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The Government is making noises about putting housing investors to the sword. But will it follow through? And will this help?

The Government is making noises about putting housing investors to the sword. But will it follow through? And will this help?

Tired of the same old duck shooting season? How about a bit of housing investor hunting this year instead then?

Yes, those naughty housing investors.

The Government, having for some reason chosen not to blame itself for New Zealand's median house price rising by $200,000 (to $730,000) since it came into power in late 2017, has decided to find a fall person - the investor. 

Well, actually, Finance Minister Grant Robertson has talked most specifically around "those who are speculating".

This is what Robertson said on February 9 of this year:

...We all know that building more houses, particularly affordable houses, is critical. But we also can do more to manage demand, particularly from those who are speculating.

New Zealanders are seeing family members being crowded out of the opportunity to purchase a home of their own by speculators and investors. We want to tilt the balance more towards first home buyers, while also incentivising more investment in the construction of homes.

As I said late last year, we have received advice from both Treasury and the Reserve Bank on our existing measures to manage demand and discourage speculation, and how they can be enhanced or changed. Proposals will shortly go before Cabinet.

As the Prime Minister has outlined, we will also make more announcements on the supply side as Budget 2021 is finalised. These will build on the Government’s housing programme that has seen us build more houses than any Government since the 1970s.

Anyone who tries to tell you that there is a single silver bullet for addressing the housing crisis is not facing reality (or is speaking from the safety of Opposition).

What we do know is that now is the time for bold action. The market has moved quickly and rapidly in a way that is not sustainable. We have to confront some tough decisions, and we will do that.

So, what's a speculator and what's an investor? And how would you tell the difference when implementing new measures aimed at the demand side of the housing market? I will come back to this.

The speculator v investor debate/argument is a fairly recurrent theme in the comment sections on this website.

Down with the specuvestor

When I think investor, I think of someone who is buying property for the purpose of the rental yield they will derive from said property. So, it's a proper business. The provision of shelter in return for a revenue stream.

I reckon that a speculator thinks capital gain first. That's the focus for buying the property. The rental is incidental to the motive to make a capital gain.

Some commenters on this site like to use the term 'specuvestor'. And I like that. It kind of implies someone who's in it for the capital gain but will take the rent for as long as is necessary to bag that capital gain.

I've rented a fair few properties both in New Zealand and in the UK in my time.

And I've rented from both 'specuvestors' and what I would term 'real' investors. 

I know which I prefer.

In earlier days I rented a lot from owners who were definitely eyeing the capital gain and their attitude reflected that. They begrudged spending any money on the properties and would take it personally if you did anything that might necessitate them having to fork out money. The clear subtext is that any money the owner is forced to spend is less capital gain for them.

Taking care of business

In more recent times I've rented from several real investors, normally through agents and that's as different again. If something goes wrong, you get in touch with the agent, and the problem is fixed. And nobody takes anything personally. It's a business.

So, I say, subjectively, we need the investors - people who are providing liveable accommodation with the purpose of making an income from the rental stream. We don't need the specuvestors, since it's always going to be capital gain first for them.

But, aha, how will the Government actually tell the difference?

Robertson had targeted putting out housing proposals before the end of February. These plans have been delayed and may yet be further delayed by the latest Covid outbreak. And will what the Government comes up with match the tough talk? Implementation, or lack thereof, IS an issue for this Government.

I honestly don't really know what my attitude is to the idea of specifically targeting 'investors' as a way of constraining demand in the housing market. 

Clearly this Government (and it's certainly not the first government to be so) is terrified by the potential bomb-in-the-ballot-box that is images of first home buyers being locked out of the market.

But I don't like the way some of the thinking appears to be leaning - such as Finance Minister Robertson's inclination to have any introduction of debt-to-income limits targeted at 'investors' with FHBs likely exempt.

Be careful with those FHBs

Yes, I get the point, the FHBs are the ones most likely to be blocked from buying a house by DTI limits, so exempting them makes sense from that perspective. But what if they do overstretch and get into trouble? The outcome could be worse than if the FHBs were not able to buy that house in the first place.

