Are there any numbers from areas with expensive housing that detail foreign investment as a % of total housing purchases? Would be an illuminating stat.
They have a graph in the article that showed foreign ownership (not necessary as investment) that showed it at around 3% for NZ over all, with between 5-10% in popular places (Queenstown and Auckland)
According to the Case-Shiller U.S. Home Price Index, house prices are almost 2x as high as Jan 2000. Is that not a significant increase to you (inflation was 1.5x during this time)? And that is an average, as urban areas have experienced fast growth.
Seems reasonable to me. Housing should be for housing people, not a speculative financial investment.
It's reasonable for cities to ask that people show that they have some skin in the game, that they're living, working, paying taxes and contributing to and enhancing the community.
If they own a house, they are paying taxes, so they do have significant skin in the game. They pay property taxes despite not using the local schools or most other city services.
As far as not allowing housing as a speculative financial investment, there are some significant unintended consequences there.
Ya, property taxes should act against such behavior, but many places like Vancouver lack one. Not sure about NZ, but it seems like property taxes are more of an American thing.
Edit: oops, Canada does have a property tax, and New Zealand has something like it. So it’s just Australia (on first residences) and the UK that don’t. Well, China also. I’ll take my downvotes gracefully.
Yeah, this is a relatively important metric for both investing but also affordability. It shows that there is an apples to oranges comparison in housing prices across markets (discounting currency differences).
When calculating the affordability of a home, the total monthly cash flow requirements (housing costs as a percentage of income) are critical. I live in an area where the rates are 10x that of Auckland. A $600k home valuation requires a ~$250 weekly rate commitment vs only about $27 in Auckland - a significant difference. It's still an expensive home by any metric, but considerably more affordable.
From a speculation perspective, an investor in Auckland can sit on a very expensive property with almost no cash flow burden, reducing the need to even rent.
So the property is being occupied, which I don't think they have a problem with. The issue is wealthy investors are coming in, buying up property at above market rate, and then letting it sit empty and driving up the price higher since there is less sellers on the market.
If it’s rented out to a local or sold to a local, the ratio of buildings to locals is the same. Supply or demand (or things outside this context such was wages) has to change for prices to change.
You assume that the ratio of buildings to locals is the sole input for real estate prices.
If an external rentier enters the market and realizes yield, other rentiers will follow. This increases demand for housing assets, not necessarily housing utility. this is the problem they are trying to solve.
No, they do not, they only cover a portion. As the owner of a New Zealand investment property...
In NZ, ROI on property is targeted to be around 8% [3]. The owner will take that ROI either in capital increase or in rent. [2]
If the property is appreciating, the rents will be allowed to slow down. If the property stops appreciating, then the rents increase to maintain the ROI. The entire market is targeted at 8%, particularly the property management companies.
Changing the property tax rules changes this equation, with a shift to higher rents.
New Zealand is trying everything to remove demand from the housing market. They first brought in new deposit rules (20% min for owner occupier[4], higher for investment properties 35%+[5]), now they've brought in foreign ownership legislation. It might affect the rate of capital increase, but that will only shift the ROI equation towards rental increases.
The government is looking at building more housing (FINALLY), but they are finding that all the regulations (houses with heating and insulation cost more!) means they can't do it for less that 600-650k [1].
Weird.. you can build a house in the upper midwest USA for 200k. That's land + all of the regulations etc... Condos should be cheaper per unit too. But like everywhere there is a construction labor shortage. I would hope that the kids gets into construction, at least as a summer job or something while pursuing education.
Finding young unskilled apprentices for construction work is easy, finding experienced skilled journeymen is hard because most of them leave the field during each construction bust.
You just can’t make a career out of construction with the current boom and bust way the cycle is going.
You can absolutely have a career in construction, as I know many people who have.
The challenge is health. It's a very demanding line of work where you have to carry weight, wake up in the early morning and work in the cold. People don't want to work like that. It's very hard on the body and you're broken when you reach your 50's.
I think a lot of things can be improved here with technology both in materials and for doing the actual work where the risk is lower so your body isn't completely shot.
