house price inflation in Auckland.
What about incomes?
The Home Loan Affordability Report tracks the median after-tax pay for couples aged 25-29 working full time, as a proxy for the incomes of likely first home buyers.
At the national level, in September 2011 this would have given a couple a combined after-tax income of $1411 a week, rising to $1578 in September 2017, up 12% over six years.
In Auckland wages were slightly higher but the rate of increase was slightly less, rising from $1462 a week to $1609 over the same period, an increase of just 10%.
So the increase in house prices greatly exceeded the increase in wages for likely first home buyers during the six years from September 2011 to September 2017.
In September 2011 the average of the two year fixed mortgage rates offered by the major banks was 6.39% and by September 2017 that had declined to 4.70%.
This was a double-edged sword in that although it would assist with mortgage payments it was probably also a significant factor in the increase in house prices over that period.
So how did all of those factors affect overall affordability for first home buyers?
In September 2011 the mortgage payments on a home purchased at the national lower quartile price of $247,000 would have been $285 a week, assuming it was purchased with a 20% deposit.
That would have eaten up about 20% of a typical first home buying couple's after-tax pay.
In Auckland the mortgage payments on a lower quartile-priced home bought with a 20% deposit would have been around $398 a week, equivalent to 27% of a typical first home buying couple's take home pay.
The threshold for mortgage payments being considered unaffordable is when they take up more than 40% of take home pay, so by that measure, buying a home of their own should have been well within reach for most people on average wages in 2011, even in Auckland.
By September 2017 things hadn't changed much at the national level.
The mortgage payments for a home purchased at the national lower quartile price had increased to $335 a week, equivalent to about 21% of of a typical first home buying couple's take home pay - still very affordable.
But things had become a lot more difficult in Auckland, where the mortgage payments on a lower quartile-priced home had ballooned to $622 a week, taking up 39% of typical first home buyers' take home pay.
Ominously, Auckland was on the verge of becoming unaffordable for first home buyers on average wages.
September 2017 to September 2023
When Jacinda Ardern's Labour-led Government took over the Treasury benches in September 2017 the national lower quartile dwelling price was $350,000 and in Auckland it was $650,160.
Six years later in September 2023 the national lower quartile price was $585,000 (up 67%) and in Auckland it was $799,000 (up 23%).
So the rate of house price growth at the bottom of the market under Labour moderated in Auckland but rapidly played catch up in the rest of the country.
On the income front, the take home pay for typical first home buyers increased by 25% nationally and in Auckland over the same period.
The other element in the affordability mix is mortgage interest rates which have been on a roller coaster ride over the last six years.
The average of the two year fixed rates was 4.70% in September 2017 and it fell to record lows in 2020/21 as a tsunami of cheap money was pumped into the economy to stave off a post-lockdown recession, only for interest rates to rocket back up to try and counter the rising tide of inflation which followed.
In September 2023 the average of the two year fixed rate was 6.92%, the highest it had been since July 2010.
The overall effect of that was that while Auckland housing had been on the verge of entering unaffordable territory in September 2017, it marched well into it over the next six years, with the mortgage payments on a lower quartile-priced home in the region eating up 48% of typical first home buying couple's take home pay (with a 20% deposit), or 61% if they only had a 10% deposit.
Clearly, a home of their own has become increasingly out of reach for aspiring first home buyers on average incomes in Auckland over the last six years.
Not only that, but the surge in prices that occurred outside of Auckland over the last size years means the Bay of Plenty has now joined Auckland in the unaffordable club for first home buyers and Waikato isn't far behind.
So looking at the affordability picture for first home buyers over the last 12 years, it tells a pretty sorry tale whichever political party has been in power.
The tables below show the main affordability measures in all main urban districts throughout the country at the end of September this year, for typical first home buyers with either a 10% or 20% deposit.
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79 Comments
Typo in the header: Affortdability should be Affordability
Thanks Birdie.
