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Latest BNZ-REINZ Residential Market Survey shows that buyers from China account for 25% of NZ houses bought offshore

Property
Latest BNZ-REINZ Residential Market Survey shows that buyers from China account for 25% of NZ houses bought offshore
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Buyers from China account for one in every four of New Zealand houses sold to offshore buyers, according to the latest BNZ-REINZ Residential Market Survey.

However, according to the survey, which this month had responses from 373 real estate agents, just 6.4% of dwelling sales are currently going to people located offshore.

Anecdotal suggestions, particularly in the Auckland area, would point to higher percentages than that. But there is little either quantitative or qualitative information available on offshore buying, with the BNZ-REINZ surveys one of the few attempts to put actual figures to the the extent of foreign buying here.

The survey first asked agents questions on offshore buying in the March and May surveys last year.

That first survey a year ago came up with a result of about 9% of home sales going to offshore buyers, while the second survey came in just under 8%.

However, since then the questions have been tweaked slightly and instead of agents being asked if 'less than 10%' of buyers come from offshore they have now been asked more specifically if 'zero', 'less than 5%' or '5-10%' come from offshore.

BNZ chief economist Tony Alexander said that if the original methodology had been applied to the latest survey this survey too would have produced a reading of about 9% of buyers from offshore.

"There is no upward trend evident in the proportion of NZ dwelling sales to people located offshore," he said.

There were reports from Australia over the weekend that the Government across the Tasman will launch an investigation into the impact of foreign purchases of residential property, and whether foreign buyers are being property regulated.

China on top

But back in New Zealand, Alexander said that while people based in Australia had been the main offshore buyers of houses here (with 22%) the last time the subject was surveyed in May last year, buyers from China (with 25%) had now replaced them at the top, up from 20% last year. Australia was now in second on 20%, with the UK on 11% and the rest of Europe excluding the UK also on 11%.

The figures from the May 2013 survey had now been reworked, Alexander said, after the discovery that some data had not been properly captured in the original processing - hence the May comparative figures are different to those originally produced.

Alexander said that while the survey's data did "not allow one to say that an increasing proportion of NZ houses being sold are going to people offshore, one can say that the proportion of sales going to people located in China has risen. But then so too have our exports to China by 54% over the past year while spending by Chinese visitors in New Zealand grew 6.7%."

First home buyer recovery

Elsewhere in the latest survey, there are some signs of a tentative recovery in the numbers of first home buyers, which dropped to just 15% of the estimated number of total sales in December from a figure of 24% earlier last year. In the latest survey that figure has come back to about 17%, up from 16% in January.

Participation in the market by would-be first home buyers was knocked strongly by the introduction of the Reserve Bank's 'speed limits' on high loan-to-value lending from October 2013. The November and December BNZ-REINZ surveys showed that a net of close to 80% of agents reported seeing fewer first home buyers in the market.

Alexander said the latest figures showed there was a "slow recovery" in the proportion of sales going to first home buyers.

The February survey had overall shown quite a strong recovery in sentiment from the agents, including the reclassification again as this being a 'sellers' market. But some of these strong results have reversed somewhat in the latest survey, including the status of the market, which is now pretty much in balance between being a buyers or sellers market.

Easing off

"All eight of our main measures of sentiment in the residential real estate sector have eased off in March after rising firmly in some instances in February," Alexander said.

"On balance one could not say nationwide that it is a buyer’s or a seller’s market though in Auckland it is still a seller’s market with a net 9% feeling that buyers are more motivated, and in Canterbury a net 14% of responding agents feel the buyers are more motivated than sellers.

"Nationwide a net 31% of agents feel that prices are rising with Auckland at a net 37%, Canterbury 52%, and Wellington 40%.

"A net 44% of agents still say that they are seeing fewer first home buyers compared with 40% last month and a net 24% seeing more first home buyers in September – just before the new [LVR] credit controls came into force.

"However a net 15% of agents say that they are seeing more investors. On average agents report that 19% of their sales are to investors which is the same as a year ago," Alexander said.

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50 Comments

Come-on time to change the rules!

Non residents must build new and contribute to infrastructure.

 

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Absolutely. I wonder if the overseas buyers who just buy an existing property would pass any OIO rules? They certainly aren't adding any value.

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There 8 people in my Auckland office, 2 of them rent from Chinese who don't even live in NZ.

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And that is far more likely to be closer to the general truth than anything else and absolutely must change. 