Putting limits on interest-only loans is an interesting possibility and could be a good idea depending on how it's applied.

I guess I'm just concerned the Government might come out with a one-size-fits-all blunt instrument approach that does help to drive out some of those 'real' investors who have been providing a good service in the rental market.

Another concern is that we don't want to be 'hitting' the market with too many things at once. Remember, the LVRs are back, and with the supercharged 40% deposit rule to follow closely behind in May, although some of the big banks are already applying that.

When the 40% deposit rule for investors was first introduced in 2016 I doubted it would make much difference. It did. And I think it will again. 

Remember also, the 'beast' may be at least partially sated. 

Fill your boots

The RBNZ-compiled mortgage figures show that in the last six months of 2020 'investors' took out $11.163 billion in mortgages, compared with just $7.062 billion for the same six months in 2019.

Of huge significance is the fact that within those totals, in the last six months of 2020 some $3.959 billion of investor mortgage money was advanced on 'high' (over 70%)  loan to value ratios. For the same six months in 2019, when a 30% deposit rule was in force, just $1.087 billion was borrowed at a high LVR. 

So, the vast majority of the difference in the investor borrowing amounts between the last six months of 2020 and 2019 was down to investors being able to fill their boots and leverage up.

A 40% deposit rule will make a difference.

So, the Government should tread carefully. 

The last thing we want is for ructions in the market caused by a Government being political and wanting to be seen as doing something, rather than doing the right thing.

'Doing the right thing' for this Government will be coming up with a convincing plan to tackling the supply side of the housing headache. Its previous (KiwiBuild) form in this area is terrible. And if we want to talk about ballot box bombs, well, another failure like that one would surely be terminal for the Government next time.

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90 Comments

Yawn.. with the recent price rises and additional equity I think most of us investors who've been in this game for a while can stretch to 40% deposit easily.

Agreed, especially given recent equity boost and still rising.. Could be a long long time before the headwinds of 40% start to slow these ratbags down

Government are on our side but they can't tell us that. They have to be seen to be "doing something" by the great unwashed even of ultimately that thing they are doing is unhelpful (e.g. The increasing the complexity of the RMA.)

If you notice the Prime Minister is astute enough to essentially avoid any meaningful discussion of this issue. Covid-19 and the "climate crisis" are far easier grounds to seek votes.

Yip, detraction.. another clever ploy was that Chch shootings, OZ dumped the crims/like her 'frown, not happy acting' but basically nothing can be done about it, being inclusive for specific ethnicities,.. vote/sympathy grabber what else? plenty still to name and on-going.. ouh today is that Pharmac thingy, but please don't ask her about more funding that can be easily achieved through tax coffers of CullenCGT - don't ask her the ideal DTI for NZ, she is a nice lady, that willing to listen to expert scientist, but for economic? she already chooses which kids to protect.

Your correct to a point. And that's fine, stretch away buy another one. But if the rule was 20% you'd buy 2! 10% - 4 houses, etc, etc, And that's the demand side problem.

Could speculand do a Dti ratio of 7 or even a bit more ....no way it would be 80% plus equity.

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Both main parties supported the open door immigration policy prior to covid. The 50 to 60k net migrants a year is an astounding number for a country the sixe of nz. The current housing crisis was inevitable. Try deporting 50k migrants that would put investors to the sword.

kiwikeith..Apparently we still have more than 200 000 foreign workers in NZ. Id correct that is over 8% of our total workforce I think. And I doubt that includes all the overstayers. Having said that I do not think we need to get carried away with deportations. If we just keep the numbers really low (10K PA absolute max) from now it should not take long to do the trick. If you think this Govt would deport more than a handful of token overstayers (who have committed heinous crimes) then I think you are very optimistic.

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Capital gains tax. Universal, not just housing. Let's join the rest of the world.

Faaaar too late. Horse, bolt and stable door

FH
Agreed to a certain extent
I recall John Key (OK . . . an idiot but at least unlike most knockers on this site made multi-millions and became PM) saying around 2015/6 when the market was hot that there is little point in putting a capital gains tax on at the height of a market. So your view is aligned with that.
However, the market has basically - with only a small breather - just simply continued to go silly.
It seems that there may never be a best time to introduce a CGT - however as long as losses on property are ring-fenced for tax purposes then impact of any correction will have no immediate tax advantage.

