New official Reserve Bank figures definitively show that investors accounted for nearly 46% of all mortgage monies advanced in Auckland last month

By David Hargreaves

Well, it is finally, officially, official; investors really are buying up a storm in the Auckland housing market.

And despite talk about residential investment taking off in other parts of the country as well, new figures indicate that investors are possibly less prevalent in the rest of New Zealand than might have been thought. It seems for the investor, Auckland is really the only game in town.

The Reserve Bank has for the first time unveiled official figures that break out the Auckland market from the rest of the country's mortgage lending figures. The figures confirm what some previous research and anecdotal evidence has pointed to. Investors are huge in the Auckland market.

The figures show that in April, investors committed to $1.623 billion of the $3.536 billion worth of mortgages advanced in Auckland. That's just a tick under 46% of the total.

This is a considerably higher proportion of investors than can be seen elsewhere in the country.

Despite the anecdotal talk of a lot of Auckland investors now looking elsewhere for bricks and mortar to buy, the ratio of investors in the rest of the country is running at only around 22%-26% month-by month.

The new figures are now being collected by the RBNZ from the country's banks to help monitor the progress of the 30% deposit restrictions placed on Auckland investors from last November.

And the figures clearly demonstrate what has been apparent from recent housing sales data - the restrictions have not dampened Auckland investor activity at all.

The RBNZ basically had to concede as much and has now retreated back to its drawing board, with strong suggestions that debt-to-income ratios are likely to be applied, though not imminently.

The new RBNZ figures go back as far only as November, the month the new LVR rules came in.

According to the figures, in November 2015, investors accounted for 42.6% of the mortgage money advanced in Auckland. This then climbed to 43.1% in December and to 44.8% in January, before easing back slightly to 43.3% in February.

However, in March the proportion climbed slightly again to 43.7%.

Then last month it jumped to 45.9% - the highest percentage since the RBNZ started gathering the information.

There are some exemptions available from the 30% deposit rule, including for new builds and for restorative work, such as on leaky homes. Banks have a 5% 'speed limit' to work to, which enable them to do some lending to people with less than 30% equity in circumstances such as providing assistance to borrowers in hardship. 

The April figures show that of the $1.623 billion advanced to investors, $1.345 billion was to investors with a 30% or more deposit, $275 million was in the exempt category and just $3 million was officially outside the 30% deposit cap. This means that whereas the banks can theoretically advance up to 5% of new lending on mortgages to people with deposits less than 30%, just 0.2% was in that category last month - which is in fact the lowest percentage in any month since the new rules came in.

This demonstrates that the investors are seemingly having no difficulty at all finding the extra equity to get mortgages.

The new figures also demonstrate how dominant the Auckland housing market is on the overall New Zealand figures.

In April the $3.536 billion of Auckland mortgages made up 54.4% of the $6.504 billion worth of total new commitments in the whole of the country.

As far as the proportions of investors in the rest of New Zealand, in April the total amount advanced to them was $763 million, which was 25.7% of the $2.968 billion in new mortgage commitments made outside of Auckland.

The non-Auckland investor ratios were worked out by using the Reserve Banks's national lending by borrower type statistics, and by subtracting the Auckland investor totals from the New Zealand investor totals shown in those charts.

These calculations do show that the percentage of properties being bought by investors outside of Auckland has risen somewhat since last November. At that time the percentage was 22.7%, rising to 23.1% in December, falling again to 21.7% in January, then climbing quite steeply in February to 25.9%, edging up to 26.1% in March, then easing slightly to 25.7% in April.

The non-Auckland investor figures, however, remain positively dwarfed by those in Auckland.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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123 Comments

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Wow, cause ironically that figure is almost mirrored in the latest poll that had National at 45.4%.. Must be a coincidence

Lets just get one thing straight here , and call a spade a spade .........these are NOT "investors" as the headline describes them , they are pure 100% speculators.

I don't know what effect immigration - driven demand for housing is having , but I would not be speculating in this overheated market

New official Reserve Bank figures definitively show that investors accounted for nearly 46% of all mortgage monies advanced in Auckland last month

So what? Is that a bad thing?

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Credit fuelled speculative bubbles are a bad thing.

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yes as it will cost us more and more over time. 1.2 billion per year and rising, its time landlords paid there share instead of sucking of the teat of the government.
Rt Hon JOHN KEY: , $2.4 billion on Working for Families, $1.2 billion on the accommodation supplement, $800 million on income-related rents,
Hon BILL ENGLISH: It is important to understand that any initiatives come on top of $2 billion that was spent this financial year—over $2 billion—to support 300,000 people on the accommodation supplement and 60,000 households on income-related rent.