It might not be them, but there will be others who have to have tops ups and WFF in order to meet their rent payments, and more will be outright on benefits. As far as I am concerned that is foreigners receiving WINZ benefits even while they live overseas, and I am disgusted by it.

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What you didn't quote from the Van Onselen report was

 

Data surrounding foreign investment in real estate is woeful. The data that is publicly available is tardy and opaque. And when a journalist does try and gain more useful statistics on the extent of foreign property buying, they encounter huge roadblocks, with the data treated as if it was some kind of state secret.

 

Sound familiar?

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Iconoclast totally agree .... the reason "Vested Interests" groups do not want to tell you just how many foriegn based entities/buyers are purchasing NZ residential real estate (esp. AKL) is plain and simple .....it would upset the current "market" status quo.......cheap overseas money pricing locals right out of the market.

Were they to tell us the "real" figures,  there would be an uproar from the general public (especially not good in an election year) and momentum would really gain traction to do something about it.....but FAT CHANCE things will change on this front.

 

WHERE'S WOLLY !!??

 

 

 

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Playing devils advocate here Factboy, it seems to me that having the National Party at the helm makes us part of the club. If we weren't part of the club I can't see what makes us better than Cyprus or Greece as an economy. Or even worse other just turned energy importers Egypt and Syria (we import 50% of ours). So in general I agree with your accusation of treason, but is there another side to this?

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Unless of course you are selling. I'm sure a survey of those selling in Auckland to foreign buyers would not quibble over the fact that some unfortunate New Zealander couldn't find an extra 100k to match the overseas investor. 

I totally agree with your comments; however, I now understand why National will win the next election. 

Their policy around home ownership in part helps many of their voters (cashed up +high earners) and themselves (most of whom have several property investments/portfolios).

Secondly, it beggars beyond belief why the rural industry consider them a friend when their policies encourage further foreign ownership....causing further inflation and subsequent interest rate hikes.

 

 

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We are way way past time that we did something about this, and that includes farmland. Come on Labour this is your real chance

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This issue could be a game changer for National .

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Exactly.  Show some balls and if you're going down then go down swinging.

Put it out there as one of Labours key policy issues and let it go to voting day and see what NZers think.  I know who i'd vote in that election.

 

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We need to cut John Key and the Nationals some slack. Make foreign ownership hard and there might be repercusions for the milk industry. Lets face it China can get their powder anywhere and I half suspect the reason they focus so much on little NZ is that they can control us so easy. For the same reason we put up with our polluted rivers and lakes white gold forces us to turn a few blind eyes. Rural NZ is running the country whatever Wellington may think.

What Key needs is a MMP partner holding the balance of power who can be dragged out as the culprit when changes are made to foreign ownership rules. We saw Winston jump on this over the last few days. I look for it to become a distinguishing mark between the parties.

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How about any amount of foreign ownership can be leasehold only. They will pay the same price as purchase for an indefinite lease to the crown. When they relinquish it they get a back value linked to CPI from that original purchase price.

It would stop land banking from offshore.

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What Key needs is a spine

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On what planet would a voluntary survey of agents estimating their perception of anything have greater creedence than anecdotal reports from any other party? You cannot piss in my gumboot and expect me to believe your press release.

Their vested interest and client protective cards are very close to their chest, fudged in every possible misleading way and delivered so late as to be worthless anyway.

Overseas buyers easily circumvent rules by having resident relatives, friends, agents or companies setup for the purpose buy the properties to cloak the source of the funding.

Follow the money, they can do it for blood diamonds, kiddie porn and drugs, why no motivation for this? Simple, imagine the GDP drop and fees lost if this amount of money was to stop flowing between parties. Flash cars, boats, suits and downtown carparks don't pay for themselves do they.

Maybe we could reciprocate by buying some land in China; oh wait, no, why not?

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Add it all together.

Cash coming in to buy houses (and business premises too) not only upsets the local balance and hikes prices but perhaps MORE IMPORTANTLY it causes the NZ$ to remain much higher than it would be an a pure trade basis.

In the case of business real estate what was a reasonable yield of 7% is now often below 5%.

That is a 40% hike in the market prices paid. Someone has to pay. Either they will on-sell lower later or rents will go up. Hence more empty shops on the high street and run down industrial property. These overseas investors are notorious for running down their property. Lack of hands-on shows in suburbia in uncut lawns poor paint and general maintenance.

