More first home buyers squeezed out of the market by investors in January

Property

First home buyers' share of the housing market dropped to 22% in January, investors' share rose to 41%

17th Feb 21, 9:44am by Greg Ninness

More aspiring first home buyers were squeezed out of the housing market by property investors in January, according to the latest figures from property data company CoreLogic.

This shows first home buyers' share of the housing market dropped to 22% in January, the lowest it has been since the first half of 2018, while investors' share climbed to 41%.

CoreLogic said it was likely that some investors brought forward planned purchases to beat the reintroduction of loan-to-valuation ratio (LVR) restrictions announced by the Reserve Bank, which will require most investors to have a 40% deposit from May 1.

However the figures also show there are plenty of cashed up investors who do not require a mortgage, with this group accounting for 11% of sales in January.

CoreLogic said much of the buying activity was from smaller investors with one or two investment properties rather than investors with larger portfolios.

Many of the smaller investors are likely to be so-called mum and dads who may be diverting money from low yielding bank deposits into residential property because of the potentially higher rental income stream this can provide.

However CoreLogic said the reintroduction of high LVR restrictions on new mortgage lending would likely dampen demand from investors later this year and improve buying opportunities for first home buyers.

It may also divert some investors' attention away from existing properties and into the new build market.

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122 Comments

by dago | 17th Feb 21, 9:51am 1613508695

Does not surprise me. What does shock me is the RE and Property gurus in MSM counselling and 'helping' FHBs. They are the RE equivalent of a pervert counselling abuse victims

by Flying high | 17th Feb 21, 10:26am 1613510813

Are you implying they are taking advantage of the vulnerable... that would be ridiculous. Its cheaper and better owning the house than paying rent for it

by dago | 17th Feb 21, 2:28pm 1613525296

They are all about 'adjusting' FHB expectations and remember the sh*thole you end up with is only the first step. Nothing in it for the RE/property expert, of course! Purely free advice out of the goodness of their heart. So sh*tholes get bid up and up to levels that used to buy a real home

by Spectators | 17th Feb 21, 10:38am 1613511509

Exactly. So many policies and rules being created to "help" FHBs into homes at current prices. House prices are the problem! It makes no sense to me that our reaction to prices being too high is to "help" FHBs take on more debt (by lowering servicing). Facilitating FHBs to take on more debt is the opposite of helping. If prices are the problem than the answer is simple...lower prices. To lower prices curb demand and increase supply. Make property unattractive as an investment (vs other assets) and let people use it for it's intended purpose SHELTER. Government to build build build. I get it's complicated w/ many layers but the goal should be just that simple.

by itsme | 17th Feb 21, 10:46am 1613511999

There are many ways the Government could control house prices, They do not want to. All they are doing is pretending to care by tinkering.
Property investors are the problem. No good building 1000 houses if investors are encouraged to buy them with huge tax incentives.

by Kiwi Tim | 17th Feb 21, 11:13am 1613513599

This is not a snarky question I swear, I’m just admittedly in the dark about this and find it hard getting a straight answer. Can you please explain to be the huge tax incentives? Especially in comparison to say business ownership?

by printer8 | 17th Feb 21, 4:20pm 1613532007

Tim
At the risk of considerable backlash . . . .
I'm not a tax expert but the following is from experience (although out since 2016) so I stand to be corrected.
There really is no tax advantages in investment property compared to a business; however rental property deprecation (other for chattels) can no longer (since 2011 from memory) be claimed and losses on sale of property need to be now ring fenced while depreciation of businesses can.
As with any businesses, expenses (rates, insurance repairs and maintenance etc) can be claimed for investment properties.
Income after expenses is taxable as for any business and for properties owned by an individual this is taxed at the marginal rate - most commonly 33% - or if owned by a trust at a flat trust rate of 33% (although that income and tax can be apportioned to a trust beneficiary at a lesser rate). Note that the trust rules apply equally whether it is a investment property or business.
Where people see a tax advantage for investment properties is on capital gains which is subject to the Bright Line Test (applicable to properties purchased and sold within a five year period since since 2018). IRD can also consider the purpose for which the property was sold and it is my understanding that there is existing legislation for taxing a property if it was purchased for capital gains (I recall that as far back as 2000 and prior to the first Bright Line Test in 2015) that one could be liable to income tax and it was at that time considered that one should be looking at owning property for 10 years to be exempt that although the time limit is not specified. That legislation still exists; so even if an investment property was owned beyond the Bright Line Test period of five years, was never profitable and sold for a capital gain, then IRD could argue a case for taxing one on that capital gain.
As said most (especially on this site) are very concerned about tax free capital gains on property and I agree that a CGT should be applied on sale of all investment properties. After all, Mum and Dad investors are looking at extra income through investing in property and all income should be tax deductible - after all if they put it in term deposits they would be taxed at their marginal rate, or the blue collar worker working overtime is also taxed again at their marginal tax rate.
Is a tax free capital gain on investment property any different to that of a business? No. Gareth Morgan is a clear illustration of this: he made a tax free capital gain/profit of $47million on the sale of Trade Me, and then later an disclosed profit on his KiwiSaver Fund.
So huge tax advantage on capital gains on investment properties compared to other personal income. However arguably some negatives for property investment vs businesses.
Me: I have often posted that I believe a lack of a CGT on investment property is wrong.

by HeavyG | 18th Feb 21, 10:10am 1613596255

Very good summary of the tax consequences of investment property. The 10 year capital gain rule you are referring to is the tainting provisions that apply to property dealers and builders. The rules taint land sales even if it was not part of the business, and includes land held by an associate (e.g. spouse). For example, if Mrs X runs a property development business and Mr X buys an investment property and sells within 10 years then that sale is taxable. Similarly, if Mrs X is a builder and Mr X builds a house, rents it for 9 years and sells it that sale is taxable (as it is "tainted" and sold within 10 years of construction).

