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Infometrics says millennial first home buyers are signing up for a lifetime of debt and are likely to be much worse off than the baby boomers

Property / news
Infometrics says millennial first home buyers are signing up for a lifetime of debt and are likely to be much worse off than the baby boomers
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The current outlook for first home buyers is the worst it has been for 65 years, according to economics consultancy Infometrics.

In a new Housing Update report, Infometrics' Chief Forecaster Gareth Kiernan concludes that this year is the worst time for potential first home buyers to get into the housing market since 1957.

Kiernan concludes that baby boomers fared much better from the housing market than today's first home buyers are likely to.

"There has been a long-running debate between baby boomers and millennials about who had it tougher when trying to purchase their first home," Kiernan says.

"Our analysis shows that even with mortgage rates below 5%, the average home's million dollar price means that today's first home buyers face much less favourable financial outcomes than a buyer in 1987 did with interest rates of 20%."

The report takes a long term view of the housing market, and estimates the total payments made by homeowners over the full term of their mortgage and compares that with the value of the property once the mortgage has been repaid.

"Our analysis suggests that millennials wanting to enter the market now face the least attractive housing prognosis since their grandparents in the 1950s, if not longer," the report says.

It found that two of the best years to buy a home were 1949 and 1996, when interest rates stayed relatively low throughout the life of the mortgage and there were substantial house price rises as well, providing significant capital gains.

The two worst years for buying a home were 1955 and 1975, with the following 25 years including periods of substantial house price weakness.

This year is almost as bad as 1955, with the report's house price projections for the next 25 years making 2022 one of the worst years ever for buying a home in terms of the financial returns it could ultimately provide.

That's because the extended period of high house price inflation since 2010 makes it more likely that price rises will be more subdued in future, while buyers will need to take on more debt.

"Young people are effectively signing themselves up for a lifetime of debt if they want to get into the housing market, with much less money left over to spend on other things than previous generations enjoyed," Kiernan said.

"Our analysis highlights the generational issues being caused by New Zealand's housing affordability crisis.

"There is a social responsibility for greater political action to ensure that home ownership does not continue to slip out of reach for more and more kiwis," he said.

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108 Comments

The Boomer vs FHB argument often misses the point, the deposit. 

Boomers talk about having high interest rates, however that's not the biggest barrier to home ownership.  I don't think aspiring FHB over the past ~10 years were complaining about how much interest they will need to pay on a mortgage.  Obtaining the required deposit in a rising market has been the biggest barrier to buying the first home.  

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There's always barriers to buying first homes. So we're transitioning from high deposit requirements to high servicing requirements.

People are waiting for a Goldilocks zone where price falls exceed interest hikes. So long as that can hover under the line where incomes drop and jobs are lost, things will be peachy.

The Death Star canyon run of home acquisition.

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The 'transition period' seems to involve high servicing requirements AND massive deposits at the moment. Low interest rates masked how out of control the principal being borrowered to get a first home was becoming, along with boomers who don't get that a high percentage of a small number can be less than a small percentage of an absolutely massive number, or that wanted to act like they paid 18% for the whole life of their mortgage, when in reality that was for a brief period of time, on a much lower amount and relative to earnings that were inflating far quicker than are today.

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Yes, my comment was scarcasm at the rather naive optimism that FHBs will be gifted any real lasting improvement in home affordability. Some fundamental underpinnings would need to shift outside of a recession/depression, that would be a decade in the making.

On the upside, plenty of cheap apartments in 30 years when the retirement villages empty.

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I have always wondered what will happen to the retirement villages in a few decades time.  Imagine them becoming student/party villages.  

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Stands to reason, they're built on a predatory business model that relies on constant growth, when that growth disappears (which is an inevitably), pop goes the weasel.

Maybe we'll start importing old people.

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don't even joke about that, robbo will hear you 

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Will absolutely become apartment living blocks for the young...
If you look at the holiday parks in the UK - in the 80s they were full of families - boomer parents and their children.

Now there is less of that market to fill the park all year round.... they host rave weekends, 80s/90s throwback music weekenders, fetish weekenders.

I would imagine these will follow the same path and shift their use to what the younguns want.... prob replacing the billiards table and library for a metaverse bunker

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Indeed. Astute FHB understand that nothing is going to get better in New Zealand.