It's almost like that problem would be partially solved if the US had a system where you could get healthcare without needing it to be tied to full-time employment.
It's not just an insurance problem. I assume accidents are already covered as part of your construction work.
When you are in your 20's. You fall from a ladder, break some bones, you heal and get back on your feet one year later. When you are in your 50's, you are more fragile and less resilient, same thing happens, you might never be able to work again. It's brutal.
Eh I don't really buy it... HVAC techs, plumbers, electricians, earthwork, even carpenters/framers can all find work outside of construction booms. And you can move towards prefab as much as possible as well if you are deeply concerned..
The land in Auckland is driving the value. It's a lovely climate, great city to live in, stable economy and government and open the water. There simply isn;'t much of that sort of living around.
A 2.4M 2x4 costs almost 10 NZD here. And that is the cheapest lumber.
There are huge markups in the local market on building materials due to a duopoly. It is cheaper to fly to Australia buy NZ made siding there and ship it to NZ than to buy it locally.
This makes no sense. Rents are not linked to the costs of property. They are fixed to as much as local people can pay for a home, roughly 50% of typical household income everywhere in the developed world.
The ROI is the +appreciation + rent - expenses.
If the property depreciates you have least return on investment. There is nothing you can do about it. You can't increase rent to compensate, people can't pay more rent. Your reasoning is absurd, if you could increase rent you should be doing that right now already.
Rents are definitely linked, until discretionary income for the local people goes to zero they can still pay more. Housing prices also affect mortgage payments, which rise in tandem.
Looking it up, I see USA is somewhere around 30% of income [1] as housing cost, while NZ is about 17% [2]. Seems to indicate there is room to grow under tight supply conditions.
As another New Zealander with an investment property I thought the government closed the loss-making rental loophole s few years back. You can’t use rental losses to offset personal tax so why would you rent at a loss?
About the insulation thing, to be clear, it's just a heat pump and a certain R number in the floor and ceiling (correct me if I'm wrong). Pumps cost <5k to install and insulation isn't that much more if done while building. Double glazing isn't mandatory either.
What I'm trying to say is walking into a house here in winter still doesn't feel like a place in say, Northern Europe. I don't think it's that onerous.
Sources: Partners brother in law is a builder, parents just had heat pumps installed, our landlord just installed underfloor insulation and it's currently 12 degrees C in the house.
In many countries, property taxes are local and don't go to schools (which have funding from income taxes i.e. from the state).
So it's not like the foreign investors are beneficial in any way, besides maybe paying their bit of water/electricity/police costs (and if they only pay their share, then why bother accomodating all the volatility to house prices they bring?)
Yes this is true in NZ - property taxes here ("rates") pay for roads, water, street lighting, that sort of thing. Not schools, police, or other stuff done by central govt.
Also property taxes here are not tied directly to house valuations - there's a fixed component, plus a component that's calculated from your valuation divided by the sum of the valuations of ALL the properties in the city. That means that if everyone's valuations are doubled your taxes don't change, if your house value goes up faster than the average you do pay more, if it goes up more slowly your taxes go down.
The problem with absenteeism is that while taxes are still being paid to maintain city services, the city doesn't function correctly, because there's weak street life.
Here's an article about the struggles of retailers in Vancouver's Coal Harbour neighbourhood, which has estimates of around 20-25% empty housing.
I agree with you that it seems like a good idea. However, the vacancy tax is still in its infancy, so we've yet to fully understand its effectiveness or side-effects. A big issue around the housing discussion in Vancouver is the lack of data and amount of misinformation being injected into the discussion.
The Netherlands has a system where vacant properties may be occupied by squatters after they've been empty for a year. There's an active squatting scene in Amsterdam, particularly OT301 (an abandoned cinema, now an arts centre).
Just ask the people in London who live among all the empty properties that have been bought by various Russian oligarchs or other people who want to exfiltrate their wealth from the countries where they "acquired" it.