Well sharetrader I suggest you work out who is getting what and squandering the tax payers money. There are 200,000 households getting a share of the accommodation supplement. That is $6000 each. However there are only 50,000 HNZ tenants sharing the $800,000 on Income related rent subsidies. That is $16000 each or $307 per week. (It appears that the balance of the HNZ tenants do not get that subsidy because they earn too much) Do not forget that the subsidy is based on registered valuers reports to HNZ so the Auckland properties might actually be getting perhaps $500 per week subsidy and the rest of the country much less. The tenants pay something also. This is usually about $80 to $100 per week so HNZ is probably getting an average rent of $600 pw on their Auckland properties. There are 4500 rentals advertised on Trademe in Auckland. Most them are well below $600 pw. Don't forget that HNZ does not pay tax. We could all have a tax break if HNZ closed down and the private market took the money.

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what BS the 1.2 bil is paid for Private rentals not HNZ
the 800 mil is HNZ which a portion is also paid to private landlords who have leased to HNZ.
and lets not even count the tax not paid each year through neg gearing.
how many houses could be built each year with the same money and sold to FHB whilst also providing employment and apprenticeships
wont ever happen, why? because so many MP's are at he trough, check the register and see how many from all parties own rental houses

Its owners of capital that are the beneficiaries or middle class welfare, sucking at the tax payer’s teat. It’s not renters, or employees for that matter. Accommodation supplements lets property investors that don’t pay any tax get away with charging too much in rent. Further, working for families lets companies that don’t pay enough tax get away with not paying enough in wages. Its wealth transfer plain and simple, PAYEr’s -> “beneficiary” -> owners of capital.

100% agree with your comments. There are hundreds of thousands of people who CHOOSE to rent for whatever reason. If it were not for the private landlord, it would be up to the Government to supply rental property, at a cost of billions per year...and yes, we all as a tax payer would have to pay for it.

Well said property king

No doubt there's a roll for property investors to provide rental housing. When that extra demand translates into massive house prices rises, pricing out people who would prefer to own, I think the costs of investor activity are outweighing the benefits.

I believe the choice between renting or living in a car

100% agree with your comments. There are hundreds of thousands of people who CHOOSE to rent for whatever reason. If it were not for the private landlord, it would be up to the Government to supply rental property, at a cost of billions per year...and yes, we all as a tax payer would have to pay for it.

I would rather buy than rent if the market was realistic. Many are in the same position.

In order to buy somewhere reasonable for my family, I will leave Auckland which is a bad outcome for the country as I can add more value here.

Several years ago a certain Bernard Hickey was very vocal about the amount of losses claimed / tax not paid by property investors. Then he went quiet. With the removal of depreciation deductions and the fall in interest rates it would be interesting to see what that number is now.

Hello Bernard...are you there ?

It's time share market participants paid capital gain on their profits, some earned 50 x their money on Xero. What a rort! Other than a new share issue or IPO, similar to building a new house, trading shares adds nothing to the economy.

Share investors pay tax on capital gains in the same way as property investors. Same grey, blurred lines between selling to realise a gain and selling because of a change of circumstances. And of course, capital raisings and IPOs are a small part of the market, but without the support of a health share market neither can happen. If the market isn't liquid, it is less desirable and demands a higher cost on companies wanting to expand.

Remember that it's businesses investing for growth that actually drives an increasing standard of living for the country, something that a property investor is not participating in. Do you think New Zealand's poor productivity growth and the favouring of property over shares for investing might be correlated?

Also worth noting that you can't negatively gear your share investments for tax advantages as you can with property - Another huge bias that needs correcting.

mfd is correct, NZ and some AU share trading is covered by CGT in the same way as property. Overseas share holding are subject to FIF which is a tax on capital (similar to a land tax as is charged on a % of value, not the income generated)

Agree, but my sarcastic point is that why the call for a CGT on long term property investors and not for long term share market investors? They make little difference to the economy! Yes there is an accommodation supplement that costs the country money, but it is perhaps 2% of what it would cost for providing the entire country’s rental property pool. There is no argument here as not only would the state have to buy/develop property, but they would have to employ an army of people to manage it all. All on the tax payer.

Because virtually no-one is calling for the price of shares to be brought under control. People don't have the same emotional desire to own shares as they do for property, and no-one needs a share portfolio to keep them warm at night, while everyone needs a house. There's definitely an argument for shares to have the same treatment as property, I'd have no problem with both having a capital gains tax introduced.