But there's a big world out there. ✈️✅

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If only the passport renewal queues weren't so long...

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I find there are a number of young people working on interesting start-ups, building companies, and working in jobs they find interesting. i think there will always be an export of young people, but I think there's still opportunity here for those that want to explore them. 

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there are some in NZ - i work in tech and most smart ones in tech start up overseas - for one thing people will invest in start ups and not just property....  

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Bye-bye Brock Landers.

Enjoy the big world out there! ✈️✅

TTP

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They're already in the med. Can't you tell the posting is already more windswept and interesting.

It's good to be a diddle in multiple time zones.

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The average size deposit in Oz, is now $120k. I my day (cough) 60's - 70's you could buy 5 houses in Auckland for that. Just saying..

https://www.9news.com.au/national/home-deposit-average-rises-to-120-000…

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Key word is BUYING the first home.  Not servicing it, buying it.  

What barrier is there to buying a first home when term deposit rates were 15% and a 20% deposit on a house is the equivalent of 7 months pay?  If people found that difficult they were being frivolous. Today it's 2+ years pay, with term deposit rates being below 3%.  

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If it was that much easier then why weren't ownership rates 95% then.

Maybe they're all lying, but I haven't met one boomer that said "oh yeah we just saved for a few months then bought our house".

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Peaked at 75%.  Maybe people weren't willing to make as many sacrifices back then?  I.e. having too many kids, not saving hard.  

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Too many cafe breakfasts, etc. 

But in all seriousness I'm guessing renting back then didn't mean getting tossed out on the street more than once every 12 months because someone wanted to crystalise a stonking tax-free gain that was totally incidental, just like the last three times they did it, as was the experience of some friends of mine in their 20s.  Constantly trying to find flats, being YoPros up against families who are equally desperate, etc. Awful way to live. Many just gave up on Auckland entirely. Our loss, other countries' gain.

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The people who did not buy are most likely the winners here, depending where they put the deposit.....

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Yeah, looking to ownership rate to argue how hard it was for boomers was always going to backfire there.

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That might be because they barely had to save at all, so it wasn't the chore it is now.

No one else remembers Countrywide's 100% mortgages? Or employer-provided deposits?

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Simple. Because there are lots of good reasons to rent, especially for specific times of your life.

Even in jurisdictions where housing only costs 3x median income, home ownership never gets above about 70%.

There is research that shows if you buy too earlier in your life, especially in today's mobile economy, then you can limit your ability to move for the best opportunities that might arise. Plus it is a drag on GDP because of this.

In jurisdictions that have a stable housing market, there is very little difference in the cost of renting or buying at any stage in your life, relative to your income, plus they have better tenancy laws, so most people do not buy until they are at that stage in their life where they are settled and want to buy their forever home.

There is no reason to sell and move house continuously as many people do. Every time you move house it costs about 5% of its value which is most a lost economic cost.

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It was more than a few months saving,  but yeah paid cash for our first home. It cost 2x my gross salary. 

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I met someone that said they sold their car and bought a section. 👀

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What barrier is there to buying a first home when term deposit rates were 15% and a 20% deposit on a house is the equivalent of 7 months pay? 

The fact house prices were inflating in the double digits, depending on which year you are looking higher than CPI or interest rates, as was the cost of living.   So your 15% term deposit (less tax) didn't keep up with the price increase on the house.  

 

Also, back then you usually didn't get away with a 20% deposit.  25% or 30%.

 

https://www.interest.co.nz/property/87961/adjusting-inflation-gains-hou…

1980 to 81.  23% house price inflation

1981 to 82   31% house price inflation

1982 to 83  only 10%

83 to 84 12.8% HP inflation

84 to 85 14% HP inflation

 

The big things that helped most of the boomers were state handouts

1) Taking the Universal child benefit payments as a lump sum..  There was most of your deposit.

2) State Advances Corporation selling you the state house with a heavily subsidised mortgage.

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2020-2021 40% HP inflation 1% TD rate.

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That has nothing to do with the question NZDan asked, and adds nothing to the conversation.