Absolutely correct and neither party shows any desire to make housing affordable ever and address the root causes. They are just consumed with preserving the statis quo and directing their attention to trying to cope with the terrible social and economic consequences. Hopeless and certainly there is no hope for young Kiwis in remaining in New Zealand.
We will reap what we sow (loss of social cohesion, high crime, poor mental health stats, drop in quality of community and society etc - ie all of those things that are unfolding around us)
What's crazy is that the MPs and voters with property portfolios voting for this approach don't seem to want the same approach for themselves. In their own turn, they want universal benefit, support in hard times, floods, droughts etc.
Yip we have created a society where nobody thinks that sacrifice is required in order to build a better future.
Either;
I want to tax other people and take their money (socialist view)
Or I want to turn my neighbour into my rent slave while I build my property portfolio.
If we could just find the middleground where we don't need either view in the extreme - we would be on a much better path. e.g. bring back the middle-class where people are happy going to work to own one family home and be content with that - and have lower taxes because we don't need to support so many people who are being crushed by the current economic conditions (where the rich get richer and the poorer get poorer and need even more welfare support - and then the rich whinge about potential taxes to support the poor - that have been created as a result of their wealth gain).
Hi Independent_Observer,
What brand of shampoo do you use? Sounds like you've been brainwashed......
Rinse and repeat.
TTP
Moderators - there is no counter argument nor intelligent discourse with this type of comment from TTP.
Please consider removing these types of comments (or providing a warning) or my only option will be to lower my standard of comments to TTPs level - which is to attack and ridicule people personally (which is all that TTPs comment is) instead of trying to discuss the issues we face. And as a result, the comments section is going to degrade into an unintelligent mudslinging contest of pesonal attacks. OTY. I'm happy to play dirty if that is what the rules of engagement are on this website. You get to decide - if you moderate this stuff great, if not I'll lower my comments to TTP's level.
TTP's comment (before he decides to edit it)
Hi Independent_Observer,
What brand of shampoo do you use? Sounds like you've been brainwashed......
Rinse and repeat.
TTP
For example I could reply: The comment is really a form of hypocrisy because only somebody that is brainwashed would be capable of saying such things (but such a response adds nothing to a discussion about economic matters).
How do we want to play this? Ball is in your court.
Remember that the comments that the commenter chooses to make are a reflection on the commenter and the character and maturity level of the commenter.
Some commenters choose to use negative labels in an attempt to intimidate (this is bullying) and / or discredit other commenters. This may also reflect on their inability to discuss issues intelligently or they may have a separate hidden agenda (remember that the property promoters have their own financial self serving interests).
For your own mental health, best course of action when dealing with bullies is to choose to ignore and choose not to engage with them.
Non-violent restraint works to a point. But if the bully has narcissistic psychopath tendencies, the only language they understand is a bleeding nose (they view people that try to ignore them as even more of a challenge to try and trigger).
I/O - there is no intelligent discourse with a convicted fraudster - better to either ignore or counter
Remember the little known quote from Taleb "Don't tell me what you think you moron, show me what you are trying to dump out of your portfolio"
https://www.trademe.co.nz/a/property/residential/sale/manawatu-whanganu…
I suspect the penthouse might be next
Look like rates will be climbing and NZD tanking. Nothing holding these price’s up more supply coming as people look to exit before refinancing at 9% the next phase of crash will happen much quicker then first 20%. Now TTP is getting grumpy and nervous it will happen 100%
Things are even worse in Australia but we never hear about that because it doesn't fit the narrative. https://independentaustralia.net/politics/politics-display/urgent-need-…
This government has at least increased the rate of new house building. https://www.stats.govt.nz/news/record-number-of-new-homes-consented-in-…
Pretty much everywhere except Sydney housing is more affordable than here. I lived in Sydney for 7 years while flatting and saved a huge amount more than if I'd stayed in NZ and had the same job - it was a definite win for me.