Do you want to ban vacant or mostly vacant housing stock for its constriction of housing supplies? Why only foreign owned? Don't vacant holiday or investment homes of residents have the same impact?
Do you also want to ban renter occupied homes where a landlord is profiting excessively? How do you define excessive? Why only foreign landlords? Don't domestic landlords have the same impact? Don't investment trusts have the same impact, regardless of who owns the shares? Or is there a problem with your tax system, so the foreign-consumed profits are not taxed at the source?
If you dislike speculative investment, shouldn't you really dislike renter occupied homes where the landlord isn't profiting? They might accept a tenant at a partial loss, as long as it costs less than holding the property vacant, but this behavior depends on their speculative expectation that the future value is worth the holding costs. It is not sustainable for rent to be lower than the total holding costs (taxes, maintenance, depreciation, risk).
It is interesting to imagine a strict owner-occupation requirement. Nobody can own a home they don't live in as primary residence. Obviously, that means nobody can own a second home unless you zone some special vacation-home areas. And nobody can become a landlord, owning and operating rental properties. No person and no corporation nor trust. Ignoring the obvious disaster of how to get there from here, how would such an economy work? Does everybody at every income level get access to financing to buy their own home? It's hard to define a similar rule for commercial properties, since corporations can fractionally live in many places and it will be hard to define a minimum occupation density to distinguish real use of a commercial property from token use of a speculative holding. The same problem applies to wealthy home owners---what's the difference between a huge estate/mansion and an apartment building other than resident density?
At the other extreme, what about a strict public-owner requirement? What if every property had to be owned by a trust available on open markets? Everyone could buy into shares of every trust, and everyone would pay rent to some trust owning their residence. Everyone could benefit from real estate investment whether they have enough assets to own 1/100, 1, or 100 homes. Independently, they would decide what kind of housing and cost are best for them. What would happen to rents and property values...?
Forgive my ignorance, but if you're investing in property, don't you have "skin in the game"? Presumably it's in your interest that the community thrives, because that will help drive up property values (increasing your ROI)? This is just my naive intuition, so please correct me.
EDIT: Downvoters, what gives? Just asking a question...
So the issue is that foreign investors are significantly driving up the cost of real estate, making home ownership prohibitively expensive for locals? Has anyone quantified the impact in various regions?
No they don’t, their tenants pay the property tax. I own a rental property in New Zealand (not out of choice, long story) and the rates are paid from the rent. I don’t chuck in the extra $120/month from my other income.
That's not what "skin in the game" means, and presumably these properties are being rented, in which case the renters are still buying groceries, etc.?
Again, I'm not advocating for foreign investors; just trying to understand the problem.
The properties may not be being rented. Due to data that showed a notable amount of vacant properties Vancouver, another area with high amounts of foreign capital infusion enacted a vacant property tax.
Even if these properties are being rented out, persons with foreign capital buying power that exceeds that of locals have a distortionary and, from the point of view of a local, a negative impact on the real estate market, as they are able to out compete locals and bid up the price of housing. A person which may have normally been able to buy a home can no longer buy, and now has to devote more of their income to renting from a foreigner. Why would any local support this state of affairs?
At a high level "skin in the game" means involvement and having some commitment. That can mean monetary involvement or otherwise and I'd use the broader definition. An absentee foreign buyer has tenuous involvement in a city beyond the impact of their foreign capital. Sure they've risked their capital on an investment, but from a locals point of view they have no real personal stake in the community.
The problem is when rich investors buy properties to hold, but don't actually rent them out to people. This in turn reduces the number of apartments available to the people that need them, and just drives prices artificially upwards.
What they're actually doing is increasing the difficulty for local buyers by increasing demand and pushing up prices, and taking money away from them while simultaneously lining the pockets of existing property owners.
Foreign owners are likely to move at least a portion of this money overseas, which takes it out of the local economy, reduces the ability of residents to innovate by taking financial risks etc etc.
My opinion may be controversial, but I never understood this logic... I live in New Zealand at the moment. I am not Kiwi though, my wife and I moved from Russia. And I disagree.