As I have said here before, if this type of landlord sees a market downturn they will sell up without any concern for the price. Bargains for those who pick up the pieces, maybe, but how soon?. Imagine the NZ$ then as all that cash tries to leave at once.

 

Boom! Boom! Basel

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Can anyone tell me a single benefit of allowing off-shore money to buy existing residential property? Our currency is already at the mercy of speculators. Do we need our homes to be too?

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The ANZACs would turn in their graves if they knew that the country was being "sold out" by the establishment... Shameful.

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The ANZACs would turn in their graves if they knew that the country was being "sold out" by the establishment... Shameful.

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Isolated area I know but about 80% of Epsom Grammer zone sales are going to Asian faces.  Most have links with China where the $ come from. Our kids when their older will live outside these areas and have Asian landlords wherever they live. whats wrong with that? At least John Keys main house Is in GZ so he will sell out to Chinese one day and retire to Hawaii so who cares. Just put up with it, do nothing. Move right along

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It's causing real despair among Kiwis.  I have so many friends, myself and partner included, relatively highly paid professionals who can't buy houses because they're being priced out by foreign money. 

These foreigners aren't just buying houses, they're buying OUR future earning capacity, and they're doing it with cheap QE money.    Its destroying our future and it's not fair.  Who benefits when some foreigner swans in and buys 22 Million worth of property in a day?  I hear Judith Collins is friends with the Chinese guy who bought Hotchin's mansion. 

Crony politicians looking out for themselves or their friends who bought houses in Kohimarama, Mission bay, St Heliers etc. 20 years ago for 6 x an average income.  Oh wait, John key wants to discuss the flag.     

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Thomas Lumley (an actual statistician which puts him in the unusual position in this sort of debate of knowing what he is talking about):

 

The  BNZ-REINZ Residential Market Survey is not an actual measurement, the estimates are averages of round numbers based on the opinion of real-estate agents across the country.  Even if we assume the agents know which buyers are offshore investors as opposed to recent or near-future immigrants (they estimate 41% of the foreign buyers will move here), it’s pretty rough data.

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What a lot of racist xenophobic nonsense.

If a Chinese buyer, purchases a house for a great price, then a hard workinhg Kiwi receves the money, and everybody is happy.

Dont know too many Kiwis who would refuse a good price just because the buyer is a foreigner.

 

 

 

 

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That it is making kiwis tenants in their own land should be of concern to EVERY New Zealander, including you!!

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raegun .... you are yelling into the wind.  Big Daddy, John Key and his cronies will be long gone when the **** really hits the fan..... they all will ensure their children etc are well taken care of with a freehold property each from their portfolio selection, well away from the renters just scraping through life, enslaved to mortgages, from banks who borrow offshore cheaply.  

 

Of course it suits Big Daddy et al to have overseas "cash rich" buyers .... it nicely enhances their existing portfolio's net worth and reduces pesky local buyers, who can't afford to buy and have to rent, creating the tenants required for their cash flow. 

 

There are 2 choices - either the NZ people speak up and stop being shafted by the so called elite OR the situation will only get worse and yes raegun, we will definitely become tenants in our own country.....especially in Auckland.  

 

 

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When you say ‘great price’ you mean a higher price than would have been achieved than if that purchaser was not in the market, so following that logic right along you would be happy for any buyer from anywhere that had obtained their money by any means to sell to any willing seller – as long as ‘everybody is happy (you mean I presume the buyer and seller in that transaction).’

And the definition of a hard working kiwi is not someone who sits there in typicial rentier fashion and adds no value to the transaction other than sitting their willing to sell to anyone who could be using money obtained by any means, and who at the same time by their Nimbyism denies the ability of land to be developed by a more affordable means.

And you’re right, I don’t know many Kiwis that would refuse to sell to a foreigner, at any price, and that by your logic makes something OK, as long as we get a good price for it? 

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You can almost smell the greed coming through the screen.

Make money at any cost as long as you look after number 1.

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I actually think we are getting to the point where NZers aren't part of the cycle- Australians started entering the NZ market in a large way in late 2001 and it some point you must get to the point where those houses being sold are increasing the proportion of offshore -> offshore NZ house sales. The effects that I see of that are it making it increasingly difficult for NZers to enter the market as offshore -> offshore transactions act as a price setter for the market.

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In other words you saying that a seller should refuse the best offer if it is made by a foreigner and take a lower offer from a local instead.