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The TD rate alone does not dictate how quickly you save, it's the accelerant to the compound of your savings amount.  E.g. using today's median wage:

  • Median Wage $60k, 3 x that = $180k.  Save 20% of take home pay = $9.6k.  15% TD brings it to $11k.  
  • $180k house price goes up 23%.  25% deposit goes from $45k to $55k.  You're ahead $1k.  

Vs:

  • Median Wage $60k.  10 x that = $600k.  Save 20% of take home pay = $9.6k.  3% TD brings it to $9.8k
  • $600k house price goes up 10%.  20% deposit goes from $120k to $132k.  You're behind $2k.  
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Rubbish mate you have the average wage way out. My parents sold a mortgage free house in the UK and still spent 3 years paying it off from 1975 in NZ remember it well we hardly got any Christmas presents. Big changes after that it was new bicycles for Christmas.

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Red six, standing by. 

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An article on stuff about mortgage serviceability (from ANZ, I think) mentioned how many mortgages were paid ahead, by dollars and months.

If you took those figures, it worked out that over 2/3rds of current ANZ mortgage holders are paying approximately half of what the average tenant pays in rent.

So, it's not about not being able to afford the mortgage payments, but being able to get the mortgage in the first place (notwithstanding those mortgages are likely older at much lower prices). There's lots of memes on the net about it.

Watching Simon Bridges blatantly lie that the introduction of the LVR instead of a DTI would be more favourable to FHBs when National introduced it ... let's just say, I don't like him. Cue a market devoid of FHBs of 6 months after their deposit requirements increased 6x, whilst boomer landlords jumped in with equity deposits rejoicing at the lack of competition (my own landlady at the time did exactly that, and crowed to us about it, while we were paying her mortgage!).

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It is that kind of landlady that I want to watch go down in a tower of flames.    I hope the crash is big enough to wipe out everyone who leveraged up on their "paper gains" to buy a rental in the middle of a housing crisis. 

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FHB should wait as some house prices are tumbling 20k a month in Auckland. If you buy now you will lose deposit and be in negative equity next year.

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Its the worst year for FHB. Yet there were some youngsters who got into property and have bought and sold more properties than their mom and dad.

The savvy invested in crypto, cashed out in 2019-2021 and bought landed property.

For the most of us, its a lifelong mortgage till retirement.

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Till what?

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That point all the boomers were racing towards and when they got there they realised their prostates were stuffed and they couldn't be bothered doing anything anymore.

Is so funny that generations aspiration was to live the life of a beneficiary. You don't need to work 40 years to do that.

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Savvy? I think you mean lucky. 

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So what changed?

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Boomers have ruined it for the next generations...greed took over. 

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Greed isn't new. Ultimately the issue is disproportionate age populations.

I mean wait, no, we're better, they're worse. Tribalism.

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lol this made me smile thanks. 

In reality Boomers have created almost everything you can see.  In Europe and Asia they inherited a world devastated by war and built it up from smoking ruins.  Boomers broke down the wall and saw the end of communism.

If you are talking about housing you might be interested to know that Boomers have BY FAR built the most houses of any generation.

Did they use their equity to buy additional properties like their friends and neighbours were doing?  Yes. Did they do that to ruin the lives of Snowflakes?  No they did not.

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Actually, the world was rebuilt by the boomers' parents. The boomers weren't building pretty much anything at all before the mid-60s, and even then it's hard to argue apprentices and juniors were making the decisions that made the world what it is today (Jobs, Gates and Bezos achievements all stand on the backdrop of Shannon, von Neumann, Turing, et al).

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No I totally disagree, but that is ok.

Jobs, Gates were enabled by timing, the work of Turing and Neumann relied as much on the shoulders of their predecessors, Arabian scholar Muhammad ibn Musa al-Khwarizmi, and the Greek Diophantus who in turn relied on others before them.  

The boomers built our motorway infrastructure, most of our electricity infrastructure (thanks piggy Muldoon), most of our buildings, residential and commercial, most of our government structures, went to the moon, invented TV's, Microwaves, Mobile Phones and the Internet.

To be fair the boomers parents had nothing to work with, the western civilisations (bar the US) were broke until the 60's.  I remember my Dad (boomer) describing the amazing taste of an orange, a fruit he tasted for the first time as a teenager in the UK.

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The boomers built our motorway infrastructure, most of our electricity infrastructure (thanks piggy Muldoon), most of our buildings, residential and commercial, most of our government structures, went to the moon, invented TV's, Microwaves, Mobile Phones and the Internet.