FH... if we try it and it does not help the situation we have not lost anything, have we? We have everything to gain and very very little to lose by trying it.

And by not trying? or pretend to be trying.. what's most likely the outcome?

A CGT should have been implemented years ago, not to control house prices but to make the tax system fairer. An employee pays up to 33% tax but if a wealthy person sells one of his many houses and makes say $300,000 then he pays no tax on his capital gain! Obscene!

I don't find it obscene at all. So if I buy a classic car and its value goes through the roof your going to tax that as well ? Already paid tax on my income that I used to buy the house and then paid the GST on the house and then you want to tax it again if it goes up in price ? yeah nah. How about a rebate then if I sell and its gone down in price ? didn't think so thats called hard luck. The tax will not result in lower house prices anyway, its goes straight into the government coffers to never be seen again, its not like its going to ever be channeled directly into FHB bank accounts is it ? Total waste of time. If anything house prices increase even further to offset the tax. The tools are already in place to control house price inflation, the government is just refusing to take any action.

I pay tax on an hour's worth of work. If I take a day off leave without pay, how come I don't get a tax rebate?

Is this some sort of trick question?

Edit: I should’ve read what you were replying to. Well played sir.

Carlos
It’s all about “intent”.
Yes if you buy a classic car, Bitcoin, a rental property, shares or a work of art with the intent of it being an investment for CG then yes it is subject to CGT. That’s tax law.
And yes . . . if your Bitcoin makes a loss that loss is included in net income.

middle ground Carlos - no CGT on the first residential property but yes on others. Kudos to those who can get to the point of more than one home but the system is just too unbalanced as it is.

itsme
Agree 100%

But then they won't sell. Making homeloan interest non-deductible would be devastating though. A Stamp duty on investors would also hurt sharply. Rent control - maybe but seems tricky and probably be applied in an arbitrary manner. Or could just try frowning alot

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By invoking the latest lockdown across the country, has Jacinda Ardent single-handedly made sure the housing market will be primed and stoked for longer. The many cancelled events across the country in itself has meant millions and millions of lost economic activity. The RB will be encouraged to maintain low interest rates which is a property buyers paradise. This lockdown is a massive over-reaction and miscalculation for one or two positive cases ... absurd imo

It's all going to plan I guess. I'm going long in wheelbarrows and lampposts

Nice - took me 3 long seconds to get that one and smirk.

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Fair enough that people want to keep all their fat gains, and so will keep banging on about the supply side.
It's pure self interest - and they will be totally disingenuous if it's in their interest to do so. And it is.
But honestly, interest rates are outrageously low (savers have been eviscerated to deliver ultra-cheap money to borrowers) & when you couple that with the banks willingness to lend eye-popping amounts to pump into housing, then the property 'capital gainers' have never had it so good.
Something needs to happen in order to upend this crazy situation. If it means a housing crash to reset asset prices, then so be it. We have stock market crashes & life goes on, assets get re-priced. I personally don't care what the economic consequences for NZ are if the housing market crashes - fundamentally something has to change. The consequences of operating this property ponzi scheme are already dire, and the burden is falling heavily on savers, taxpayers, renters, the young, and future generations. Again, I would rather a crash now than the nation continue further down this rabbit hole.

Even this property guru understands that the situation is unprecedented and will come to an end if Reserve Bank stops going brrrrr https://youtu.be/QHtStiYX000

Which is why they will never stop printing.

The only way anything will work is a hands off approach to the housing market- let it runs its course. Any form of intervention will only exacerbate negative outcomes and further distort the market.

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Great - lets cancel all welfare/accommodation supplements overnight and let the free market be free. No more motels, no more government/taxpayer handouts that goes to the hands of landlords in the form of rent.

Lets let the real economy and jobs/wages market set the price of rent and therefore houses.

The market is already severely distorted because it isn't a free market.