House building has been going gang busters in Aus for years. But it simply can’t keep up with the demand fuelled by absurdly high levels of immigration.
It's bad in Canada too, possibly true in many places, which begs the question; is it due to policy settings or 'events'.
Chris, Stop repeating a doom mentality, it's been repeated by commenters for the whole year, probably longer. I know many FHBs in their 20s and 30s who are perfectly happy. Most people intend to stay in NZ and there will always be those wanting to go to Oz.
As long as demand/ supply is out of whack it isn’t going to improve too much under any government. A cgt and stamp duty on anything other than main home and bach would assist fhb’s as they are often up against seasoned investors in that price point which doesn’t help their cause. DTIs another measure. All needs to be enforced of course
Matt_09 you have missed the big picture and the root cause of the affordability issue. It is by in large not supply based.
Time and again every single metric, that digs into the details of the housing market, shows that the housing bubble was not caused by "supply" issues. It has been caused by cheap and easy access to borrowing and leverage.
FHB incomes went up 12% over the same period that lower quartile homes went up 88% in value.
Add hurdles to property investment:
- 20% stress tests on borrowing
- 70% cash deposit required
- Not allowed to withdraw equity from family home
- CGT on rental properties
- Ban investors from buying existing homes (they must build new)
- Ban investors from buying below the local median price.
and the price of homes will become significantly more affordable. FHB will not be competing against investors. It's a shame that the media didn't hold any politicians to account for the housing affordability crisis. It's an even bigger shame that all politicians failed to address housing affordability at all.
In addition - why is everyone not screaming to have the real estate laws changed? I would propose:
- Auctions - must advertise the reserve price no later than 24 hours before the auction.
- Deadline sales, negotiation etc - must have an asking price displayed.
- Tenders - abolish.
And that would just be the start. It's long overdue that some commonsense, currently absent from REINZ, is injected into the market. We should have a per capita cap of real estate agents and also enact a 1% flat fee for agent fees, with provisions for increases if the sale process exceeds 6 months.
I agree with some of your argument; that availability of credit fuels house-price inflation. But that is a general factor (i.e. it affects anyone in the market). Arguably DTI ratios would help.
However I disagree with your argument that FHBs competing with investors affect affordability. That has been comprehensively disproven. In recent years investors have largely exited the market in droves. House prices have fallen dramatically. FHB activity has picked up somewhat (as a % of the market), yet this data shows that unaffordability is at an all-time-high. This undermines the simplistic argument that investors are competing FHBs. It will be interesting to see if National follows through in their promise to unwind Labour's changes to investors and, if so, how it affects the market.
Starider, your 7 point plan would remove probably 99% of investors from purchasing property
Only until prices reduce to a point that the economy can sustain at neutral interest rate settings - based upon the productive capacity of workers (incomes). As opposed to current prices that were based upon debt speculation and ever higher future prices - and disregarding fundamentals such as price/income or debt/income ratios.
Agreed - I would be happy with just one or two. Hell I would be jumping for joy if we just stopped investors from buying existing homes (unless they tear it down and build multi-unit dwellings).
The best way to actually make property investment productive is to use this investment in a way that makes sense, and the only way to make property investors actually contribute to society, in a positive way, is to have them build loads of new dwellings. The Govt can't do it. But the private sector could and would if it had to.
Removing existing homes, from the owner occupier pool, is why we are in the current mess we are in (along with the lack of a DTI). Make investors add housing units to the market - everything will fix itself.
Something has to be done - and it needs to be a massive shift and property investors will hate it. I'd rather have 100K of pissed off baby boomers and property speculators than 950k of pissed off people 20 to 35 years old. When our youngest and brightest are heading to Aus/overseas and all we are left with are an aging landholding population something has to give.
Good.
Well it hasn't helped FHB in Aus and look at California which has just brought in more CGT on exspensive property everyone is leaving California is the most taxed state in the US and over the last couple of years they are losing over 180 000 people and even lost a congress seat as of the amount of people shifting out. Envy tax dosent work.