First, stats show that foreign buyers own ~3% of homes. Everything else is kiwi-owned.
Second, there is another thing going on here -- KiwiBuild. Basically, government funds and builds 'affordable houses'. Prices (in NZD) are $500-650k, but now they want to have even more affordable houses - $300k. For comparison, actual average house price in Auckland is above $1kk.
My wife and I work really hard, NZ is not our country, English is not our language, the culture is different, we have nothing to inherit here. Why should we pay (with our taxes) for poor kiwis who can't afford a house? Shouldn't they work harder instead? Get education, get better job.
We wish we could buy a $1kk+ house in Auckland too, but we can't. If you can't afford a house, then buy an apartment because they are much cheaper. Yes, it is not that fancy, but at least you'll have a place to live in.
I mean, yeah, Labour party is in power in NZ at the moment, hence such policies like 'Let's increase salaries to poor workers, let's give them houses, let's increase maternity leave etc.'. The problem is that somebody has to pay for that.
UPD: another problem in my opinion is that Kiwi culture is very different. NZ is isolated from the rest of the world. It is very quiet here, people are very relaxed, everything goes slow. People are not used to work hard (in my opinion). It is common here to spend a year or two doing nothing, just traveling around the world after graduation. Many people don't want to build a career, they want to 'try many different jobs, find themselves, enjoy life'. Many people live with their parents, start thinking about career at the age of 30-35. At work, if it is 4pm (sometimes 5pm) -- people just leave and go home. "We have an urgent task" here means that it must be done within a week. In schools they teach children that everyone is a winner -- even if you have poor marks. Also, if there are any competitive games/sports, then sometimes they make it that the winner is not the one who actually won, but the one whose turn today is. And so on. Hence many people here, when they grow up, are not used to fight for survival. Just enjoy their quiet life in a beautiful country. But then they are 35, have no money, no career, but want a fancy house...
Sorry if I'm being too harsh, don't mean to offend. But this is my take on Kiwi culture, the way I see it as a non-native.
> Why should we pay (with our taxes) for poor kiwis who can't afford a house?
Why pay taxes at all for a country you're not citizen of? /s
Seriously now, it's because you live there. Their government makes the rules, you decided to live there and, by extension, decided to follow their rules.
> I mean, yeah, Labour party is in power in NZ at the moment, hence such policies like 'Let's increase salaries to poor workers, let's give them houses, let's increase maternity leave etc.'. The problem is that somebody has to pay for that
And, given which democratically elected government is in power, it's their right to choose how to spend their money.
All the political parties here have similar polices - it's a country with a social welfare system. On the margin National/ACT (blue) like to cut taxes and spend less social welfare and Labour (red)/Greens the reverse. After 3 terms with blue we had overshot, and Labour iOS having their turn at the well.
I encourage all voters to be swing voters - that way they have a chance to influence policy. There are good politicians across all parties here, and we are lucky for that.
Coming from Poland I had a very similar fist impression when I started living in-and-out in Italy.
Nevertheless at some point I started thinking: Maybe these guys are right and I'm wrong? Maybe there's more to life than this "fight for survival" and I shouldn't value my ability to do so so highly?
There's a level of, for lack of a better word, satisfaction I see on people's faces daily in Italy that I know I won't achieve, because I was born in a poor country in a rather poor family and had to claw myself out of poverty.
I think it's precious. I wish my (future) children lived in a world where they can have, like my SO likes to put it, "two youths" - one spent on doing personally meaningful, fulfilling things, and the other doing what's necessary to live an independent life.
Yes, when I first started living in NZ I was baffled by completely alien culture and the way of living. But then I began to understand it, like it, enjoy it (to some extent)!
And I respect people if they choose to live this way, not fight for survival, enjoy their lives. But I don't think it is fair if later they start complaining about lack of money, lack of career and expensive houses they can't afford and start asking the government (read 'other people') to pay for it.
Its not a matter of asking other people to pay, it's a matter of there not being enough housing stock and houses being seriously unaffordable relative to wages. BTW: NZ workers do the OECD average amount of work per year.