See https://www.legislation.govt.nz/act/public/2007/0097/latest/DLM1512421…

I support a CGT but I think it should be at a reduced rate to recognise costs of holding the property (e.g. 15% of gain) and should apply to all assets over say $50k (including the family home).

by company of heroes | 18th Feb 21, 9:18am 1613593135

Build build build is not enough. The government is definitely making housing speculation and housing investment more attractive, otherwise why would our PM say she would like see a small increase in housing price every year? It just keep pouring fuel to it. This will definitely make investors and speculators think the government is on board, we can just keep buying houses and pushing the prices go up.

by karl seastrand | 17th Feb 21, 10:10am 1613509804

Time to pull out ALL STOPS to ensure property investment (and land banking, Air B n Bs and keeping houses unoccupied) is not a viable and profitable undertaking. The housing crisis is far more damaging to our country than Covid could ever be. We need to see Jacinda and Chris Faafoi fronting (at least) weekly live briefings on progress made, the current situation and most importantly to keep us updated on their planned actions for the future. Time for ACTION.

by EdwardD | 17th Feb 21, 10:14am 1613510079

Sorry, but they are busy with Covid and those pesky Australians at the moment - they can only handle one crisis at a time. (sarc).

by sam-s | 17th Feb 21, 11:28am 1613514511

Where do you expect people to live if there are no rentals because it is unprofitable for landlords?

by karl seastrand | 17th Feb 21, 11:48am 1613515681

Wake up. Houses will not disappear into thin air if we get rid of the scourge of investors/landlords. Houses will still be there, the only difference being they will be used in a way that is much better for NZ as a whole.

by Yvil | 17th Feb 21, 12:03pm 1613516596

So where do you suggest the many renters who cannot afford to or do not want to buy a house will live if there are no rentals ?

by al123 | 17th Feb 21, 12:56pm 1613519760

Why do you think the only options are to get rid of rentals entirely or sit back and do nothing?

by karl seastrand | 17th Feb 21, 1:23pm 1613521381

Yvil...No rentals? As I said, do you expect the actual rental houses to disappear in a puff of smoke? We need to try to get rid of the landlords/investors so houses currently under their control can be utilized in a way that is more beneficial to struggling Kiwis. Hard to say exactly how that should be done but it needs doing.

by Flying high | 17th Feb 21, 1:39pm 1613522341

Its Jacindas dream to Nationalise ALL houses and land using QE... and the govt to be in charge of production and delivery. No one will go hungry or poor. The bill will be gazillions but who cares.

by Zack Brando | 17th Feb 21, 1:51pm 1613523077

Birds seem to be able to arrange themselves to fly in flocks; nature (even degenerated form its original designs) poses the question:

Will the aggregate decisions of 5 million people (under Western laws/principles) produce a better outcome than central planning by Pork-Barrel, Ponzi Politicians like Robertson and Ardern?

by dcnbwz | 17th Feb 21, 5:01pm 1613534470

Yes, yes, blah blah communist, blah blah socialist. No comment on the 40 years of neoliberalism in this country that has led to mutliple market failures and got us into this mess? Didn't think so.

By any kind of measuring stick Labour are right of centre with a less harsh veneer. The language and debate has shifted so far right that we've lost our compass completely.

by sam-s | 17th Feb 21, 2:06pm 1613523960

The houses won't disappear, of course, and some will be purchased by FHB as prices stabilise, which is great. But there is always going to be people that won't want to buy, don't have the ability to save and buy, those the banks would never lend to etc. that need rentals.
To say that all landlords are evil and shouldn't exist is just ridiculous, they provide a product/service that people want and that certain people will always want. People don't go into business to be a charity.

by Peoples | 17th Feb 21, 2:10pm 1613524250

True. Not all landlords are evil. I'm quite stoked I went from FHB to investor in 9 years.

by karl seastrand | 18th Feb 21, 12:30pm 1613604627

I do not think that all landlords are evil but I believe a system that encourages more landlords (which leaves less room for FHBs) is evil in the extreme. By creating an environment where more and more landlords own more and more property and fewer FHBs can compete we are creating a monster. Unless we ensure we do everything possible to disincentivise property investment (and there is much we can do) we will pay a huge social cost in the not too distant future. Your last sentence sums it up perfectly. The economic environment should be such that property investment is not viewed as a viable business. We need to rebalance things so that the ratio of investors to owner occupiers falls back to levels it was in the 1970s and 80s. We owe it to our young and our poor.