I'm not sure I follow the rest of your argument, the country is already paying for an army of people to manage rental properties, it's just that they're private rather than publicly employed. The country is already paying vast amounts of rent, just mostly privately rather than to the state. Why would it be so much worse if housing was run by the state? Purely because you think the bureaucracy would increase, or because they would charge more reasonable rents than private landlords?

Partly agree with your argument, though to say that it would be cheaper for the State to own and provide rental property is completely off the mark. Any property management private business will pay tax back to the State on any profits. Bureaucracy would certainly increase costs, look at the way they manage local housing at present, it is a joke! If they charged cheap rent who would have to pay it? The tax payer of course. With the current system they don’t have to outlay billions of dollars to buy/develop property, the powers that be including the Labour party know this. Also, if locally run social housing is so cheap then why are most of their rents fairly comparable to other rental prices around town?

To be honest, I don't know enough about state housing in this country to say for sure. I just generally have a problem with the argument that a service which can be profitably provided by the private sector (clearly very profitable given this article) would necessarily be a disaster if the Government were running it. I see it quite often with healthcare, people complain about the amount the government/tax payer spends on health and argues for it to be privatised. Well, that cost still exists, you would just pay via insurance rather than via taxes, with the added requirement for all providers to make a profit to pay shareholders.

I can see the problems with the government getting too involved in housing though, it must be a difficult balance between charging enough rent to cover costs while still needing to provide housing people can actually afford. The private sector has the advantage of not having to consider morality. On the other hand, if more properties are needed, surely the most efficient way for the country to build them would be by government borrowing, as they can command the lowest borrowing costs?

I think a tax (tax on capital or capital gains tax) should be applied equally to all capital investments to level the playing field.

Other reasons are Investors will go out and borrow against that capital gain, that is a form of realising that value gain and should be taxed, and then they charge a rent based on a return they expect from their capital, another form of realising that growth in value. People holding shares gain no benefit from a change in share price until they sell it, and all returns such as dividends are taxed at source, unlike rents. Perhaps we should change the law that makes all renters declare to the IRD all rent that is paid to enable tax to be paid on it before the LL gets to hide it?

OnwardsUpwards ....it would be all fine if it wasn't TAXPAYER FUNDED !

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So make these speculators stump up cash deposits instead of questionable "equity". It's done in plenty of places overseas.

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Can't wait for the wheels to fall off - which we all know is inevitable. All involved need a swift wake up call. This is getting beyond rediculous.

Believe me you don't want the wheels to fall off.......have you thought about the consequences of large numbers of mortgages going underwater?......the investor can walk away and many home owners will also declare bankruptcy.......and the can will be carried by depositors if there is an OBR event and the RBNZ takes over the bank/s.......anyone wishing the wheels to fall off would have to be a narcissist.

Apart from building more houses and faster what should be happening is a reduction in WFF and accommodation supplements as these are pushing prices higher......huge regulation is also having a massive input into the prices of houses..............it is not investors pushing prices higher so much as they are just part of the market that has been created by Politicians and bureaucrats.........all markets eventually suffer when there the proportion of political and bureaucratic interference hits thresholds that the SME's cannot afford to pay this is the reason we get bubbles and recessions.

Prices to income are way out of kilter......and this will probably continue until the supply side is rectified and the subsidies on housing removed (and there is a complete lack of willingness to correct these issues......in fact I would go as far to say the bureaucrats are sabotaging the politicians attempts) What may well happen in NZ or in particular Auckland is that the supply side improves over say the next 10 to 12 years or so and if this corresponds with investors needing to sell their investments for retirement purposes then many of those investors will find themselves in a different market to when they originally invested so they won't get the retirement they'd perhaps hoped for.....one thing that offsets this of course is immigration........but if you have too higher numbers of immigrants coming into the country then you have pressures on all infrastructure so those investors could well find themselves in a completely different cycle to what they originally invested in and that cycle will have different cost structures to now...........

In the short term however we have other issues that could put pressures on the NZ economy and that is our ability to generate taxable income at the business end of things........the lower interest rates are assisting businesses through lower debt servicing costs which Politicians assume leads to more taxable income and less tax deductible interest expenses however very few Politicians in NZ have ever run a SME in NZ (which is where 90% to 95% of taxes are generated) and the bureaucracy has no damn idea so are incapable of provisioning good advice. Any taxable income that was to be generated from the lower interest rates has gone into higher regulatory costs across the board......so the bureaucrats have actually beaten Bill E to the dosh......this is an unsustainable economic situation and one that should be watched very closely. When SME's finds they are paying more to the regulators than it is in taxes then we have trouble in Rome!!!!