$3-400k gets a tiny 1 bedroom apartment downtown, which I would have loved early in my career. The kiwibiuild homes are being aimed at families and necessarily much larger.
I do agree that NZers have this strange desire for bungalows in the suburbs, commuting and mowing lawns. I'm in an apartment downtown and love it.
> Let's increase salaries to poor workers, let's give them houses, let's increase maternity leave etc.
New Zealand is a very wealth country by most metrics. It can definitely afford these things.
When I say "it" I mean: the people of New Zealand can afford to redistribute some of their wealth so the country can avoid the worst types of poverty, and probably a whole lot more.
You'll find serious resistance by existing residents to even moderately increased density, that isn't solely a NZ phenomenon either. People are fiercely protective of anything which may affect the value of their property.
Logic has gone out the window regarding sensible planning, it's all politicised and no longer serves the greater good.
House prices could be slashed overnight with the stroke of a pen in many cities on earth.
The problem is that builders in NZ suck at building apartment buildings. The quality is rubbish, and they are not that much cheaper than houses, in many cases they are much more expensive due to the Body Corporate Fees (~10000 NZD / Year).
At first we were looking for an apartment, but then realised that it was just hopeless to find affordable apartments which a of reasonable quality.
In addition to the issues around lack of industry familiar wtih apartments, many native NZers don't want to live in apartments as it doesn't fit their culture or way of life.
Proxy purchases would be common via the informal financing system in places like Wenzhou. It's hard to imagine how the NZ government could possibly enforce such proxy purchases, especially since Australians and Singaporeans are exempt from the foreign buyer restrictions. Australia, New Zealand, and Singapore all have high immigration from China, and such immigrants can easily act as the proxies of anyone with an informal business relationship with a lender in Zhejiang.
Sounds like a good time to start a NZ real estate company that takes investments from foreign buyers, buys the houses they tell me to buy, and then rents it out to them when they visit at very low prices.
Good move. More cities need to adopt this. There is a flood of foreign capital into major western cities that is hurting those economies. And a lot of denial that this is happening.
Not when the local is downsizieng from a 4 bed house and garden to a 2 bed apartment for retirement, or they simply die and it's local's kids that sell it.
There's a simple solution to avoiding buying in expensive locations though - buy in cheap locations.
So the local sells to a foreign buyer and downsizes. That’s great for them. But their kids are now priced out of the market, and will never own a home but rent from someone who lives 15h flight away.
I’m not sure the point you’re trying to make here.
It’s a town of 1700 people, described by Wikipedia as a “gang town”. If your point is that it’s possible to buy a house in NZ, sure. But quality of life is totally a thing, no?
And even then, your example requires a $40k deposit while earning $32k, a salary which doesn’t appear to have a whole lot left over and the end of the week.
My understanding is that skyrocketing housing prices aren't much of a benefit to anyone who doesn't own more than one home. Because you always need to live in at least one place, your economic elasticity only kicks in when the number of homes you buy and sell is greater than one.
Local kids can't buy house and is renting forever at unreasonable price. The world is not just about giving everyone the opportunity to become rich. Just making a decent living for most is a nice objective.
2 bed house, $310 a week, that's under half the minimum wage. That doesn't seem too extreme to me. That's for a two bed remember, so if you are a couple on median wage, you'll be earning $1800 a week pre tax, about $1500/week take home.
Should be able to save $450 a week out of that. After 3 years that's $70k, a 20% deposit on https://www.realestate.co.nz/3341361, with a mortgage then costing about $330 a week.
The problem people who complain about house prices seem to have is that they want to live in very specific and desirable locations (Certain parts of Auckland for instance). There is a high demand for these locations, therefore price is high. But clearly the price is reasonable as people can afford to live there, otherwise they wouldn't pay the rent/mortgage.
When people stop paying high prices for rent in aukland, and instead live elsewhere, then companies in Aukland will have to either
1) Relocate to cheaper locations to attract staff
2) Pay staff more so staff can live in the area
It's the same the world over. You can buy a house in the UK half an hour out of two major cities for £125k. That's a £7k deposit (£44/week or £190/month for 3 years) and £550 a month after that.