by dago | 18th Feb 21, 1:32pm 1613608338

Its not even close to a viable business, it's a ponzi scheme of epic proportions. Not only will it drive productive skilled educated kiwis away in a stampede towards greener pastures, foreigners won't even want to come here anymore! This is what happens when a big idiot who's only passion in life is sport, and has no financial credentials, is positioned as Finance Minister. However Wikipedia says his father was an accountant who was imprisoned after stealing around $120,000 from the law firm he worked for. It seems the apple must not fall far from the tree as the only explanation for GR dithering is corruption. It says on Labours website Grant’s belief in social justice and a desire to see every New Zealander able to achieve their potential led him to politics. The hypocrisy is astounding. Grant Robertson and Labour at large are a huge swamp monster in bed with the banks, draining the life force out of Kiwis for many years to come. There is something very fishy going on for sure because stupidity and ineptitude simply don't explain things

by kiwikeith | 18th Feb 21, 4:09pm 1613617794

Gordon Brown had a similar story in the UK. He had no financial credentials before becoming the chancelor in the UK. And he did a great job passing himself off as a financial guru and told the world that the days of boom and bust were over. That went well until global recession came in 2008. He also managed to sell 60% of Britains gold reserves at an average price of $275 an ounce. (now referred to in the Gold business as Browns bottom. )

by sam-s | 18th Feb 21, 1:33pm 1613608425

I think you have missed the point. If property investing were to become unprofitable, we would have limited rental accommodation as the only provider would be the government (no sane person would enter or continue to invest purely to make a loss). Who at this point in time are unable to manage a small number of people that need it. Kiwis really do struggle with the idea of someone making money. We need to encourage everyone to do better. Not hack away at those that are succeeding or trying to succeed.

by dago | 17th Feb 21, 5:57pm 1613537850

Who said no rentals. Is anyone saying no rentals at all? No

by Zack Brando | 17th Feb 21, 11:40am 1613515205

Both Ardern and Robertson want house prices to increase. So your comment is going against the government's stated desire.

by Ryu | 17th Feb 21, 10:20am 1613510418

Why are the government not allocating new housing development sites say 10-15% to FHB/Social housing? FHB get a low interest government mortgage and social housing have a path to buy in future. Let people with existing properties or those cashed up to fight it out between themselves.

by dago | 17th Feb 21, 10:26am 1613510789

We need this https://www.gov.uk/stamp-duty-land-tax note there is an exemption for FHB

by b21 | 17th Feb 21, 10:53am 1613512397

Exempting FHB from stamp duty is not a great idea since you may channel investing through FHB, which happens all the time. A refund after a period of time the home has been used as a family home (let's say 3-5 years) would make more sense though.

by Property Leader | 17th Feb 21, 3:26pm 1613528813

I saw your comment. Perhaps you are not aware in the UK at the moment the govt has suspended the payment of stamp duty in order to encourage the provision of more rental housing. Perhaps they might have a better understanding of economics and care for their poor people more than our leaders do.

by fastlane | 19th Feb 21, 12:05am 1613646305

"Perhaps they might have a better understanding of economics and care for their poor people more than our leaders do."

You're talking about the Tories here, right?

by BirdieNZ | 17th Feb 21, 3:28pm 1613528916

Stamp duty makes housing more expensive and slows the movement of housing stock. A yearly land value tax is a better way of taxing property, as it is a very efficient tax that doesn't make it more expensive to build houses, is unavoidable, and only reduces economic rents. It also encourages more efficient use of land and will stop this rampant land speculation currently going on (note that current property prices are being inflated primarily by land values rising, not the actual houses).

by b21 | 17th Feb 21, 10:29am 1613510948

Time to react and BAN speculation on housing. Yesterday was too late already.

by Nifty1 | 17th Feb 21, 10:29am 1613510987

2/12 Beatrice Ave, Hillcrest - sold 1.485 mil at auction. Alot FHBs looking at this house, not a chance... Seen so many like this now. As soon as something semi decent comes up, it goes crazy.

by b21 | 17th Feb 21, 10:36am 1613511388

Those FHB are just competing with each other on a race to the bottom before the LVR restrictions kick back in, this would not be happening if it would not be thanks to the likes of NZME and other media with vested interests.

by karl seastrand | 17th Feb 21, 11:51am 1613515868

NZME publications like One Roof should be closed down and banned on the grounds that they are a national security risk. (I am only half joking).

by b21 | 17th Feb 21, 12:07pm 1613516850

You are right in the sense they are causing thousands to make bad financial decisions which is already hurting the economy. All in the interest of their own shareholders. It is dishonest at the very least.

by karl seastrand | 18th Feb 21, 12:33pm 1613604835

And for a certain type of person (read white middle class Aucklander) One Roof has the addiction level of Pornhub or online gambling.

by karl seastrand | 17th Feb 21, 1:25pm 1613521521

Nifty.. no chance for first home buyers? Why not? They only need a deposit of 300K. /s

by Nifty1 | 17th Feb 21, 1:45pm 1613522718

Yeah you're right, no point in complaining. Simple solution is to stop buying smashed avo & iphones to save that deposit!

by Whatwillhappen | 17th Feb 21, 3:53pm 1613530416

Your 300 iPhones are holding you back. I don't know how important you think you are, but no-one needs that many phones/

by Just a farmer | 17th Feb 21, 4:30pm 1613532624

$300,000 deposit and about $230,000/year household income.
Not sure why people are complaining really. Just need to work a bit harder!