Back and rearing, just remember to ... "Try A Little Kindness"
https://youtu.be/r3u86akEurY

The other option is that we don't have a free market at all and just go full blown communism whereby we fix the prices of everything and we each get allocated a house.

Seems like the path we're walking towards if we want to keep paying more and more in accommodation allowances and for motels. Landlords might not like it much, but no point giving money to one group of people when it could just be even distributed between everyone.

Darklords wouldn't mind that would they eh?

Communism must be the ultimate form of kindness!

Yes lets... remember cream floats IO so no doubt you will be on top comrade.. but if you want it to solve the problems then dont expect to be overwhelmed. These days we even have the PM chastised by non compliants, whats the appetite in nz for autocratic leadership

Turds also float from time to time FH - you might have a shot as well!

You know you're losing when having to resort to cheap parting shots... communism sounds attractive at the beginning just like the guy you meet in the half light of a nightclub after drinking one too many.

Just returning the favour - hope you can handle it ;-) eh comrade

What’s your address - I can send you a saucer of milk? But you’re a big boy - I’m sure you take what you give right (or perhaps not!)

Yes - you often hear landlords complain about a CGT being a double tax (which it isn't). But the accommodation supplement essentially functions as a double tax for renters who don't receive it. You're being taxed to pay for others accommodation, and at the same time your own accommodation costs are higher than they would be without the landlord subsidy artificially inflating rent prices across the board.

Yip its $$@#%$@ insane.

As I say we may as well just go full blown communism and instead of giving the money to landlords, just get the state to take over ownership of all the lands, set prices and allocate houses to people. Its the slippery path we're heading on with ever increasing rates of accommodation allowances being paid and more people needing the state to house them in motels because our housing market has become so dysfunctional.

If country economy=housing market, you can't called distortion - it's saving the economy mate.

Exactly, just wait till the realities of HHS compliance kicks in combined with new tenancy laws in next 12-24 months. This will be the cherry on the top to rental shortages like we have never seen in this country.
Government and posters on here will be crying out further blame to " Greedy landlords", only the market will able to correct things. Will make a great case study in future years how to do things exactly wrong.

Investor here, spent loads on renovations and any requests are dealt with very quickly. My property managers only have to call me if something is more than $1k (unless it's an emergency, then fix and call me tomorrow). I don't care about a CGT because I didn't get into this for tax free gains. Already pay oodles of income tax and happy to. Honestly just implement a CGT and be done with it.

How will a CGT make houses cheaper? It doesn't create new sections or build new homes.

Income from CG, doesn't need to be channeled into RE, but say to fund more of those expensive cancer drugs for example, reduce healthcare waiting list etc.
Honestly, NZ public is being shielded from the info. of .. 'even the wealthiest, when needed those expensive cancer drugs.. almost all chooses the govt subsidy' rather than using their tax free gain capital - score one to who? and score 0 to the rest.

It might* put a speculator off buying more houses, and therefore reduces demand, and hopefully prices.
Worst case scenario it doesn't drop prices but the govt clips the ticket on these profits and we might get some decent transport, healthcare, schools, etc, etc.

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I'm all for duck shooting, or clay duck shooting. Hunting scapegoats not so much. If you wan't to decrease the price of houses, it's far better to build more of them, or in this case remove the roadblocks to building, rather than blame someone that is by all accounts unable to defend themselves and has zero control over the current situation. If I had a dollar for every time I heard someone blame a property investor/specuvestor, I could buy a house by now. They didn't create the current environment and their behaviour is entirely predictable. It seems obvious to me that the solution is to make houses cheaper to build, rather than wasting time and energy playing the circle game, where everyone is looking for the next person to shoot.

I suppose you are right but it is very depressing to see so many people I know quietly admit they may buy an investment property off the back of the equity gains they have scored. They never see themselves as fueling a problem that is impoverishing their friends. It is an incredible feat of mental gymnastics, and pretty bloody greedy tbh.

In the current environment where you're lucky to get 0.50% interest on a bank deposit - and pay tax on it - buying an investment property is a sensible move.

I just get a bit ill thinking about people who will never be able to save or invest because they are paying my friends' school fees

My heart absolutely bleeds for the poor old property investors. Won’t somebody please give them a break!?!