The moon landing was in 1969. None of the astronauts who went to the moon were boomers, and given boomers would be at most 24 at the time, I'm betting pretty much none of the people who worked for NASA at the time and were involved were boomers either. TV was invented in the 1920s. Microwaves were first patented in 1945. Mobile phones weren't invented by boomers either, as a quick wikipedia check will tell you. I'll give you the internet - Tim Berners-Lee is a boomer. 

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Ah, beat me to it! I accidentally deleted my comment and had to retype the whole thing >< Mac for work, PC for home, shortcuts very different!

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They didn't build Transmission Gully.  They didn't build the Christchurch Southern Motorway network.  Most of the motorway infrastructure that was built by them resembles goat tracks.  

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The boomers did next to none of what you listed.

The US interstate network dates to the late 50/60s. The Jersey Turnpike was completed in 1951. Transmission gully was 60s-70 here in NZ - my boomer dad recalls driving through it newly completed as a teenager (though it has been expanded on since). Mangere Bridge was built 1972-1978, and the Auckland Harbour Bridge in 1959, and expanded in 1969.

Over half of US and NZ houses predate the 1970s.

The first moon landing was in 1969, the culmination of over a decades research, when the oldest boomer was 23.

The think big projects were all completed late 70s/early 80s - maybe some boomer expertise there, but not their vision (my dad likes to claim he helped design Meremere power station because he designed one flange as an apprentice...)

TVs were invented in 1927.

The microwave was patented in 1945.

The inventor of the mobile phone was born in 1928.

The internet came out of the US army's 1970s ARPA project, commissioned and engineered by, you guessed it - not boomers!

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Interstate?  Are you living in the US?  I said motorway.  And the yanks were only following the Nazi's who built the Autobahn in the 40's.

All the technology I listed was commercialised by boomers, patenting does not make something actually useful, I should know I have one.

The internet came out of ARPnet that is true, but the Internet came later with the creation of ethernet networks and the HTTP, TCP/IP stack.  ARPnet came out of the telex system that came out of the telegraph network but that is not relevant.

Fewer than 10 percent of current dwellings were built prior to the 1940s so you are talking nonsense.  Around one third of New Zealand’s homes have been built in the last 20 years.

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Ah yes, I put in the US context because I somehow interpreted your original comment in that light :P Still doesn't make you right re: NZ motorways.

I tend to think very low-level (hardware), so fair point on the internet.

I also think for a generation to have "given" i.e. contributed something, to the world, they need to have invented it. Anyone can commercialize something someone else made, but that doesn't make it right to attribute the contribution to them. But that is philosophical.

And yes, I hadn't taken into account the recent newer stock - so the correct stat is (according to stats NZ) 800k/1.9M residential homes pre-date 1970 (50% was correct for 2013, which is when I last looked at buying a house).

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Interest rates fluctuate, the price paid for a house doesn't. 

Boomers bemoaning how high interest was when they first purchased make me want to throw up, and I am one. The question I ask to that is, "Did your interest rate remain high the entire time you paid a mortgage?". 

Recent buyers are now facing the double whammy of ludicrously high prices compared to income AND rising interest rates. Their purchase price remains the same

We have systematically over the decades removed from a huge portion of society, their stake in a community by denying affordable homes and security of tenure for those who need to rent. If you want to know why we have seen the breakdown of society that we see today, I point you directly to that.

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Kiernan concludes that baby boomers fared much better from the housing market than today's first home buyers are likely to.

Yes, but, the rapid decline in working age population as a proportion of total consuming population across the industrialised countries will likely push labour demand to a frenzied level. With that wages and inflation. We have just passed the inflection point: 

https://blogs.lse.ac.uk/businessreview/2020/09/18/the-great-demographic…

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Because people refused to have enough children. You shouldn't receive social services if you didn't have enough children to cover your cost.

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Couldn't afford to have children, you mean.

Unlike their parents, who could sustainably house a family on a single income. And who will complain about Millennial women being too dependent on childcare.

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I'm not having kids... Don't want them. Productivity gains through automation can cover the need for more humans to tax. 

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My understanding of this report is that this is the worst time for FHB or any buyer if they plan on making a capital gain.