If you can afford £600 a month for housing costs (£400 rent plus £200 deposit), you can rent for 3 years, then buy, within 35 minutes of Leeds and Manchester. Minimum wage is about £1200 a month after tax.
As much as I like this solution it always seemed to me that if the problem was too many people buying houses the best thing to do would be to build more houses.
Sounds like a great idea, but NZ is struggling to build fast enough. NZ has a terrible attitude where everyone must have a backyard, and public transport is horrendous, so moving further out often isn’t much of a solution.
The current govt promised to build ambitious numbers of new affordable homes, but I haven’t seen any strategy on how they plan to execute on it.
> NZ has a terrible attitude where everyone must have a backyard, and public transport is horrendous, so moving further out often isn’t much of a solution.
Oddly enough, other places with that attitude are the same ones where moving further out is a solution. Pejoratively dubbed "sprawl", there is less focus on centralized things like limited property sizes and intra-city public transportation. If the land is available, it offers reasonable scale despite the detracting urbanites' cries of culture loss.
Maybe it's not the attitude that's terrible, but the inability to support it possibly caused by people not embracing the reality that the attitude exists.
Moving farther out has its own set of problems: longer commutes, and much costlier infrastructure. At least in the US, outlying areas frequently don't pay enough in property taxes to maintain the amount of infrastructure necessary to reach those outlying areas, putting strain on municipal budgets. Nobody wants to pay more taxes.
I'm seeing, also at least in the US, a combination of remote work and business moving out of the confines of a large metro's downtown into the sprawl themselves. This reduces commute. I'm also seeing more inter-burb infrastructure becoming private and not relying on funds from the municipalities they traverse. I feel like inner city space is more constrained than outer city budgets.
Yeah, I think that would really be a great solution. With NZs 3 year terms, no govt is prepared to invest heavily in infrastructure, which leaves privatization. Which kiwis really really hate. The insane choke point that is the Auckland harbor bridge could be resolved if a private company put in a second crossing, but nobody is prepared to pay or let it be in their backyard. Having lived in large cities including the US, I do love the attitude to just do stuff.
I am afraid your math doesn't add up. Influx of foreign capital can never be bad because it fuels the local economy. It brings new jobs in construction and other related services, transtively bringing more money to government because every human activity is taxed.
By banning foreign investors you're basically saying: "nah, we don't need more money, we have enough".
I'm not suggesting anything. If you can't respond without libertarian insinuations that government be the bad agent here and simply repossess the property, please don't.
Feel free to come up with constructive solutions though.
Saying "what about" the people who have already lawfully purchased property certainly has the implicit assumption that something has to be "done" about them, doesn't it? I didn't insinuate anything.
I own property which is currently collecting rent.
The rent is set by the market — if I charged a million bucks a month (it’s a one bed flat) it would be empty.
No matter what my costs are, the number chosen by my agent has to be both “as high as possible” and “no higher”.
I do know the government can mess up and if you Google “rent controls” the standard downsides there are real problems if the government goes too far — but there is room to improve the current unreasonable (in my favour) mess.
I don’t understand when people believe this - as an owner of an investment property in Auckland, NZ, I almost never can just pass on increases to my tenants, unless I want long stretches of no tenants, even with the shortage as it stands.
The market dictates what I can charge.
And if I have good tenants I’d rather keep them than immediately try to recover costs.
You might buffer changes in costs and provide some stability to the tenants just as they can provide some to you by extending a lease rather than vacating. But, you do need to adjust and pass on the costs, or fail as an investor. In a significant way, the service in a healthy landlord-tenant transaction is for the landlord to accept the liquidity hit and risk of property ownership and redistribute it along with other costs in the form of rent.