Envy tax?
So tax on dividends is an envy tax?
Right, let's tax something to make it cheaper, said no one ever.
Wait to National wind the Ponzi Back up.
Sorry first home buyers you are dead in the water.
Seen it all before after the GFC laundered money Then printed money for covid.
This is what has caused the mess we are in funny money not real made money
Not looking good going forward.
Banks create money as credit for mortgage lending, they don't lend out government created money and which is all retained in the central bank.
https://www.hks.harvard.edu/sites/default/files/centers/mrcbg/programs/…
Many MPs have property portfolios they cannot afford to pay for themselves and must pump via policy.
The younger generations seem to be expected to carry the load so older speculator MPs and their entitled voters can live beyond their means.
I would say it's all looking very good.
A new govt that wants to get NZ moving, led buy a real world successful guy, not a waffler like Chippo. First order of business is to dump some of the absurd red tape foisted on us over he last 6 years, and then get the show on the road.
Just like Wayne Brown in Auckland
Yeah Right.
Yeah . Luxon has been crystal clear, he is a "real world successful guy"- who has trouble stringing two cliches to together but is deeply committed to getting NZ's rock solid mojo back on track - big time - no waffle.
Ill believe it when I see it. At one stage they were doing the old trump classic, for every law we introduce we will dump two. He hasnt talked about building a wall but a bridge to India is on the cards.
What does getting NZ moving look like ?
The ultimate facepalm in investing is negatively geared low yield hopium kick of forever gainz from an already unsustainable high. "Buy high, never sell, leverage up." Banks love it.
At this point you'd be better off borrowing a cool $1m and putting it in a 10y govt bond. Lower risk, higher return. And the rent payer is almost guaranteed. Though we can see where those markets are heading, through into securities and RE.
The trick will be trying to hold the penny while it drops.
BTW this is nothing like the GFC, and our position as a nation is looking far more precarious than it did then, yet still values dropped then and did not recover for a number of years.
Hardly surprising is it. Housing is now simply an industry, a business that is designed to make money. First home buyers don’t factor into it and I feel they are about to get left behind once again. With low home ownership comes social issues, inequality and breaking down of communities…..sound familiar.
Housing is now simply an industry, a business that is designed to make money
I would tweak that a little. Housing is simply a vehicle for credit creation and money supply expansion. The Bank of England has already admitted this.
So global debt to GDP is 3-4x (that's conservative as it doesn't really account for many financial derivatives). The simple math puzzle that's important to remember. If the cost of debt servicing is say 3%, then GDP arguably has to be increasing at 9-12% pa just to keep up with debt servicing. That's simply impossible from where I sit.
You would think something has to give and I'm not clever enough to even consider how that all unfolds. I have sought advice at the water cooler. Nobody seems too fazed by it and one of the guys reckons 'she'll be right' in NZ and Aussie. No dramas.
Smudge, what you have written sounds familiar ecause you have repeated what Independant Observer has written.
This place has become an echo chamber for DGMs
Do you have an argument against this TronMPV or are you just having a whinge because you have no counter argument and just take pleasure in name calling (e.g. calling people you disagree with as DGM in order to try and belittle them and their views).
How about coming up with a counter argument instead of just saying 'oh this has turned into an echo chamber for DGMs'.
If you are superior than DGMs, which is what you appear to be implying with your posts, then you will be able to come up with a bunch of really good arguments that show that DGMs are wrong.
So go for it - add value to this comments section with these superior views (but just don't complain about other people being doom and gloomy - because whinging about other people makes you sound like the same thing you are complaining about = and makes you a hypocrite).
How about coming up with a counter argument instead of just saying 'oh this has turned into an echo chamber for DGMs'.
Everything today is sentiment driven, particularly through social media. Being labelled a 'DGM' is part of the whole charade. The real nasty slur being bandied around is 'cooker.' That word is dripping with barbed insult and typically delivered by someone in the 'progressive' camp, which has a growing reputation for being particularly vindictive.