One has to ask the obvious question of how many bureaucrats and public servants are invested in housing or land other than the house they live in???

I understand what you're saying, but I would also love the see the wheels fall off. OBR event, great. Mortgagee sales, great. "Investors" or "speculators" out on their ass, bankrupt....great. This is the attitude that is borne out of this environment. I, and many others, feel they have been screwed out of affordable housing. It's always nice to see the tables turned. I still look for a property to live in with my family, in a city (not auckland) where prices have jumped around 20% yoy for the last few years now. No signs of slowing. But wages do not match prices. Now, barely anything below 500k even comes close.

I can fully understand your frustration at feeling priced out of the market....prices in Auckland are going up faster than what the majority of average working people can save..........there are not many avenues open for people and I know this is a systems problem.......

The only thing I can suggest is a rally...but it is not enough to merely protest/complain about house prices or even your own personal position.....there are too many people making calls for reforms that won't actually work.......you can't have the plethora of bureaucrats, planners and regulators and it would be remiss of me to not include our taxation system and not have prices artificially changed.........the core issues have to be dealt with!!

In the meantime you could buy a section and build your own house and claim your rights under the 1688 Bill of Rights as that would make all legislation passed in NZ which hasn't gone through a second house as being invalid and it is also your ancient right to have your own roof over your head!!!

I was young and in business in the 1980's and I never want to see NZ go back through that type of period ever again and I can't stress this enough...........

Ok just cutting through all the bull - Non-Auckland Investors 26% (approx). And yes it's not surprising that Kiwi investors largely from Auckland have been buying up in the provinces, since it's not a financial advantage to buy in Auckland due to insane house prices and very low yield. And yes interest rates / saving rates are likely to hit the floor hence the mad rush for property.

Guess where else is also suffering for Investor over spend, that's harming their economy and pushing out their citizens? Yes that's right Vancouver! Here's a nice hot off the press BBC article for you titled: Vancouver's 'freak show' property market.
http://www.bbc.com/news/business-36369108

We can all crash together! Won't that be fun! :)

....is the crash coming? Im not so sure, purely and simply because there are endless Chinese who want to buy land but are not allowed to in their own country. Add to that their territorial ambitions in the Pacific and I fear that letting their own citizens buy us up without a wimper is a pretty good strategy. I hope I am wrong.

These the same Chinese who twice in the last decade couldn't buy enough shares, but who quickly decided they couldn't sell enough shares? They can spot a bubble...

Unless you're blind, these Chinese investors will sell in droves the moment the music stops. And it will be the NZ Mum and Dad investors left without a chair.

and the chinese bond market they crashed, and the iron ore futures they crashed.
they go from one good scheme to another all pile in and when it starts to turn they all run for the door at the same time.
without trying to be racist, chinese investing is more akin to gambling things rise for no other logical reason than heaps of buyers then drop like a stone when they become sellers.
they tend to ignore fundimentals and instead rely on people power when choosing what to buy and sell

...im kinda hoping that because Im getting daily grief about being a non risk taker with my shares and because I'm not into rentals!!

just be thankful they are not interested in the NZX or ASX

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Could you please refer to these people by their financially accurate term - speculators?

It brings a bad name to legitimate investors.

Whats the difference?

Half the money does not mean half the properties, most investors are buying off equity hence putting nothing down, so there for FHB's or primary home owners are borrowing less as need 20% and I would also hazard a guess that investors are buying properties above the average median price, so my estimation is investors are not buying 46% of the property but closer to a third / 33.3% of actual number of homes

Why then kw are the poorest areas of Auckland then being hoovered up by specvestors. 80% in Otara etc.
I would hazard a guess that they are buying up the top, the middle and the bottom, whatever they think will earn them some easy capital gain.
The rules need to change to stop this madness.

Possibly and even so the fact they are 100% equity infers that they are buying less than 20% of the value of loans hence less properties, remember the term investor is also someone that is buying their 1st second property, hardly Donald Trump, but certainly despicable behaviour by most commentary on this website

This is fantastic! These morons spent large on stocks in 87; got sucked into the dot-com boom of the 90s; failed their way through retirement savings in the 2000s; and now the coup d'etat with Auckland property and capital gains - we've been patiently waiting for 2 years shunted around rentals in Auckland with a sizable deposit waiting for the madness to end. This is the proof in the pudding. Happy days.