In reality with the average household income being around $110,000 that limits FHBs to a mortgage of approximately $550,000 (assuming they bring home 2x average incomes). So that would mean a total house price a bit under $700,000 assuming a 20% deposit.
Getting harder and harder to buy a house under $700,000 in our major population centres with the exception of Christchurch.

by TommyYank-old | 18th Feb 21, 8:30am 1613590206

Regarding the $700,000 Price Range in the major cities for a single family home, and the difficulty of the average $110,000 Median family every getting to that price range brings to mind where I think successive City Councils have been leading us for 20 years. They are developing the cities so that 1st Home buyers do not buy a 1st Home. 1st Home buyers are supposed to do what the great cities of the immediate north do and buy and Apartment, and plenty of Apartments are within the $550,000 affordable target range. Making land affordable for building single family homes in the eyes of the powers that be would be wasteful and non sustainable. Their policies send that message--but they dare not say that in public!

by EarlyRiser | 18th Feb 21, 9:16am 1613592967

Yep, the solution seems to be smaller and smaller homes which will cost less and less to build. We could end up with this crazy situation in a country with relatively heaps of space, only 5 million of us - but where many Kiwi families are living in 50-square-metre apartments because that is the only thing they can afford.

by cromulent | 17th Feb 21, 4:43pm 1613533399

Went to the open home a couple of weeks ago and could see that price coming as was a very nice reno but just 6 months ago would have gone for 1.2. It's peak insanity right now but welcome to the no risk casino this government has allowed.

by jim hansford | 17th Feb 21, 10:40am 1613511640

Shock.. Horror and gobsmacking awe. People who get their money for free are able to buy property more efficiently than those paying tax on their income.. What a surprise. TAX EQUITY RELEASE AS INCOME.

by jim hansford | 17th Feb 21, 10:40am 1613511617

But remember our finance minister is not sure this is actually happenning.

by Albert2020 | 17th Feb 21, 7:52pm 1613544731

Don’t forget they also pay tax on the pathetic interest rates they get in a bank whilst saving for the deposit

by CourtJester | 17th Feb 21, 10:50am 1613512227

"Y'all should've bought 3-5-10-20 years ago instead of listening to DGM's!" incoming....
Let's not forget that most FHB's start looking for a house once they have (barely) enough for a deposit to buy in their desired area.

by This Charming Man | 17th Feb 21, 2:31pm 1613525514

Let’s level the playing field. Ban the use of equity in one home to fund another. Ban the use of interest only loans to fund another. If someone wishes to purchase another property, they can save a deposit and get a traditional home loan as first home buyers do. Those who are already in this position should be given a few years grace to either restructure their loans or sell their properties. Let’s do what’s right by our future generations and give them a fair go. Let’s not create an even greater divide between the haves and have nots. Let’s bring our house prices back to where they should be, and we’ll all be better off.

by GV 27 | 17th Feb 21, 11:46am 1613515578

....except anyone who bought a house in the last two years, who will face catastrophic negative equity. I'm fully onboard with the stated aims, and we'd definitely be better off if there was a viable path back to 3x - 4x household income property, but I'm not sure how you do that without decimating people who have copped huge rents and then huge house prices just to get a foot in the door as things stand. If that's the destination, you've got to find a way to bring people along on the journey.

by CourtJester | 17th Feb 21, 11:49am 1613515797

By that logic this issue can never be solved.
The govt is hellbent on saving all property owners already, speculators, landlords and owner occupiers alike. Maybe they could give a guarantee to protect owner occupiers with negative equity - it would be cheaper than the constant increase of accommodation supplements.

by GV 27 | 18th Feb 21, 12:45pm 1613605545

Agreed - such an outcome is inevitable from a political perspective anyway - there's no way a Govt can throw recent FHBs and owner-occupiers to the wolves to solve a problem they and investors have created.

by Whatwillhappen | 17th Feb 21, 3:54pm 1613530477

That's not actually that many people in the grand scheme of things. FHBs could be accounted for. A solution at Croaking Cassandra on that.

by Albert2020 | 17th Feb 21, 7:54pm 1613544841

As a percentage of total mortgage holders that would be a very small figure. As long as you can pay the mortgage negative equity is not an issue.

by Rob Reid | 17th Feb 21, 9:39pm 1613551152

Let them be decimated. I can see the risk of rising interest rates and negative equity and have stayed away from the ponzi. They had the same choice. Time to grow up FFS.

by GV 27 | 18th Feb 21, 12:44pm 1613605461

Great for you, guy. Guess the rest of us can't put our lives on hold waiting for corrections or blood-letting from 2007 that's now 14 years overdue and counting. You might be able to sit on the sidelines twiddling your thumbs, but some of us want to get on with things.

by Rob Reid | 18th Feb 21, 7:14pm 1613628857

I have found there are better options for "getting on with things" than joining the housing Ponzi. But for those that mostly only want a house it is a truely shity situation.

by CourtJester | 17th Feb 21, 11:47am 1613515632

What's disheartening is that Jacinda literally just needs to give a nice speech to make your ideas sounds acceptable and minimise voter losses (since that's all they care about). If they had the intention to fix the problem, they would have given that speech already. The silence is deafening.

by EdwardD | 17th Feb 21, 12:03pm 1613516595

Perhaps the Govt is catering to the National swing voters rather than Labour supporters these days?

by Albert2020 | 17th Feb 21, 7:56pm 1613544967

In that regard Covid resurgence is a real pain the ass as it only detracts away from housing and the fact we should be talking about this issue with Labour fronting up daily.

by Lord Dowding | 17th Feb 21, 12:28pm 1613518134

Cue all the bleating renters in 3, 2, 1...