You are right WJ tax the beejeezes out of investors or whatever it wont change a thing until supply meets demand.

Hi David,

Discussions are good but everyone know that no political party/ Government / RBNZ / Expsrts for biased vested inteest has no intend to control the ponzi, hence they do make some noise here and their, when things go out of control and are under pressure withot taking any meaningful action.

Fine, so now atleast they accept that besides supply even demand specially spevulators demand has to be tackled to tame the ponzi as supply though important is used as an excuse by eyeryong to avoid taking action to control the ponzi.

As soon as government and rbnz had doubts that market may fall in April 2020, they came out overnight to take action to protect and same now, the moment they feel that stock market may be affected, rbnz came out immediately to support :

https://www.interest.co.nz/bonds/109320/rbnz-assistant-governor-christia...

Now with same logic, when they know that house price going up on a weekly badis, why are they not taking action ovetnight instead of playing with time.

Also, many experts and media will niw try to put pressure on rbnz and government to not act on so called investor - powerfull re lobby at play and this article is one of it.

Government is planning to hunt for investors but you forget that government has already hunted FHB and average Kiwi.

So government may or may not hunt speculators but have already hunted and killed FHB, get the facts right.

Davud what you have to say on what richard1965 have raised :

Government is Thinking of Hunting Investors but government has already hunted and killed FHB.

Your thoughts, please.

Stuff this ponsi crap it is just life in the whole world of economics. Look at bitcoin if you want and tell me that is rational. Housing is real.

Yep, it's a Ponzi alright. A big fat Ponzi.

To my mind a ponzi scheme collapses to nothing, housing never will.

The NZ housing market is one of the most perfect examples of a Ponzi scheme.

From Investopedia:
- a Ponzi schemes rely on a constant flow of new investments to continue to provide returns to older investors. When this flow runs out, the scheme falls apart
- a Ponzi scheme generates returns for older investors by acquiring new investors, who are promised a large profit at little to no risk

That there is something physical like a house behind an asset class does not make it any less prone to an asset bubble. Tulips in the 17th century were real enough, as were railways in the mid 19th century. And the 2008 GFC is no so far in the past, after all.

If DTI is applied across an entire portfolio that could get interesting

Burni
Not for large investors whose properties are cash flow positive. Net rent is treated as income.
The reality is that DTI will affect only those investors who are heavily negatively geared (usually speculators) . . . and of course most FHB.

"'Doing the right thing' for this Government will be coming up with a convincing plan to tackling the supply side of the housing headache. Its previous (KiwiBuild) form in this area is terrible. And if we want to talk about ballot box bombs, well, another failure like that one would surely be terminal for the Government next time."

You may wish to consider the fact that in 1996 (with no housing crisis) we had a national stock of approx 1,28 million dwellings for a population of 3.7 million...ratio of 2.89

Forward to 2020 (housing crisis extraordinaire) we have a national stock of 1-9 million dwellings for a population of 5.1 million....ratio 2.68

Go figure

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Lets just ban the purchase of existing dwellings from property investors (or those who intend to leave the dwelling empty).

Allow investors to fix the supply problem by only lending to them if they are building a new dwelling. It also means FHBs aren't competing for the existing dwelling - reducing demand (and who knows how that drop in marginal demand might shift prices).

It will fix the problem from both the supply and demand perspectives simultaneously.

#itsnotthathard

Exactly.
But would there be some sort of exemption for developers, who want to buy land develop it?

no that should be enouraged. This would help supply and you could just assign a greater % of the new builds as FHB only.

First I would stop Housing NZ from buying existing or sub letting private homes. Some people are making a killing leasing to HNZ. Not sure about those that sell to them.

We lease to HousingNZ and assure you we are not making a killing.

However we don't do the transitional or motel housing - those guys might make a killing but regular houses do not.

To give you an example, a property we lease receives $1920 net monthly rent, however the market rent is now $680/ week. So you can see the massive undercharging in rent. Yes, it is a long lease (10 years) so there is a lower risk-rated return but let me illustrate what else we get...