Yeah-right.

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Absolutely and that is why we need to have regulations so that it does not happen.

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I wasn’t the one say it was alright to sell to anyone, you were.

The reality is we have very loose regulations when it comes to selling land to foreigners’, even compared to our cousins across the ditch who we would like to think would not be as caring about such things as we are.

What it shows is that some people like you have an  I’m alrght Jack’ attitude, and use it to justify anything, after all you are not even saying that some restriction should be put in place but ‘as long as everyone is happy’ it’s OK.

Are you really that immoral?

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I

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Its a numbers thing , see below :-

Foreigners borrow at 2% in HK or Shangha, so a $500,000  Auckland house costs them $10k per annmum, or $192 per week in interest

Kiwis buying the same house borrowing from a local bank pay $35,000 per annum or $673 per week .

And with the OCR on an upward path , it can only get worse

Is this fair?

National had better have a clear stratgey to sort this out or they are toast

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However, National == Labour.

 

regards

 

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Individual buyer ..individual seller = being happy is a myopic point of view..... ( even thou it is the market economy at work )

Big Daddy is being very self interested and very short sighted in his view.

In a bigger sense , what makes our Real Estate Mkt work well, and which is very, very attractive to foriegn buyers, is the fact that we have a legal framework that upholds individual property rights as a matter of law.

 

Modern life is the dichotomy of individual vs community...    current generation vs future generation.

I'm guessing that what foriegn investors value very highly, is NZs' legal respect for property rights....   and this is something that we , as a collective community, provide them. ( just imagine how the Chinese feel , ... all land is leasehold and their legal system to uphold property rights is tenuous.?)

So... Big Daddy... stop smelling the money for a little while and ponder NZ as a whole and how current trends might impact our children and our childrens children... 

Even though short term individual greed can be good, at some point it can become offensive and destructive.

( they say individual freedoms are like oxygen....  It is only when they are gone that we truely value them.....and when they are gone its' very hard to get them back )..     not sure if that's the saying, ... from a book about a polish guy who lost his lands and got sent to a Russian Gulag ...  

 

 

 

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So if the stable door is closed but the horse has bolted we need a legal and tax system at a higher order than CGT.

1. It has to stop the speculative buyers both local and overseas

2. It has to make existing speculators pay a penal tax.

3. It has to show that interference in our domestic market is not wanted and will not be tolerated. 

 

Just one comment from the Government of the day would stop the problem in its tracks.

Just one piece of policy from the Opposition could both secure their election in September and also stop the buy up.

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And do you seriously think if Winnie teams up with Key that any of these more radical policies of NZFirst's will get even a momentary look in. It is going to HAVE to be one of the major parties that makes a commitment to sorting this for it to actually happen, I am afraid.

I wouldn't trust Winston Peters as far as I could throw him and I was a real supporter of his for a few elections, back when, until I woke up and realised that while he says a lot of stuff we can all relate to, when push comes to shove, he is only in it for what HE can get out of it

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Ridiculous that people are only now concerned because 1.5% of houses are being sold to Chinese.  What about the Germans, English, Aussies, Americans who don't live here.  We look like a bunch of hick-town villagers.

I'm pretty sure the colonists are benefitting nicely from the sales.  Let's talk about that. Less than 50% owner/occupied doesn't = 1.5% purchasing from China.  Someone (more able) should run the sums - it's embarrasing we're focusing on the immaterial - jeeps - are any of you people in business?!

It's all a decoy by the locals who are snapping up properties, they're laughing at your distraction.

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Gee when did you come in on this subject, if you had been up with the play all along you will know that many of us have been concerned with the foreign (which means anyone who is not a citizen or a born kiwi) buy up of NZ property which includes our farmland, for a number of years. The Chinese are actually Johnnie come latelies in all of this, but it is just that now they are the most obvious.

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 (which means anyone who is not a citizen or a born kiwi)

And permanent residents. Pretty please?

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Look , you cant even apply for a job here without some form of legal resident status , so why on earth are you allowed to buy houses here ?

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Because it suits those in power for it to be so, and I point to another's comment back at the beginning here that asks how many of the people buying up houses here would pass muster if they had to go through the OIO

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My nephew in Auckland who earns well over $100k a year and is saving hard for his first home tells me that he is experiencing a housing market that is slowing down. Auctions are often not working and generally it is taking longer to sell some properties. There will always be the exception where a house sells quick or gets a fantastic price but generally he is feeling better than he was six months or so ago. He has paid off his student loan and is putting money in the bank and into equities. He is affected by the 20% deposit rule though but hopes to get around that as the company he works for is closely associated with one of the majopr banks. Do not believe everything you hear about Auckland. The people conveying it to you probably have self serving motives in their spin.