Is this not good news, Now houses are for living in not some means of making a tax free capital gain.

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It would be good news if first home buyers could afford to buy a home to live in for 30 years or until they pay it off.

Unfortunately years of greed and excessive leverage have caused family homes' price to fly way above the budget of first home buyers. Meaning anyone starting out now are resigned to raise their family in a 2 bedroom flat until their kids leave for college. Thats the reality they're facing. Thanks, older generation for doing that to them.

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Or just looking at the accommodation and saying - ok we dont have enough room for kids - ill just fill that second room with HI-FI equipment and shoes.

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Anyone catch that tool on the AM show this morning responding to this? He was like, yeah it might be the worst time economically and financially, but I still think this is the best time for FHB to buy a house.

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The study merely confirms in a more scientific sense what we all know. 
Housing policy in NZ over the past 30 years has been an abject failure which is, and will continue, to cost us dearly.

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Did we have a housing policy?

I havent seen anything that resembled a housing policy since the 1960's 

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"Did we have a housing policy?"

Definitely. It was called "Stack the market in favour of older people who vote".

Hasn't panned out that well for everyone else.

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People forget that average drops of 10% mean some properties are selling for 30-40% under and others are selling as advertised. There will be plenty of good buys to be had right now if you're of the mind. It's not like buying shares where you always pay market and get an identical share to every other.

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Top comment !

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Is there any reason to not just cut boomers off from pensions and medical care as justice? The burden of caring for the enormous pool of boomers who are now retired or retiring is the other enormous burden on the back of future generations. Particularly those who had no children. In premodern societies, leaving the infirm and old to die (usually of exposure) was a normal part of life. Maybe it should be again.

When your grandparents can drop out of school at 15, wander through life, buy property at 20 with government schemes for home ownership, work shitty terrible jobs and end up quite well off (+5m net worth) while you do everything right (graduate school with engineering and law respectively) and even with very high income, it is nearly impossible to afford to sustain as a sole income provider with a SAHM and kids.

The injustice will result in Boomers being the most hated generation for a long time to come. 

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Well vote for a party that wants to quickly raise the age at which you are entitled to the pension

That will keep some boomers in work and save Govt money for housing and health services - a win win all round 

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I'm in favor of means testing super, or extending it to a full UBI and raising taxes on asset holders and high incomer earners to fund it. I would be glad to pay more tax to see more equality and less crime and hate. 

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I am absolutely not in favour of means testing super. Because of course there is no way it will happen immediately - it will be phased in. Which will mean that all that happens is the generations that got free education and reasonable house prices and massive wealth transfers as property owners will still get full super, and those coming behind will not. All this talk about means testing super is just yet another thing we afforded for boomers but suddenly 'can't afford' when it comes to those coming behind. 

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We boomers worked & paid our taxes all our lives to fund the pension for our parents, as they had previously done for our grandparents (prior to the1970's it was a separate Govt budget line social security tax).

Hopefully later generations brought up their kids to feel the same responsibility & obligation to them.

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"Hopefully later generations brought up their kids to feel the same responsibility & obligation to them."

I think people feel the responsibility.

They just don't have the cash to pay for it because for a lot of people, a massive proportion of their income is going to service "investors" largely tax free gains.

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Yeah fuck that - im already giving them 45% of my take home pay directly into their bank account so I can live in a 1 bed apartment they bought for 20% of its current "value".

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When I was saving up for my first home in the late 1970s I paid 50% tax on any earnings over $100/wk

"we don't know how lucky we are"

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The problem is much of the reciprocal efforts those parents gave to boomers - e.g. affordable housing supply, debt free entry to the workforce with training etc - was undone while the universal pension was retained. What's missing now that boomers had while paying their parents pension is the reciprocity. 

The universal pension makes sense in a reciprocal society. That's the part NZ is missing now and that makes it a bit unbalanced when younger Kiwis are paying boomers pension while being fleeced by policy most of them voted for.

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It was very evident when Muldoon was voted in after his flagship campaign message was to scrap Compulsory Superannuation (1970's Kiwisaver).  

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Pensions will become means tested. You will need to release any equity you have from your property in order to pay for living costs.  Today's youngsters are not going to stand by paying high taxes to fund the retirement of asset rich boomers.  Just a matter of time, maybe 3-5 years away. 