What a waste of a lifetime complaining about a situation you can’t change.

Better to do something that you can control like buying a property any property you can afford and you’re no longer at the mercy of the market.

Whatever the market does in the short term you can guarantee that over the longer term you will build equity and it’s miles better to be a part of that than in the renting minority.

by Basil brush | 17th Feb 21, 12:43pm 1613519034

Really helpful comment. Thanks for stopping by.

by Lord Dowding | 17th Feb 21, 9:20pm 1613550002

Glad it made a difference ;)

by karl seastrand | 17th Feb 21, 1:48pm 1613522922

LD..."guarantee you will build equity"? Less certainty and more questioning needed. Your predictions may be correct but your certainty is, to be polite, misguided. Almost anything could happen to the NZ property market in the next few years. And "buying a property.....and you're no longer at the mercy of the market". What?? Buying a property (especially when heavily leveraged with a mortgage) puts you totally at the mercy of the market not to mention at the mercy of the banks and their interest rates.
PS: This time last year were you certain house prices would rise 20% in 2020? No? Yet you say you are certain you know what will happen in the future. Don't make much sense to me.

by Lord Dowding | 17th Feb 21, 9:12pm 1613549573

That’s exactly the reason right there why a few will never buy.

An inherent negative bias to focus on downside risk and ignore the upside risk.

I can almost guarantee people in this camp will still be on forums like these in a few more years time saying the same things and with the same focus while everyone else has had the joy of living with their own home and likely gained a nice amount of equity.

Good luck to them

by karl seastrand | 18th Feb 21, 12:49pm 1613605783

LD... I actually have the joy of living in my own (freehold) house which I bought during the first lock down last year. Back then I felt pretty sure my new home would lose value in 2020 (as did every other person on the planet, I think) but needed a home for family so bought anyway. And we all know what has happened to property since then (my predicted guaranteed loss in 2020 turned to a $1000 a day capital gain). Everything at the start of 2020 pointed towards price drops and what actually happened? Everything at the start of 2021 points towards price rises (the way some see it anyway, but not me) so when you look back at 2020 I really cannot understand how you can be so adamant that you can (accurately) predict the future.

by PonziKiwi | 17th Feb 21, 3:24pm 1613528692

Lord Dowding

Yes its a free market and the price of money is set by the free market. Glad we agree..

by Crazy Horse | 17th Feb 21, 7:16pm 1613542604

Cue the landlords to chime in about the "bleating renters" ....well LD, I have, up to a few months ago, been a landlord in the US, also a renter and landlord in the city of "sales". So I can see things from many "different angles" unlike so many of your ilk, who are so "sh*t scared" of any sort of property price drop, as the only way to make gains in Auckland property is through capital appreciation - the rental income ROI for new investors is just crap at 1-2%....I was getting 12-15% gross in the US.

The entire system is geared for landlords - if the tenant can't pay the rent, they go to Jacinda for a top up through the accommodation supplement - if our economy was doing so well, tell me LD why is the AS needed ???

Then everyone moans about the housing shortage, more BS as how many empty apartments in the city would be available and houses around Auckland by owners, who would rather just leave their properties empty, that rent them out, which just shows how much they are relying on capital gains.

The housing situation in Auckland (can't speak for the rest of NZ) is just a "clusterf**k" and purely based on GREED, it sucks the financial life blood out of the FHB (remember how much principal get paid off in the early years of the loan, so what has really been "paid off"? )

The whole situation has been primed by the MSM ie One Roof which anything they publish should be classified as an "advertorial" , the banks who at the end of the day "always win" in ANY situation, the RE industry and their "hangers on" pushing their barrow at "any cost", not forgetting those mindless radio ads. - while the government is so sh*t scared of losing votes, if they actually "did something" !! haha - that's not gonna happen !

Personally, I wouldn't touch an investment property with a barge pole in Auckland - in fact for the good of the city, we would be far better off if more people actually owned their own home - not just a city of a small group of landlords and a larger group of "bank enslaved" or renting serfs.
,

by Peoples | 17th Feb 21, 1:49pm 1613522966

I was a first home buyer 9 years ago who sold earlier this year and made a good profit and now I'm investing my profits in property as an investor. I was a single income, no help from mum and dad. If anything I was helping out mum and dad. Got denied a mortgage by ASB, TSB, KB and Westpac and it was very disheartening. And my interest rate was almost 7% at the time with a loan term of 30 years. I want to celebrate my success(and luck) without being made to feel like the nasty investor taking opportunities away from FHB. I bought into a development recently whose house prices were going up by $5k each time a plan was sold. To me ridiculous practices like that need to be checked. I missed out on a property which had gone up by $25k in 3 days. I also live in a neighbourhood with absent owners. Beautiful houses going to waste because the owners don't live in them. My neighbours are a lovely young couple renting a house from an overseas owner. Whenever something goes wrong with the house, the property manager's husband comes in to do shoddy repair work such as stapling a water damaged carpet together to the extent that the tenants have to put a rug over the carpe to avoid their baby walking/crawling over the carpets. This is in a million dollar neighbourhood. Quality of developers and investors is where some kind of intervention is required.