I had the impression Cooker is simply a new slang term for Conspiracy Theorist. Must check Urban Dictionary, though...
Sounds more like someone who's cooked themselves on the meth
I didn't think DGM was an insult, as many refer to themselves as such. However, if you think it's insulting, I'm happy to hear a suggestion for that particular way of thinking.
And I don't think I'm superior. We all have our different opinions, which I read and reflect on. If you don't think today's forum is an echo chamber, that is fine, you can disagree.
And if you are against name calling, then don't call me a hypocrite or a whinger.
Have a good day.
That was easy - deal. I won't cal you a hypocrite or a whinger if you refrain from calling people DGMs if you disagree with their views (you might need to review most of your comments on this article if this is the case).
I do, in general enjoy reading your comments, even if I do not agree with some of them.
Peace be with you
And to you as well.
If only my comments could be as witty and intelligent as yours.
I don't consider my comments witty, they are merely an observation.
Sorry if I have offended you.
The Interest article has figures showing that outside of Auckland it would take 2-3 years to save for a deposit on a house for FHBs requiring 10% deposit. In Auckland, the figure is 4 years.
You would think that with productivity being such a key issue that governments would discourage high levels of investment is such unproductive assets. But no - here is your juicy tax-free rewards. I don't see how any political party can boast that they are focused on productivity, while completely ignoring the elephant in the room.
Property investors/speculators/businesses should be banned from buying existing homes, unless new (unless they tear it down and build multi-unit dwellings).
The best way to actually make property investment productive is to use this investment in a way that makes sense, and the only way to make property investors actually contribute to society, in a positive way, is to have them build loads of new dwellings. The Govt can't do it. But the private sector could and would if it had to. They would find a way to lobby the govt to remove red tape, have basic plans approved, reduce council fees etc etc.
Take some time to talk to an investor, it will help you understand.
FYI,
If the residents of NZ want to encourage more residential ownership by residential owner occupiers in the existing residential property market (i.e. not the new build market) then it comes down to government priorities and government policies.
Singapore focuses on encouraging resident owner occupiers and less on owners of multiple residential dwellings, non resident owners with their tax policies.
1) Property taxes (which we call rates)
i) note that they differentiate between owner occupied and non owner occupied,
ii) and they are on progressive rates - the higher the imputed rent, the higher the rate to determine property taxes (which we call them rates in NZ)
https://www.gov.sg/.../property-tax-on-residential-property
https://www.iras.gov.sg/.../property.../property-tax-rates
Imagine bringing in a progressive rate system in NZ to calculate rates.
2) Stamp duty is differentiated between
1) citizens vs residents vs non resident buyers
2) first, or any property beyond their first property
https://www.propertyguru.com.sg/.../calculators/stamp-duty
https://twitter.com/GRomePow/status/1643083095376285698?s=20
The private sector did do this back in 1999/2000 when there were plenty of vineyards and orchards available to concrete over in Auckland. They were were developers/property managers and they marketed it successfully to investors - use other peoples money to pay your mortgage and cash in on capital gains. It was literally the beginning of Residential Property Investment in New Zealand. There was at least one large Aussie company that took advantage of the relatively unknown negative gearing system in NZ. It appealed nicely to the "boomers" who were all pretty much freehold and afraid of the stockmarket.
Data looks to be cherry picked, why use the last 6 from National against the first 6 from labour, surely you need to either get the yearly average across the whole time each party was in government or compare the first 6 years under National to the first 6 under labour.
It really doesn't matter. While the numbers in the article might suggest National were better than Labour for FHB, it's missing a very large piece of the puzzle: the introduction of the LVR.
It's simply disingenuous to compare the way it does (using current rules), when in 2011 a FHB only required a 5% deposit, vs 30% in 2017 (that final date I'm not sure of when it was relaxed to 10/20%, so if it needs correction, feel free).