Yup, the only morons are those people that listened to BH and SE and rented instead of buying four years ago, thank me lucky stars I did not listen to that self indulgent precious tall poppy drivel

Couldn't afford then and can't afford now. But then, we do all our calculations over the long term with the historical average interest rate of 8%. Won't be long before it's up there again. Maybe another 4 years... anything less than 15 years is a short game and cash flow is always king.

I dont think you'll see 8% for a long while. The pain threshold is much lower now than it used to be.

Based on what data Kermit? Or is is just a gut feel like all the other speculators? 100 years of historical interest data tells me they'll be up again.

Try reading Picketty - he goes back further than 100 years using data from the UK and France and thinks that a low interest rate/low growth environment is more normal than the high interest rate/high growth environment of the post-war years in those countries. This could be the new normal... Then again it might not be...

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Pickety looks like an outlier and radical who has more critics than theories.

My own theory is that the West is undergoing an economic rebirth and the old systems are crumbling away. Almost none of the policies implemented since the GFC are sustainable, and we've done absolutely nothing to curb the habits of the corporates that got us here in the first place. In fact we've encouraged them by bailing them out! At the moment we're seeing a massive redistribution of cash as a huge wave of Chinese who made good on the back of manufacturing in the last 25 years move to greener pasture and bring their wealth, habits and suspicion of govt with them. This makes for a strange landscape as through their risk adversity a lot of their wealth has been poured into the relatively safe asset class of property. But remember a lot of them aren't that savvy when it comes to investment. Just a generation ago a lot of them were uneducated farmers. And because of the scale, and the flow on effect of the local speculating frenzy this has caused all the eggs (wealth) to now be in a single basket (property). And because this is a global issue any one of many things could happen to trip up the basket carrier. Trump, Chinese stock market collapse, European unrest, Australian mining collapse, Worldwide Dairy collapse. But these things tend to start slow, and then like a train build up a head of steam and become unstoppable when the market loses confidence.

Any country who's invested heavily in tech and can automate their way out of it is going to be well placed. Google has just rolled out it's first driverless taxis. A.I. is currently at a level where it can drive cars, design websites, vacuum houses and mow lawns. Don't be surprised to see A.I. medical procedures, legal aid, butchery, baking and candle stick making within the next 3 - 7 years. Not to mention printed houses at a cost of under $50k. Those sort of market forces have never been on our social spectrum before and they're going to change everything. Certainly more entertaining to watch than The Bachelor!

Ezy, it's good to read your educated comment amongst all the self-centred rubbish that's posted. Still, you don't get a single "like" which shows that most readers/commentators have very little knowledge.

I think it is because of the wall of text. No paragraphs makes it hard to read. I don't even attempt to, makes me dizzy.

Back to The Bachelor right ZS? Usual broadcast resumed.

Just a simple 'thanks for the feedback' would have been sufficient. What's wrong with people on this site, are they not interested in improving their communication skills?

If you want to improve your communication skills I can suggest toast masters...

.

yes i do agree there will be (and is) a redistribution of wealth so to the many lefties on this website, listen and learn from your man Ezy, instead of whining about how JK has stuffed up your life, take some affirmative action and get ahead, food chain, survival of the fittest etc etc

Sorry ezy, there will be no econonic rebirth, even with driverless taxis and other tech. As long as New Zealand isowned by elsewhere you will be kept as now like slaves. Tossed a few crumbs and made to be more busy each year.

Sorry ezy, there will be no econonic rebirth, even with driverless taxis and other tech. As long as New Zealand isowned by elsewhere you will be kept as now like slaves. Tossed a few crumbs and made to be more busy each year.

I fully agree. Wont see 8% for a long time yet.

Life is too short ezy. Get the hell out of Auckland if you can man. It's total madness everywhere too but I think for the sake of your mental health...

Qualified 30 somethings are leaving in droves. You can see the flow on effects in skills and talent shortages appearing as the listings rise on Seek (11600 currently) and TMJobs. While $10 Tauranga has 600 jobs. Meanwhile for any rentals above $700 per week you can pretty much take your pick of the market. And you'll be saving about the same amount in interest only by renting rather than buying the same property. Auckland's still a good place to be if you're in the top 25% of income earners - no reason for us to leave just yet. We'll just keep adding to our deposit, and when the train wreck happens be in an extremely strong position along with any others who can be patient. Our only challenge really is making sure our assets are spread out well enough so that they retain their value in the face of idiotic policies like negative interest rates and quantitate easing.

Well I hope your hiding that deposit well cause if they employ the OBR Ezy then they will steal it to save the bank. No accountability now for corporate theft in the "too big to fail" world they have created.

That's scary stuff - hadn't heard about the OBR. That's going to give decentralised crypto-currencies like bitcoin some serious legs if enacted.