1. tenants cut down all the trees on the property including those planted for amenity, fruit trees and shade
2. tenants destroyed brand new carpet with permanent stains within 3 months
3. tenants graffitied the exterior of the house
4. tenants smashed holes in all interior doors
5. tenants built an unconsented shanty structure which they attached to the house
6. tenants' children have been soliciting the public for money causing harassment and menacing behaviour
7. HousingNZ property managers totally hopeless at keeping on top of communication and passing on incorrect information to the tenants

So yeah... it aint all it's cracked up to be. Hope that sets the record straight.

When everyone's priced out of the housing market, prices may stop rising, and ordinary millionaires have to pay outrageous rates on their properties. How will they pay if their wealth is tied up in that home?

Please don't worry yourself Solid . . . "ordinary millionaires" aren't stupid . . . that is why they are millionaires.
I know that these "ordinary millionaires" aren't stupid as they know when their houses have being going up in price that is not money in the hand, so when properties stop going up in price . . . well, that is not going to mater as they will have no different amount of money in their hand.
But, maybe, just maybe, if they really really needed to, then they could just sell one of their properties . . . but only if really need be.

Maybe have a read of a few property investor facebook pages. I read them for entertainment. it has become evident that there is a severe piling in, leveraging at any costs, and really no thought of anything but CG by Joe public and his Mrs (or Mr)

I look forward to reading the same articles, same comments and same Auckland house price index growth rates for the next 3.5 years. It really is the perfect storm. Champagne socialists masquerading as the working man's party. If this was a National government in charge workers would have downed tools.

B727... I was caddying for Morrie Davis in 1979. He thought that it would be smooth uneventful year as well.

Thanks Rob, I was wondering if maybe Davis was a golf pro who had a shocker of a round at the US Masters or something. If only.

GC...You might be thinking of a colourful Aussie pro by the name of Rodger Davis, who is of a similar age to Morrie and regularly played in NZ in the 80s and 90s. Morrie was a quiet, dour man of few words whereas Rodger was an outgoing, borderline alcoholic, womanizer. Three guesses who was more fun to be around.
Or even Ian Baker-finch, who after winning the 1991 (British) Open began his defence of the Claret Jug in 1992 by carding a 92 in the first round.

Not going to happen, why not? check out the MP list as investors, RBNZ committee. All are already shuffled the schemes the past 20-25yrs by the OZ banks - It's just that now, plan a clever out ploy, basic here but most chunk to be guaranteed as OZ savings, being spread across.

NZ is a country where the magic claim of wealthy capitalist was through hard work, whilst basically extracting from the socioeconomic below then, and by the time the natural cycle of lost about to hit? the wealthiest socialized the lost through, yes again socioeconomic below added.. future socioeconomic below. When the profit DNA was being embedded deeply the past 20-25yrs by Neolib in every top echelon of governance?
It's just a matter of time in the future, that NZ will be suck in to OZ.. back to big bro hug, oOoh.

I see a few nutters are bringing up CGT as a solution. In case they had not noticed they have not worked anywhere else so why should here be any different. The cant sell before 5 years is effectively that tax already. Globally house prices have been rising for the last decade as have equity prices. Rather than moan about it go buy some land build a house and rent it out as a means of retirement income. I and others have done that but in the process have had to go without many other things- something FHB's and their sympathisers in most cases dont comprehend. Put simply, you cant have your cake and eat it to

Right. House prices go up by more than 20k in one month, but the problem is that FHB and their 'sympathisers' don't comprehend 'going without'? You realise 20k is a hell of a lot of avocados.

GPH
A CGT is not the solution . . . its just part of the problem.
A lack of a CGT (other than the bright line test) on property just makes seeking property as an investment simply for capital gain that more attractive.

The bright line test is a CGT in its purest form . You sell you pay. Pretty simple.
The main housing issue NZ faces is a lack of Supply exacerbated by a rise in demand. This is especially the case in Auckland. thats why the smart Jaffas have sold up and moved elsewhere to better properties at half the price.

Elsewhere - like 99% of all the other countries in the OECD? What nutters they must be. With the current rate of rising each month I'll have to stop eating 6857 pieces of toast covered in avocado on a monthly basis just to make the deposit!