Where people may get confused is in ignoring the land appreciation assumptions built into a speculative investment. They don't always recognize that a capital-rich investor might be perfectly happy to buy a property and sit on it for decades without thinking of it as a revenue source. They can only imagine a more leveraged landlord where the property is purchased with a minimal down payment, the rents have to cover all mortgage, tax, and other operating bills, and the landlord may only have a limited amount of emergency capital.
The second point here is the most important. I know a handful of real estate investors and one that is far away the most successful. He buys everything in cash. He has a contracting team on payroll that fixes whatever needs fixing so he's not immediately outlaying any additional funds to fix up a property, other than the opportunity cost of having those employees busy. He hasn't mortgaged a property in probably half a decade or more.
If he thinks a property will appreciate and make money, he will absolutely buy it and let it just sit on his books for a decade while the RE value increases and he waits for an opportune time to develop or rehab it.
Vancouver Canada taxes foreign buyers 20% on top of the listing price and has a speculator tax of 0.5% (eventually 2%) tax on homes owned by people not paying provincial income taxes (primary residences and long-term rental properties are exempt). They also have a 1% annual tax on the assessed value of "empty homes".
Hope the Canadian government learns from this. We desperately need it. (ya, I know I know there will be trickle down impact of so much foreign money pulling out, but average home price of $1.36MM is unbelievable for the local salaries)
Ditto the South East of England. London property is the new Swiss bank account for overseas oligarchs. Commercial property is fine for investment purposes but residential property should obviously be priority for, umm, actually resident people...
If they do, maybe the USA will learn from Canada. In my area the Canadians are the ones buying stuff up. Other than property taxes, their contribution is to all show up on the same weekend and empty the grocery store shelves - and driving up prices.
Everyone is being too optimistic about this law in NZ. It’s too watered down. Note it only bans existing homes. Foreigners can still buy new homes. (Unless that was changed.) This may have some affect but new houses and existing houses are all in the same market. If foreign buyers all shift to buying in the new construction market they will drive up prices of new houses, force residents that might’ve been looking for a new house to buy an existing house, continuing to drive up prices of all houses.
I think if we see house prices drop significantly in NZ it’ll be more to do with other economic changes than this rule.
(Note: I am in favor of requiring buyers of all property to be residents of the country. I think this should be pretty standard in any country.)
Corporations are also owned by people. You get around this by making the law look at the entire ownership graph and seeing the total percentages from that.
Western cities have only themselves to blame for turning housing into an appreciating asset. Housing is not supposed to appreciate and if it does not then nobody would speculate in it. In cities where they just build housing, like Vienna (typical rent ~1000 Euros/mo), they don’t have a need of these kinds of laws.
The problem is that in many places it is quite unlawful to build housing. The legal regimes exist to protect incumbent land owners. That’s an open invitation to speculators.
In one sense that's not a problem - in most cases the same body passing these laws could make new construction entirely lawful. But it does point at a root problem - that there's a meaningful chunk of the population that more-or-less wants things overpriced.
Well the solution would be to reject the idea that housing is an investment, and do whatever we can to crash the housing market. For example, by building a whole lot of houses.
I don't think it's fair to blame cities for what is a nationwide problem. The entire economy is shifting from farming and production to a service economy. The former provided incentives for people to be widely distributed across a number of small cities and town. The latter does not, so there is a mass migration to cities. It's happening faster than the infrastructure, zoning, and physical layout of the cities can adapt to accommodate.
This is a hard problem, and isn't made easier by moralizing, which seems to happen heavily on both sides.
Personally, in the US, I think we'd be better off trying to make our mid-sized cities more desirable than turning our handful of large cities into giant skyscraper-filled concrete grids. We have plenty of space for everyone in the US. The problem is people all want to live in an increasingly small fraction of it. Increasing the density of that tiny fraction while the rest of the country empties out doesn't seem great to me.
It is the most-dense city save for NYC, which is ten times larger. Which is my point: people think of it as dense but in reality most of it is suburban in character. There’s no need for skyscrapers to change this. A handful of 5-story buildings on major intersections would do the job.