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That would assume that the leading political party is mostly made up of young people… Quite an assumption!

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Over the boomer's dead bodies! Oh wait..

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Because they have paid tax into the system all of their lives, that is what should fund their pension when they retire. 

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  • Individual pension: $20k
  • Average life expectancy: 82
  • Average pension duration: 17 years  - $20k x 17 = $340k
  • Today's Median Salary: $60k
  • Tax on Median Salary:  $11k. 
  • Years to fund 1 pensioner: 30

They paid taxes all their lives to fund services, unfortunately didn't pay enough to fund their own retirement.  Also voted Muldoon to scrap the Compulsory Super Scheme.  

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Tax paid to fund services and pension. Blame the governments not the people who paid into the system on the premise that they would get a pension when they retire. 

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Blame the voters too. The folk who in their entitled greedy shrieking prevented a CGT to share some of the load across society, for example. Can't blame government without acknowledging the role of voters.

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You're just reinforcing the can kicking entitlement mentality and pointing the finger elsewhere, something quite rife in that generation to this day.  Thing is, they do get a pension when they retire and we're often reminded that it's not enough...despite being 20x what it would cost to scrap student loans.  Regularly see complaints about how the Gold Card only applies to off peak travel, or supermarkets removing gold card discounts.   
 

I think we know which generation is the "me me me" generation.  

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It's undeniable that it's much harder for young people today to buy a first home, than it was for Boomers or myself (I'm not a boomer, I'm whatever comes afterwards), and that's a sad situation.  

But I don't like the categorising, the "us vs them" mentality, I think it's unhealthy in a society.  Not all boomers are bad and not all young people are good, we're all just people who try to do the best we can.

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Yvil, you are not wrong...

But sometimes it happens that you see something like this:

"And another 10 per cent is owned by those who have between seven and 20 homes."

https://www.nzherald.co.nz/nz/part-time-paradise-mum-and-dad-landlords-…

And yes, what you think is that those people are not your people. 

And who made is possible it not a good person.

I might be naive, it is possible (??) that some of them are really nice landlords... But nevertheless that sounds and smell like an obscenity.

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It is just not that complex.  I appreciate it is easy to think it was a scheme but of course this is not reality.  Here is the truth.  They made significant capital gains.  The best performing investment for those gains was property and so they re-invested.  No evil plan simply economic decisions.  Did they spend the time to sit down and hypothesise the possible outcomes of these actions on the house buying environment they were creating for their children?  No they did not but there is no need to apologise the future is unknown and unknowable.

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They exploited a system that made that possible, agreed.

My point is:

Once you covered all your needs for the next 4 generations if you need more then you are miserable.

It doesn't matter how rich you are, you still are poor... and you always will be.

About the future... it's perfectly knowable: you are gonna die, and you will take nothing with you. Somebody will remember you as "that guy that bought 36 houses".

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The guy who owned 36 houses and threw massive parties at his mansion, invited friends on his super yacht, travelled the world to the finest places and ate in the best restaurants will have far more people at his funeral and will be remembered much longer and fonder than the poor sod who never did anything with his/her life.  

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You are such a materialistic and status-driven person, Yvil, but each to their own. It seems like you only equate wealth with success and meaning. I guess you are just a fundamentally different person to me. 
I equate success with meaning, not wealth. 
The people I generally respect most in life are those whose lives have been dedicated  to giving, or creating - teachers, good religious people, artists, doctors, nurses, community leaders, intellectuals, writers etc. 

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Yes I admit I am money driven and I'm honest about it, unlike many who pretend money doesn't matter and then buy a lottery ticket in the hope to get rich without having to lift a finger

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The good thing about a Lottery ticket is it doesn't occupy a license to own an existing residential property surplus to one's needs, and also some of the proceeds go towards some great community initiatives.  

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Doesn't seem like history remembers many just slightly wealthy (e.g. 36 houses) folk like that, to be honest. If they're looking for others' esteem history suggests they'd be better served looking to something else you refer to, i.e. doing something with his or her life. 

History remembers Orwell for his achievements, but how many minor landlords from his time can anyone recall?

Moreover, does anyone - rich or poor - truly admire those who always feel their need to proclaim their wealth in search of others' approval?