by CourtJester | 17th Feb 21, 2:16pm 1613524593

Our office is owned by a Chinese lady. Apparently she's gone missing more than a year ago. My boss sent her a message during the first lockdown that he'd like to pay half rent while lockdown lasts. No answer, so my boss started paying half rent.
Months went by, still no answer, so my boss stopped paying rent altogether. Still zero feedback. He talked to the other people in the building (the lady owns the entire complex) who also couldn't get a hold of her. So here we are, small NZ companies paying rent to absentee landlords who are so rich they don't even notice tens of thousands of dollars of missed rent...
I'd like to hear some libertarians explain to me how this is good for NZ. (Let's put aside that our company has been rent-free for more than 6 months now.)

by Peoples | 17th Feb 21, 2:24pm 1613525079

Wow! That is bizarre but very lucky for your company. Nothing stopping a similar owner from buying up 10 residential houses that have zero dent on their bank statement.

by unaha-closp | 17th Feb 21, 2:45pm 1613526358

Generally libertarians aren't in favour of allowing rentiers to make windfall profits. Government actively fire-hosing cheap loans into the property market, whilst the maintaining blocks against new building - thus sending property prices into orbit - isn't really the sort of economic policy a libertarian would endorse.

A libertarian response to the deflationary pressures, which our government uses to justify the fire-hose, would have been to let deflation happen.

by ShoreThing | 17th Feb 21, 3:22pm 1613528538

Curious how you think libertarians should have to explain that. What part of that situation do think libertarians are responsible for?

by ShoreThing | 17th Feb 21, 3:16pm 1613528177

The single raindrop never feels responsible for the flood.

by Peoples | 17th Feb 21, 3:21pm 1613528471

No point in aspiring to much then...

by ShoreThing | 17th Feb 21, 3:25pm 1613528734

I think you might've missed the point. You made a bunch of money by owning a property over the last 9 years, good for you. No one cares about the actions of an average individual in the property market, no one is making you feel like a nasty investor. It's the combined actions of thousands or tens of thousands of people with the same idea as you that people care about.

by karl seastrand | 18th Feb 21, 12:56pm 1613606162

It is not the landlords fault, it is the system or more accurately the people who run the system that are to blame.

by lets_pump_this | 17th Feb 21, 3:20pm 1613528440

If youre young just save the deposit in Bitcoin and worry less about price increases as houses have been falling relative to bitcoin for ten years.
Brr.nz

by Brutus Iscariot | 17th Feb 21, 4:43pm 1613533401

Residential property investing should be as frowned upon by the community as amphetamine manufacture is.

by CWBW | 17th Feb 21, 5:09pm 1613534974

Renting is both a lifestyle and financial choice similar to choosing between buying bitcoins and a house.

Rather I see the problem stemming from envy and personal insecurities that people are adamant on being entitled to a house according to their ridiculous budget.

Perhaps more help on counselling and self-esteem development would solve this social phenomenon.

Again, renting is a choice, if it isn't, you aren't productive enough in your finances.

Get back to work!

by Amokk | 17th Feb 21, 5:16pm 1613535369

Again, renting is a choice, if it isn't, you aren't productive enough in your finances.

What an absolute tool.......

by PocketAces | 17th Feb 21, 6:41pm 1613540461

Wrong person replied to

by al123 | 17th Feb 21, 5:19pm 1613535580

Ok. So the problem isn't astonishingly high house price to income ratios, and rapidly increasing house prices, but rather the 'envy and personal insecurities' of renters. Sure.

by PocketAces | 17th Feb 21, 6:41pm 1613540507

Many people do good work and are paid crappily for it, much of this work, not done, would see society in a pretty parlous state. There was a time these people could afford to own houses, now greed has stopped that.
Your attitude does not belong in my country, I don't care if you were born here or not, either be a kiwi or find somewhere else better suited to your outlook on life.

by CWBW | 17th Feb 21, 6:48pm 1613540914

I'm probably more Kiwi than you. Obviously no one told you while you're growing up that you aren't special, you aren't unique and the world doesn't revolve around you.

You should be the one heeding your own advice and the suggestion of your mates and book your own ticket. This country wasn't built by whinners, it's built by people who value hard work.

Don't want to walk the mile, there's always a beach for you.

by PocketAces | 17th Feb 21, 8:03pm 1613545417

If we valued hard work, rest home workers would be the billionaires not the leeches feeding off them. Again your attitude has no place in my country.

by GV 27 | 18th Feb 21, 10:46am 1613598393

"You should be the one heeding your own advice and the suggestion of your mates and book your own ticket. This country wasn't built by whinners, it's built by people who value hard work."

This country was built by hard work, but then dismantled by a generation of selfish, lazy entitled idiots who think they should get free money for turning a certain age regardless of whether they need it, who pushed the basics of life like affordable housing beyond the reach of the working class and who still have the cheek to act like they had a monopoly on 'hard work'. Guess what - younger people are working more hours, spending less and still not able to make ends meet. They didn't stack the deck against themselves. You did that.

by Albert2020 | 17th Feb 21, 8:00pm 1613545200

Let’s try and not feed this troll shall we.

by stuart786786 | 17th Feb 21, 5:10pm 1613535013

Mission Accomplished Mr Orr and Jacinda Arden for screwing FHB.

Now even the dream of moving into own house is gone.