If they enacted it, it will effect everyone and everything. They know the very next day will be a run on all the banks and NZ will become Greece of the South Pacific overnight. Chances? 50/50 by 2018

I keep mine in shares - no OBR risk there

How you work that out? If the OBR was employed it will effect NZ shares and maybe one or two abroad as news gets out NZ is heading the same way as Greece.

Property would be affected too. Bank accounts would be frozen. At least I could get money out of I needed it.

I'm not referring to property. I'm asking in regard to your share values which are speculative in value.

Well I hope you're hiding that deposit well cause if they employ the OBR Ezy then they will steal it to save the bank. No accountability now for corporate theft in the "too big to fail" world they have created.

Stamp Duty 10% when investors buy existing housing stock. Zero stamp duty on new builds.

Three huge benefits
1. Stamp duty tax can help pay for the infrastructure auckland so badly needs.

2. Will encourage new supply

3. Takes investors out of the market for existing homes thus giving first home buyers less competion and take the steam out of the house price growth. Probably lead to falls in prices.

Stamp duty all investors. So local investors, foreign based investors, local based foreign investors such as students and temp workers (35% of market lol)

Time for action.#stampduty

"Then last month it jumped to 45.9% - the highest percentage since the RBNZ started gathering the information.

46% of mortgages. Guess this exludes cash buying investors or buyers using foreign based loans. Probably safe to assume investors are over 50% of the market. Wow !!! It is becoming clear that it is not a supply problem its a demand problem. INVESTOR DEMAND

None of this will happen without either a crash or a change of government

I'm definitely voting National now.

Yeah right! I doubt you are even a resident so good luck with that. Otherwise you would of said " I'm voting national....again". Either way the difference to me is mute

....would have said....or maybe would 'ave said but not would of said. Is the difference mute or moot? I will not support your revolution if it means the murder of our beloved language!
Actually, I voted NZF & Act last time however my confidence in the present government is being restored. They must be doing something right if most of the commentators here are against them.

sure ya did. You keep living the fantasy man.

I live in Epsom so Act for MP was logical in the sense that you feel your vote actually made a difference. I knew National was going to win so my party vote went to NZF to keep them from getting too cocky. Is that so hard to believe?

Same for me as I live in Glammuera :-P

I blame it all on the board game Monopoly. Real Estate was hugely over represented as the best investment while utilities were kind of rubbish. If you wanted to be a winner you bought the best and most expensive houses.
It is very unfair to immerse children in this culture from an early age and then later calling them parasites for practicing what they were taught. When we played it we changed the banking rules so that you could borrow more money. How were we to know how dangerous this precedent would turn out? Maybe a lesson there about sticking to the rules.
Somebody needs to come up with a fairer more humane game and relegate Monopoly to the dustbin of history.

But that's the point Zac. Monopoly was created by a Georgist in order to clearly demonstrate the perils to society of land speculation. Henry George held that the benefit to a property owner came partly from his own endeavours from the improvements he made (ie the buildings) and partly from the efforts of the rest of society which pushed up the land price. This is the argument for society, through local or central government, taxing that land price gain away. It's one of the reasons Texas housing is more affordable I believe. This is the secret behind successful land speculators, why location is so important.

Fred Harrison has written extensively about this.

Monopoly should come with a parental guidance warning.
What does Texas do with all that land tax? I recall long ago visiting Los Angeles and my elderly hosts were very worried about retaining their house as the land tax was so high. Some places in the US seem like huge Cornwall Park Trusts where your house is practically leasehold. I don't think Kiwis would be too keen on that coming here.

Go ahead Zac, get busy, work hard, invest all your money and invent that game, patent it, manufacture it, market it, try selling it, talk is cheap

Nah, can't be bothered as board games aren't my thing. I was being slightly facetious with my comment about the dustbin - Monopoly is a classic and an important part of our heritage.

Meridian Energy has increased in price 75% since IPO and still has a yield of over 5% after tax. Seems the utilities are a better investment.

The difference is that you normally buy shares with cash and not borrowings. So that 75% of a small sum is nothing compared to the 10% of capital gain on your multi-million dollar property portfolio that is leveraged to the max.

You can leverage 20x into shares if you want but over leverage is bad in all things including property

Just sold a house in Tauranga privately. Definitely more than half the lookers wee investors of which the buyer was one.