Alain de Botton's book Status Anxiety is worth a read.

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I watched a short clip the other day, I don't even recall who the celeb was, but they explained about how when they made it everyone wanted to be their friend.  Going to clubs, parties etc.  One day they fibbed to everyone that they were broke.  Only half a dozen of their "friends" still wanted to hang out.  

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Shocked...how can it be that people loved the money not the person all that time?

You can't buy love eh, just rent it.

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Now imagine what would happen if the guy went bankrupt 5 years before his funeral. How many of his gold-digging lovers and fair-weather friends would have bothered hanging around after the parties and champagne dried up?

I find New Zealand's obsession with getting ahead obsene and sad. Makes me think of my landlord. He got ahead, only to be left by his wife ("..can you believe it? Even though I had so much money.." is the line he repeats every time he recounts the story to me.. ugh) and apparently his kids do not bother keeping in touch. He seems surprised to find himself in such a lonely place after achieving his dream of leaving everyone behind.  
 

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Potential FHB need to take control now in this time of flat population and housing oversupply.

Firstly do not buy. Find a better house in a better location for cheaper rent and move. The more landlords facing periods of vacancy and cashflow squeeze the better for you. 

When (not if) the OCR interest rate is cut in 2023. Start the process to buy then. The government will probably go the second step pre election budget 2023  and raise the income caps for First Home Buyer loans and grants. Prices will recover to Nov 2021 peak. But they will stay there for years. But at least you will get some quick equity gain to offset the interest expense. 

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"Prices will recover to Nov 2021 peak. " <== that's a pretty bold statement, and you sound absolutely sure about it.

I am quite confident that won't happen, but I'm interested in understanding what makes you so certain.

I see negative demography, lots of new houses, unfavourable economic conditions, boomers dying, some hard-to-forget punishment for some buyers.

What you see?

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We have added 53 billion in total mortgage debt from Mar 2020. That is what drove the increase in property values. Now the total debt of 331 billion can not be serviced when everyones mortgage is reset at 5% +. There is so much cross collateraliasation. The whole system is at risk. Prices will fall as people unwind their situations. There will be a recession if we are not in one already. But due to CPI inflation peoples incomes will improve in balance of 2022 and 2023. The public sector and those 1 degree seperated will set the tone.  Government will continue to borrow to support employment (that is why they increased the debt limit) RBNZ will first signal moderation of the interest rate peak. Then they will do 0.25% cut in the middle of the year at around the same time they will relax inflation target to 4% (that is being worked on now). Further tweaks to FHB Grant and loan schemes will manufacture more potential FHB in 2023. When fixed   interest rates go below 4% people will reassess what they can afford to pay on a weekly basis and they will start trading up again and new FHB will come in to buy the lower quartile. Prices will go back to 2021 peak by 2025 and then just increase in line with CPI from then on.

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WestieAJ

Let's say I get your point.

I can produce here an now several other more or less plausible outcomes.

High-debt => great-reset => ocr=25% => no more debt => DTI=2

High-debt => 3 world war => ocr=40% => ...

High-unemployment => UBI => :shrug:

Euro fallout (completely possible, look how prudent the ecb is) => UBI => :shrug:

Euro fallout (completely possible, look how prudent the ecb is) => 3 world war => :shrug:

What I am saying is that you should not be that sure about your assumptions and the consequences of those. The transition probability is not that easy.

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Be Quick !

 

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It is not that people are unwilling to buy right now, it is difficult to get finance, once the rules eased the headline will read something like” the market appears to have bottomed..” Another 18 months or so perhaps before or after the election 2023

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Wouldn't it be amazing if there was a solution to boomer hoarding like, I dunno, land taxes / wealth taxes?

....and maybe not allowing anyone past retirement age a vote.

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no taxation without representation => no representation without taxation 

I don't completely dislike the idea...

 

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Bless, you think you would do a better job of managing the wealth.  I am sure you would <virtual pat on the head>.

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Well... if it's so bad for first home buyers today then they may want to rent for the next 30 years and lets see how that works out shall we?

Sounds like good news for investors... plenty of tenant demand.

 

 

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I am not sure what this 'finding' helpful or not. today housing a financial problem, not a house problem. t

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Charlie Sheen said it best.

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