However, the conclusion (both were bad for FHB) remains correct.
There seems to be this idea that investors will pay for builds and happily make a loss because they're flooding the market at the same time as they speculate on capital gain.
Yeah nah. Building costs too much. Councils no longer do anything in-house, it's all charged out. Building products have inflated in price well above anything else because of monopolistic practices. Land owners ration the release of land to maintain prices. God only knows how much work and safety costs now. I've heard it is $25,000 extra in red tape to add a second floor (third hand gossip level of accuracy). Everything has to be triple glazed and double insulated and engineered to the hilt.
Some of the above is well and good. Much of it is just extra cost.
In 2014 I purchased a house in a regional town for $260k. This was a mere $3000 more than what the vendors purchased the house for in 2007. So housing was extremely affordable under National. Fast forward to today, and after 6 years of Labour that house is now worth around $550k. It was the same in Christchurch, before Labour you could pick up a 3 bedroom house in a decent suburb for around $400k - now those houses are going for around $650k.
After the equation stopped looking so good in Auckland, many speculators looked to smaller centres around NZ. The infestations had dire effects for locals.
Yes clearly that was Labour’s “Increase KW’s house price” policy from 2014, when they weren’t in government.
This was followed up by the October 2017 to October 2023 policy known as “Double KW’s capital gains” policy, which will obviously be reversed by the rockstar Luxon govt, who have proposed a new policy “Let’s get KW’s house value back on track”, which will see you taxed for the $300k revenue you undeservedly made under the previous awful brigade of socialists.
This revenue for govt will be put into a new welfare fund called “Farmers upset at Hilux ute feebates” which will be extended to support unemployed landlords and property speculators.
The RV of the house in 2017 was $320k, its now $520k. All of that is under Labour.
Here's another one. A place I looked at purchasing in Christchurch in 2017 sold for $452k. Its 2013 RV was $455k. Its current online valuation is $710k (with a RV of $670k). Again, all achieved under Labour.
Alternatively,
All achieved under Adrian Orr.
Yes printed money not Real
What is real money? All money is created in the same manner from keystrokes and as debt and once the debt is repaid the money no longer exists. Even the government issues its money in the same manner from keystrokes and as its own debt. It issues money through its spending as tax credits and so when we pay our taxes this money is cancelled again.
QE is not money printing, it is an asset swap if that is what you were referring to.
Bought our first place in Masterton 2017 for $200k (before Labour were elected). Was $5k more than the accidental landlord had paid for it 10 years prior. Sold in 2021 for just shy of $600k.
Thank you Labour. Gave us a huge deposit we could leverage off into a great home in a great suburb with a more than comfortable mortgage.
As a FHB, I certainly had more hope in price coming down under a Labour Government, than a National Government. Every single one of National's housing policies looks to stoke an already incredibly over-stoked market (no surprise given who their donors are, and how many of the National MPs own investment properties of their own). I'm actually just hoping that interest rates stay where they are for longer to force more of the investors out of their properties.
...and still a long way off 2020 let alone 2017 prices which some were calling for. Cant see it happening now.
I dont think the change in Govt will make as much of an impact as many hope for .... even imported wealth will be wary of what they are buying into. I see the pressure coming from financiers looking to retain YOY growth .
Sorry, but the detail (which is good) doesn't match the headline. It could be argued that over the time given, affordability for FHBs worsened. But in the first six years of the period, the mortgage payments for a home purchased at the national lower quartile price had only increased by a mere 1%. This is statistically insignificant. Admittedly Auckland was much higher but it was still below the 40% threshold. However, the data shows that under Labour, it's been terrible for FHBs any / everywhere. And that's during a time of massive falls in house prices in the main centres, including Auckland. It's a 'line call' whether to blame policy settings or events for this result.
By way of comparison, it would be nice to know what a potential FHB's outgoings for rent would be over the same period. If a FHB can't actually buy, then generally speaking, they'd be paying rent. Some might be staying with family, but for most people, if you're not an owner - occupier, you're a renter. It'd be nice to know what the counter factual for accommodation costs would be.