Stamp duty will not change the shape of the market. Think tax on cigarettes = not stop people smoking = only lining the tax collector's pockets ...

smoking rates have dropped as taxes have risen. correlation is not causation, but you'd have a hard time proving your claim the tax doesn't stop people smoking.

home ownership is circa 50% in Auckland. That means that every second property is owned by the investor!
So, if on your street you own the house your neighbour on the left, and neighbour on the right are living in investments.... on average of course. this is sad...

paula bennet this morning talked about the accommodation supplement rising another 400 million over the next four years. that is money sucked out of the productive economy with a big piece of it flowing offshore in interest payment.
the cost will rise due to more renters and less FHB

So you are saying that investors buying 46% of house is too low?

If investors own 50% of houses they should be 50% of sales and 50% of mortgages right?

I agree.

Given your name, you should perhaps give this more thought. Proportion of buyers in one month who are investors is only one small component of how many houses are currently owned by investors. If I bought 80% of all houses next month, that wouldn't mean I own 80% of all houses. If all investors decided to swap houses with each other next month, they could make up virtually all house transactions without making a difference to how many houses are owned by investors.

If half of all houses are rentals then we could expect half of all sales each month to be rentals.

It's not a complicated concept. I'm not sure what's confusing you?

Only if all sales are new builds, or if half of those selling existing houses were investors. If I purchase 1% of all houses sold each month and never sold, eventually I'd own a lot more than 1% of all houses. You're confusing a flow and a quantity.

I've been to 3 auctions in the last couple of months, tagging along with mates. 2 two bed brick and tiles, and a 3 bed do up, out west and on the shore. The auction rooms were full of young couples, and a couple of middle agers. take a guess who the property's went to. I'm not typically the emotional type, but it was genuinely heart breaking.

"Investors"

Never has that term been applied so loosely.

Very misleading headline ...... should read "Auckland's rampant housing speculators "

So property investment is an addictive drug? You are correct that investors will still dive into the market.. but they will think twice and the percentage will drop, which will give owner occupiers a chance. Paying 100k upfront on a 1m house (which you cant borrow and must be paid in cash) would probably put off an investor a little more than a $2 price rise on a pack of cigs puts off a smoker. Dont get me wrong though.. a stamp duty wont happen

Why doesn't the RBNZ bring in a similar scheme to the UK with Buy To Let mortgages. This puts investors under a much more stringent set of rules. I lived in the UK for 3 years and was interested to buy an investment property in London but was refused because I didn't own the property I was living in. Annoyed me at the time but it makes a lot of sense. Buy To Let mortgages are also more expensive i.e. a risk premium is added to the base rate. This would effectively act as a tax on NZ investment properties that could be used to speed up the increase in housing stock.

Cause they don't care mate. They are only focused on the banks. That's their mandate no matter what destruction their policy and regs brings in the real world outside the banking bubble. Forget them, they picked a side decades ago. Focus on the politicians and making their lives hell from now on

83 Vodanovich Rd, Te Atatu South. I was in that onsite auction 6 months ago with more than 50+ people, most people were FHB but out bid to an Asian investor sold at 850+K for this ugly 3 bd room house. Now it is put on the market and list on Trademe again, I wonder how much it is going to sell?

1. Stamp duty hasn't worked anywhere else why would it work here?
2. Capital gains tax hasn't worked anywhere else why will it work here?
3. Australian style differential treatment new build vs existing has achieved nothing
It still comes down to supply and demand. We can supply more houses in Auckland but does it make sense to promptly fill them with new immigrants?
Demand comes from FHB, new immigrants, domestic investors/speculators and overseas investors/speculators.
Cut the new immigrants down, we don't actually need tens of thousands of unskilled new workers crowding into Auckland.
Tax the domestic investors under existing tax laws (buying on negative yield surely demonstrates intent of capital gain) or perhaps change tax laws to annual revaluation of property stock and tax the gain/loss just like herd scheme for farmers.
Lock down rules somehow to stop overseas investors/speculators. Remembering that many of them take a much longer term view of investments and don't require immediate return.

1) actually it depends on whether you see things in black and white or shades of grey. So the Q is how much effect has stamp duty had? not has it stopped the problem. Or maybe the profits are so big the duty simply isnt big enough.
2) See 1)
Supply and demand depends on is there real demand? ie what is the need for more houses if the significant speculative % of buyers dump their gambles and leave the market?
3) In terms of immigrants the criteria seems quite strict ie not much sign its unskilled workers at all but workers with good quals and experience.
4) In terms of land bankers from overseas, because we dont have a CGT they can sit on the land and make a tax free killing in the future, meanwhile they probably book costs such as rates as tax losses so in effect pay little, yet you dont seem to like a CGT?.