%@$&&£§

by dago | 17th Feb 21, 6:04pm 1613538253

.. And shifting bankers creditors to debtors column by transforming boomber savers to investors or bank of mom and dads. Mission accomplished

by mikekirk29 | 17th Feb 21, 5:47pm 1613537260

41% of houses OTM going to landlords, presumably for rent?
So, that is all that stock NOT available for buying.
And gov and RB facilitated this.
Brilliant

by dago | 17th Feb 21, 6:14pm 1613538899

As far as I’m concerned, you may as well call it 78%
, if owners are cashing in profits to trade up to new homes and take them away from FHB’s.

Need to put a limit on that practice too as FHBs can’t compete with them either..

by printer8 | 17th Feb 21, 7:58pm 1613545088

dago
. . . and just the other day you were adamant landlords were selling up.
Also came across Tony Alexander’s survey of REA - contrary to your claims they have been reporting for the past five months they have been seen fewer investors coming to the market to sell and more to buy. (This data certainly supports the later so not seemingly erroneous)

by dago | 18th Feb 21, 1:39pm 1613608756

Am only going by what I've seen on the ground in Wgtn. When a property is being sold by an investor, which there have been many, it's one they've held very long-term, not bought recently

by Daggydab | 17th Feb 21, 6:34pm 1613540051

As a first home buyer this is absolutely disgusting, it is near impossible to buy a first home it was easy as for all the boomers when they were $70,000 to buy or so. Our generation works harder without the rewards.

The goverment has to do something yesterday to help us out!

by ex agent | 17th Feb 21, 6:33pm 1613539982

I am 65 years old. In all those years I have never experienced the kind of greed we are currently experiencing in New Zealand on the part of property investors and speculators. Fear of missing out is driving people into banks to borrow whatever they need to grab as much property as they can. Stuff all those who are not yet on the ladder. Grab what you can as quick and as early as you can and go for the ride. The Government and the Reserve Bank seem very reluctant to get stuck into the problem. Guess what they all hold property and are enjoying watching their values increase. Human nature can be very disappointing at times.

by stuart786786 | 17th Feb 21, 6:47pm 1613540823

This is promoted by politicans and supported by reserve bank governor and many with biased vested interest - so call experts and media.

by EdwardD | 18th Feb 21, 9:06am 1613592379

Totally agree. I listen to my kids and their friends and it just makes me sad. They have lost hope. I had to reassure my son the other day that although I no longer have interest income from TDs to help my costs, at least I own my own home in my retirement. His question was what happens to his friends who don't own by the time they retire or are still paying mortgages off as it's taking them so much longer to save for a deposit. I had no answer.

by Lord Dowding | 18th Feb 21, 11:48am 1613602107

You’re just throwing out nominal figures “70,000” without any consideration for what that actually means.

Household incomes, supply and demand and interest rates set that price all of which were completely different then.

by karl seastrand | 18th Feb 21, 4:43pm 1613619833

LD... I hope you are not denying that it was pretty easy for almost anybody with no kids and a job to save a deposit and buy a home 30 years ago if they wanted to? Without Mum and Dad it is nearly impossible now. No comparison.

by Lord Dowding | 18th Feb 21, 7:25pm 1613629543

Not denying it at all I agree with you but it’s still very possible.

by dago | 19th Feb 21, 8:31am 1613676707

Buying a house shouldn't be in the 'possible' category. Travelling to outer space is possible as is winning lotto. Buying a house does not belong in Extremistan but it's heading that way

by richard1965 | 17th Feb 21, 6:53pm 1613541232

Important reason : Many investors rushing to take advantage of window given by government and RBNZ before LVR kicks in.

This is planned in such a way that will see rush from investors / speculators rushing till May before 40% LVR kicks in.

This ponzi is as is the intent of the government in power - labour party and earlier National.

by richard1965 | 17th Feb 21, 6:53pm 1613541234

Important reason : Many investors rushing to take advantage of window given by government and RBNZ before LVR kicks in.

This is planned in such a way that will see rush from investors / speculators rushing till May before 40% LVR kicks in.

This ponzi is as is the intent of the government in power - labour party and earlier National.

by Fantastic | 17th Feb 21, 7:09pm 1613542146

It's hard. Even if FHBs can whip up 20%, or even 10%, the monthly repayment is still horrendous. Move to somewhere cheaper and there's no well-paying jobs. So either win big on Lotto or go to Australia when the route opens again. It's too hard to save while paying so much rent. Forget it!

The government has done too little too late.

by nktokyo | 17th Feb 21, 7:18pm 1613542712

I invest. I buy very run down 2-flat properties, renovate and remodel and rent them out. No FHB would ever touch them. I always thought I provided a service. My tenants are young flatters and the places are now mint.

Other investors are primarily responsible for the surge in consents and building of townhouses in Auckland right now.

What does everyone in here want? Seems like an angry crowd.

by Fantastic | 17th Feb 21, 7:27pm 1613543239

Good for you, nktokyo. Although not impossible, it isn't for most FHBs because 1) they might not get the loan approved for a rundown place, 2) even if they do, they might not have the extra budget to renovate it, 3) they want a place (to immediately) call home especially when there are children, 4) they worry there are unexpected hidden costs due to their inexperience.

Instead of being angry, I think people should think outside the box on achieving first home ownership.

by jim hansford | 18th Feb 21, 10:14am 1613596494

Again there is a lot of wasted typing here. We only need one thing. TAX EQUITY RELEASE AS INCOME.