If there was a way of preventing using equity for deposits that would be a good thing. Then investors would have to sell a house in order to buy more houses.

Ah Yeah, the "Real Investors" will be sent to Mortgage Sale, older investors with a few houses, and limited term on their mortgage due to their age. Maybe currently living on 50k of income from their rentals which they carefully manage, by being on Interest only. Then Govt / RB enforces them on to Principal and Interest, and their principal repayments are 150k per year. So all of a sudden a cash drain deficit of 100k. My friend right now this has happened to, the banks are doing it now, whereas for the past 20 years he has been on Interest only. So, you think, sell some properties. Great, you sell some, but I see DTI and LVR soon to be at 40% or 50%. Bank says okay, you can sell, but we take 100% of the proceeds as you now need to comply with the rules. Great, true investors get squashed. The problem with crackdown on "NZ Investors" is that the Asian buyer with funding through relatives in China, is completely unaffected, so instead of Chines buying 18 out of 20 houses at Auction, they are now buying 19 out of 20. Great plan to sell more of NZ to overseas "money". In case no one has worked it out, the buying up of NZ property, is still happening by overseas buyers, they just use residents of NZ to put the ownership under.

Wait, are you suggesting we should feel sorry for the 'older investor' with multiple houses, bought 20 years ago when prices weren't totally insane, who has not even been required to pay any principal off in the meantime, and has chosen not to, despite the fact that rent he has been able to charge has soared? And will somehow end up not making any money if they sell their properties, despite the fact that prices have quadrupled in the last 20 years? Yeah, really sucks to be him right now.

20 years of non-performing loans. Your friend's investment doesn't stack up, it's a shame it's taken 20 years for this realization.

Houses were cheaper 20 years ago, rents today much higher, why can't he go on P&I? I assume your reference to P&I payments of $150k p.a. relates to your friend? If so then it sounds like he's gorged himself on equity recycling and interest only mortgages. All I can say is Ha ha .

So long as there is no bag limit, I'm in

My children, at 14 and 12 years old, are already saving for their first homes. For every hour they put in working around our property (excluding expected chores like making their beds, washing dishes etc), they earn money, which I put into an account they have no access to, in the hope that by the time they are old enough to move out they will have amassed enough for a deposit. This money is purely for housing, not university, which I will pay for separately ("Thanks Dad!" I probably won't hear).

Although starting 2 years earlier than my 14yo, my 12yo will, of course, need the extra earnings to cover the likely price rise while she's still reaching house-buying age.

I haven't the heart to tell them that even starting this early there's still every chance they won't have enough for a deposit anyway.

Yeah but that will develop their attitude in a positive way if nothing else even if its not enough for a deposit and getting ahead can be all about attitude and the way you save and what you spend your money on. Plenty of people didn't buy a house when they had a chance to, they had different "Priorities" and now its to late and they are pissed off and looking for someone else to blame.

I'm already saving for my 3 year old daughter's first home.

The only way is to BAN investment on housing for as long as we need until affordability drops to 3-5 times the median, monitor individual regions and let investors back as soon as we can again afford it as a nation.

Make no exceptions and crack down on those using relatives or other means to circumvent restrictions by making all parts involved accountable.

Make the deposit non-tax deductible, to temper those using existing equity.

I am a long term investor if 30 years meets the qualification. The last time I sold a house was in 2003. I have however purchased something every two or three years or so. Will this entitle me to keep purchasing at say a lower deposit or even get a hand out from the government for housing people they do not want to house like groups of young people, foreign workers, and new people to town looking to buy or those between houses. There is no way the social housing people want to house people like this. They are simply not needy enough, often do not qualify for housing assistance and probably do not vote.

"When I think investor, I think of someone who is buying property for the purpose of the rental yield they will
derive from said property. So, it's a proper business."

Not it is NOT, it is an abuse. Wealthy investors are taking advantage of their wealth to purchase homes at a higher price which would otherwise be accessible for owner occupiers to buy and live in. Instead they make a profit based on their initial position of privilege pushing people to a live of renting for their own profit. NOT a proper business.