Don't you think increases in stamp duty have had a positive effect in cooling the HK and Singapore property markets?

C'mon lets get cracking ...at least in Aussie they are talking about it !!

http://www.smh.com.au/video/video-news/video-national-news/election-2016...

So let's assume we can somehow force investors to sell a lot of houses so that investors in Auckland own the national average of about 25% of houses.
1) Who will buy these houses ?
2) What will happen with the tenants living in them?

If prices become affordable, then
1) the tenants
2) see 1)

(of course there'll be a bit of shuffling around and some tenants forced to move, but that happens already. I've been kicked out of two homes in two years due to the house being sold)

But prices are not "affordable" why would prices all of a sudden drop in value ? Are you suggesting landlords sell at big losses and default on their mortgages ? Also a lot of tenants don't want the responsibility of owning a house and are happy renting

Why did prices all of a sudden rise in value? What goes up can also come down. I think my flippant reply matched your straw-man argument, no-one is suggesting forced sales at any price, just the introduction of some additional costs/signals to reduce the amount of money flowing into unproductive investments which are hurting the country. As prices in Auckland have become so dislocated from the rest of the country and local wages, it wouldn't be hugely surprising to see some price falls as a result.

if investors are using equity in another property to make the 30% deposit on the next then that money should be taxed as it is income and has been realised.

thats an interesting point, especially if the house used was brought less than 2 years so falls inside the bright line test.
would IRD even know how to find out

The reason is that equity $$$ is not punched into an account as new $$$ by the bank on application. So IRD don't actually see what aint there. It's not made real. Equity can and is quite often based entirely on speculation of value/wealth

Invisible money. And they have let that slide since the very beginning starting as far back as 2001

It could also be applied to a 'family home' .... . after sale, to buy the next

Well making big money has always been about taking big risks and housing is now the vehicle for making big money. Really I cannot blame speculators or investors or whatever you want to call them, if they want to take the risk then so be it. No point complaining, either get on the property ladder or keep renting but quit whining. Cannot afford it ? get a better job. Yes its sad prices have gone through the roof but thats the reality of the situation and I don't see it changing anytime soon. We all want to drive a Ferrari but can only afford a Ford, thats the way it is in life.Those that want a crash are simply not thinking of the repercussions. I was made redundant in 1987 and I didn't even know what the stock market was at the time. If it crashes its going to hurt everyone. Be careful what you wish for.

No one wants a crash for exactly the reasons you mention.

These "investors", through their credit binge, are putting the financial stability of the economy in jeopardy to everyone's detriment.

A price correction would be good for tempering this hysteria and saving us rational souls from the effects of a meltdown. I just hope those that are taking the risks don't try to socialise their losses.

The Greed of it all, nash nash dribble...

Praying for a Black Swan.

Wish people would stop bagging the Chinese we import their wealth to pay for people that have 8 kids so more dpb $. Also we have an ageing population that requires more funds as people claim the pension. Don't hear much bitching and moaning about the poor people that milk the system. NZ historically not a wealthy country and our expense are rising. So if we want to maintain a decent quality of life we don't need sh.tloads more refugees otherwise we will soon become like the country they come from.

yep, Mr. Asia gives $1-2 million to a kiwi home owner, happy days and now this guy can retire to bay of islands with a boat and a pension....we should be thanking Mr Asia.

The biggest group of beneficiaries are in fact the over 65 year olds on Super, by several biilions, but don't let a small statistical fact get in the way of your beat up of the "undeserving" solo mums and other dead beats who have had the gall to have one too many kids, or experience a shitty "life event" or two to rain on your parade.

I'm sorry, so am I to now to apologize for being a man, a family man. so if I hear this right, when my daughter and grand child is left by her husband to marry a another man, should I be ringing up the government to bail her out...OK....good to know and keep it in mind....daddy........

Smoking rates have definitely dropped . In eastern Europe where taxes are low people still chain smoke like it's the 1980s. Tax definitely cuts demand. Foolish to think otherwise.... 1% may not work5 % may not 110% may 15% may ... eventually it works . Get the picture ....

Stamp duty does work. Like the other person said when an investor buys a 1m dollar home and has to pay 100k tax of course he will have to think twice
No doubt that would stop many investors in their tracks. Imagine FHBs not having to compete with investors. Wouldn't that be great.

Only an idiot would not think that 10% stamp duty wouldn't decrease investor demand. Lol

I am also an advocate of Stamp Duty

The one drawback is every migrant arriving in NZ who then buys a residence is a FHB

And at the same time the Bank CEO's would continue to get paid multi-million dollar pay packets right for the great job they're doing?