We dont need brightline tests or capital gains taxes. We need to look at the problem and solve that. Anyone with property releases equity for free in the current low interest rate environment and can transition into yet more property. They can drive up their own book because of a shocking lack of policy.

by HeavyG | 18th Feb 21, 10:20am 1613596851

If you can release equity through a tax free sale then it makes no sense to tax a non sale release of equity. Your "friction costs" disincentive to such transactions is just wasteful sour grapes.

by jim hansford | 18th Feb 21, 10:57am 1613599066

Yeehah. Rollinrollinrollin keep that gravy coming. Spoken like a true gravy train jockey.

by jim hansford | 18th Feb 21, 11:01am 1613599273

What you are missing is there is a sale.. you buy a property and you have sold a property. However if you release equity, it is just demand side. This is the answer... and it will dry up the gravy.

by jim hansford | 18th Feb 21, 11:13am 1613600023

And in a rising market with a brightline test why would you sell property.. The current policy settings couldnt be better set for churning out the gravy. Clear case of government incompetence and property investors laughing all the way to the bank. Needs a change and a simple one too. The bank knows the score.. one email to IRD and the job is done.

by Lord Dowding | 18th Feb 21, 11:40am 1613601621

Yes and most investors don’t sell anyway as rents keep rising and it’s an income stream most people are now looking for in retirement regardless of capital appreciation.

Any negatively geared properties which will be few and far between at the moment become positively geared over time as rents rise. If interest rates rise so do rents. Most investors are not flipping properties for realised capital gain at all.

by HeavyG | 18th Feb 21, 1:36pm 1613608582

What you are missing is the investor uses the sale proceeds to buy 2 properties.

In both scenarios, releasing equity in P1 to buy P2, or selling P1 to buy P2 and P3 the investor ends up with 2 properties and the market loses 1 more property to the investor. Again the only difference is that "friction costs" of selling and then buying in the same market.

From a political and policy stance such an outcome is dead in the water.

by jim hansford | 18th Feb 21, 6:22pm 1613625760

That is not valid analysis. How do you know that is how an investor behaves. They may do this and may buy none.. It is the normal investor argument... you cant do this because of something completely irrelevant.. If they release equity and spend it on property.. then that equity should be taxed. It may be dead in the water now but so is the future of New Zealand if current policy continues. The current policy is gravitational.. The more you have the more you must purchase.. like a black hole it creates exponential demand that can never be met.

by linklater01 | 18th Feb 21, 11:35am 1613601307

I got an update today from homes.co.nz with their current estimate of the value of my home and rental properties. Of course, it is only an estimate, but if at all accurate, my small Mount Maunganui rental has risen by some 33% over the past year.
I have had it for over 20 years and have no intention of selling, but if I did and had to pay CGT at say 15%, why would I object? Of course, a Capital Gains Tax would not be sufficient on its own to solve the housing problem, but the amount raised could be used to help fund say, the building of more state houses for the most disadvantaged in our society.
I didn't like the Greens Wealth Tax, but would not object to an Inheritance Tax.

by Lord Dowding | 18th Feb 21, 11:44am 1613601880

Yeah I know many people with a lot of rentals in Tauranga, the Mt and Papamoa and none of them will sell because the net income on these has grown so much over the years it’s the perfect retirement investment. They are all on the hunt to accumulate more properties and why wouldn’t you.

by karl seastrand | 18th Feb 21, 4:48pm 1613620130

To me inheritance tax seems like the most palatable and sensible way to help sort this mess. The masses are far too greedy to accept CGT or wealth tax but might (reluctantly) agree to go along with an inheritance tax. And of course all the loopholes like trusts would need to be closed.

by K.W. | 18th Feb 21, 5:48pm 1613623739

Where are the absolute numbers? Percentages don't mean much. There might have actually been more FHB in January than normal, but slightly more extra investors than normal. The total number of house buyers might have dropped due to home owners and FHB being busy enjoying their holidays in January, rather than rushing around looking at open homes, which pushed up the investor % due to their absence. There might have been a larger number of people on holiday buying holiday homes while they are in the area, which are counted as "investment properties". Could be any number of factors. Correlation does not equal causation.

by K.W. | 18th Feb 21, 5:53pm 1613624005

The Australian Govt makes the NZ Labour Govt look like the bunch of incompetant idiots they are. Turns out its pretty easy to get new houses built if you pay people to build them, rather than giving the money to banks to lend to people buying existing houses.
https://www.macrobusiness.com.au/2021/02/homebuilder-to-drive-record-co…
"It is fair to say that the Morrison Government’s HomeBuilder subsidy has been incredibly successful in juicing new home construction and supporting the economy.
Detached house approvals surged to their highest level in the series’ 38-year history in December:
Construction finance has also soared to unprecedented highs:
Today, the Housing Industry Association (HIA) has issued a media release forecasting that detached house construction will hit record highs in 2021 on the back of HomeBuilder:
“It is anticipated that almost 130,000 new detached homes will commence construction in 2021. The previous record of 120,000 starts in a calendar year was set in 2018,” stated HIA’s Chief Economist, Tim Reardon…
“HomeBuilder has delivered. All leading indicators show a record volume of detached homes about to commence construction and this is occurring in almost every location across Australia…"