Rental Yields vs TD ? ...Cash outlay? (asks are still high),throw in uncertain times (Israel,Ukraine) vs Finance (mortgage rates could go higher) ... My guess is even those that still have affordability are holding tight...waiting for a more favorable environment. CG's likely to be the motivator but outgoings are higher...New Government ? Road ahead could be full of potholes... Affordability wont improve if values climb ...if its not looking pretty now .....well... draw your own conclusion...
Who would buy some of the crap that's being built......Stalinist flats all jammed in together, and of doubtful construction methods. The last time there was lots of construction in NZ it precipitated the leaky house crisis.
Better off taking on more risk, or waiting to buy a house that's got quality cladding. Many of these houses and projects are being built by cheap imported labour. Interest rates are up, and that's the time to buy.
Sadly there is truth in some of this...plenty of places that have the aesthetic look but wont see the distance of time...
Having been travelling for 3 months through around 16 countries in Europe and talking to young ones from UK and Europe it's the same everywhere, if not worse than here, apart from a few, Denmark, where it seems
1 you are taxed to death if you buy more than 1 and 2 at the most properties.
2 if you are not a citizen you cannot own and rent out property if you leave the country. You have to sell it. With rule 1 you only buy one anyway
Funny enough it works and everyone I spoke to there supported it. They still have rentals but with security and all good quality.
From an incidental traveller
Thanks Jack for the information.
Checking prices, Houses seemed cheap to buy, but renting seemed expensive. Is that correct?
One of my sons and partners live in Copengagen and renting or buying seem much the same. If you rent you pay a large bond, they just paid $14k nzd, and when you move out it is used to totally refurbish the apartment- floors, walls everything redone. On the flip side when you move in its brand new. They also have much lower interest rates and can be fixed for much longer so buying isn't as daunting and you can lock in your known repayments it seems. Again I'm no expert but the people there seemed happy.
The worst housing I heard of was from young Americans especially California where it's almost impossible even for well paid professional couples to buy. They were talking $1.5million USD for a 2 bedroom rat hole, needing $500k do up, 2 hour commute from central LA. Some of the prices made NZ look cheap!!!
Also the inability for expats to hold if they leave discourages them from buying and it's very very hard to get a Danish passport. Remember wages are very high as well and they only do quality - you won't find a warehouse or Briscoes there!! No cheap junk anywhere.
They do also have the distinct advantage of being surrounded by prosperous trade partners who manufacture quality goods at economies of scale and having greater levels of competition. Sounds lovely either way :-)
True but they also are very pragmatic and are prepared to think long term. For example all education is free - knowledge, learning and using it are celebrated and first and foremost top of mind. As a result they have many tech and high end businesses and attract bright young things from around Europe, and the world, and it all snowballs from there. Saying that they also respect all levels of society - in effect treat everyone with respect. Something I think we used to have here.
to be honest I came away thinking we are a very immature and insular country and society in that we can’t seem to realise that any improvement here will take generations but we need to start on some long term plans to improve the way of life here now. Some I don’t think are to hard. This will take some growing up, I’m not holding my breath!!
Not building enough in public sector as no one willing to fund it properly, for affordable rented 3 beds
Too much immigration
Wages held down for median earners due to factors working in labou market
Most of all QE and negligible interest rates meant credit got cheaper each year and everyone preached this could never change. Meaning debt funded borrowing for mortgages drove prices "afforded" up all the time.
Ironically, what is needed to improve affordability is primarily HIGHER rates and second, higher wages.
Politics has little to do with this, except in that both sides regard control of interest rates as a sacred cow for the CB and also neither side wants to upset people over 55 who own most houses and mortgages and who vote in far greater % than younger co-horts.
first home buyers have been poorly served by both Labour and National-led governments
no kidding
greatest inter generational wealth theft ever
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