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Gordon your nephews single income of $100K is well over the medium household income. In a normal housing market he would easily be able to afford a home. The fact it is a little difficult indicates a problem. In times gone past this certainly would not have been an issue. What about the people on medium incomes or the 50% earning less?

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Attended an auction last week (just to observe). Two out of three properties were passed on, no bids at all. These were very desirable properties, but in my opinion not even worth the auctioneers opening offer.

The one property that did sell (wrecker with a bit of land) went to a Chinese couple who sniped it away from a kiwi chap. The Chinese gentleman couldn't pronounce his bid and needed assistance.

My partner and I are similar to your nephew, but we're keeping our money safely away from the property market for now.

 

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I agree Brendon. Something needs to be done to make the housing market easier for people to get into. I would not be unhappy if my house price came down as it would help him and my children also who are just starting off in their careers. Afterall I cannot eat my house so whether it goes up or down in value does not worry me. If it goes up the one I shift to has also gone up. If it goes down the replacement home will have gone down hopefully. He is talking a $100k deposit to get into a $500k property.That is a lot of money to save after tax is taken out. It will be a lot harder if not impossible for those on a lower income and who have children. We need to increase incomes somehow in New Zealand to give people a living wage for a start. Those who went to Australia sometimes with very little capital seem to have bought houses and started getting ahead a lot quicker than if they had stayed in New Zealand. We certainly cannot pay people $10 an hour as Cowboy is suggesting. He might be able to live on that but a family cannot do it and save for a home. If we were all as mean as he is the underclass would be even bigger than it is now. In Perth a Heineken costs A$14. That is why barmen get $30 an hour. Would New Zealanders pay $14 a beer or $10 for a pint of rubbish as good beer costs more than that.  How do we grow our wages without causing inflation?

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I agree Brendon. Something needs to be done to make the housing market easier for people to get into. I would not be unhappy if my house price came down as it would help him and my children also who are just starting off in their careers. Afterall I cannot eat my house so whether it goes up or down in value does not worry me. If it goes up the one I shift to has also gone up. If it goes down the replacement home will have gone down hopefully. He is talking a $100k deposit to get into a $500k property.That is a lot of money to save after tax is taken out. It will be a lot harder if not impossible for those on a lower income and who have children. We need to increase incomes somehow in New Zealand to give people a living wage for a start. Those who went to Australia sometimes with very little capital seem to have bought houses and started getting ahead a lot quicker than if they had stayed in New Zealand. We certainly cannot pay people $10 an hour as Cowboy is suggesting. He might be able to live on that but a family cannot do it and save for a home. If we were all as mean as he is the underclass would be even bigger than it is now. In Perth a Heineken costs A$14. That is why barmen get $30 an hour. Would New Zealanders pay $14 a beer or $10 for a pint of rubbish as good beer costs more than that.  How do we grow our wages without causing inflation?

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Lots of good points Gordon. You are right for those that own only one home which they live in what does it matter if it goes up or down in value?

 

I think many home owners like yourself would see the wider benefits for society if house prices went down for a while.

 

I don't think there is a magic cure for NZ. Whatever we do will take time and hard work.

 

If we can eliminate some of the supply constraints, monopolies and cartels that the average worker faces in their day to day lives this in effect would give them an income rise.

 

I have a friend whose rent for his family has increased from $280 to $450 in only a few years. That is like a 10% tax increase. Imagine how much better off his family would be if that didn't happen.

 

It is hard to prove but my suspicion is that renters spend more of the income locally than landlords so I think this would be better off for NZ as a whole. But even if that is not the case it is better for NZ for families to have a stable home whether that is renting or owning. That doesn't seem like the case currently. 

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i have a solution.. since my children are unlikely to get any chance of survival in NZ through "normal" means. I am going to teach them how to use weapons and how to fight.

Then they at leastwill  be able to "have a shot" at the problem.

Perhaps best they start with the government. About time we had a revolutiuon.

hmm thats should do it. haha my sons have taken great interest already... hahaha.

 

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nah. guns are cheapo and way more fun. hahaha

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