Look beyond arbitrary administrative divisions at what actually exists on the ground. Of course, many cities are spirals rather than circles so it can be difficult decide where to draw the line. Oakland and Silicon Valley, and even San Jose are also part of "Greater San Francisco", which is a very spread out city because of the geographical imposition of the bay.
Do you have kids yet? I lived in such cities from when I left home at 17 until 36, but the arrival of kids... well, I want them to have a yard to play in, in a chilled neighbourhood, close to the beach and hikes, etc.
As well as more room so they can all have their own bedroom, we can have a family area, etc.
When they leave the house, I’d probably move back to the city to an apartment.
In essence, I’m agreeing with you but I think it also depends which life stage you are in as to what you prefer.
If you took half a dozen normal-sized detached American houses and their yards, put all the houses right next to each other and all the land in a contiguous polygon, you'd have a way better place for all the children to play, just as much interior space, and a dramatically better place to be. Detached single-family homes fragment the open space and alienate people, which are not good things for growing children.
> I mean, what's wrong with SOME cities being giant skyscraper filled grids?
Nothing at all, and I get that some people dig that.
> Why can't us high density people get the 1% that WE want?
You can. What I disagree with is the moralizing tone that people take when others don't want their existing city turned into that.
> There is more than space for both skyscrapers and suburbs.
I agree, but this discussion usually takes place when people argue that the existing single-family homes should be torn down and replaced with greater density.
I'm probably overly sensitive because I live in Seattle in a single-family home. But it gets really tiring always being made to feel like a bad person for liking the way I currently live.
> people argue that the existing single-family homes should be torn down and replaced with greater density.
Literally nobody argues this. Pure strawman. What people argue is that property owners should be _permitted_ to build _slightly_ larger buildings on _their_ property. The law today for most land in most American cities says that property owners are forbidden from building anything but detached single-family dwellings. To remove this prohibition and to allow property owners to develop their own land, if they want that, is not the same as bulldozing the existing neighborhood.
What I want is for every major city to have a singular 1 square mile area, with zero building height limits, so that people who want to build tall building on their own property, are allowed to do so.
There is more than enough room in Seattle that is already allocated to single family homes. Now let's pick an area, and get rid of all zoning limits in that singular area.
> I don't think it's fair to blame cities for what is a nationwide problem
In the US, zoning and land use regulations are mostly enacted at a city level, so they're pretty much to blame. Of course, they could be preempted at a state or even national level if the political will were there, but the current mess can be laid at the feet of our cities' regulations.
This should be passed in lots of places. for example, Oligarch money is flooding in, and if you take NYC as an example, its pricing people out of the city. After sanctions were put in against russia, the prices of housing/apts in NYC dropped slightly for the first time in a few years.
To add some context: NZ regularly rates in the top 10 least affordable cities to buy a house. The last stat I saw was that median house prices were 9.7x median salary.
That’s absurd for a relatively small city of 1.4m people.
It has further negative effects: everyone gets into property as their only real path to financial freedom, with 95% of new loans using family financial assistance. It’s stifling innovation and business that could be providing employment and international business.
It’s no different in Canada. Yes, foreigners are buying property, but Canadians are doing an awesome job over-extending themselves on real estate including getting help from “The bank of Mom” for down payments.
All in the name of “real estate always goes up” and “if I don’t buy now I’ll never be able to”.
If you dig deep, you may be able to uncover the intention of that sentence. NZ has some of the least affordable property in the world. A tiny nation of 4m with minimal job prospects should never be able to achieve that title.
Logical. I wonder if it's possible to designate certain parts as investment property...leasehold for 99 years and sell to the rich and tax them more. You want it? Fine, it will cost more both in price and maintenance. Buying homes also is good for the econ...from the builder to the security company later.
Good. Every country needs such laws. From NZ to London to Spain to Iceland.
If you live in a place and earn your income there you should be able to buy or rent residential property. Otherwise you have no business exploiting the inflexibility of the market to adjust the available housing. Rent is becoming an indirect tax to the rich in many major metropolitan areas around the world. And it's massive, often up to 50% of the median wage.
Having New Zealand cities with average prices at 10x yearly average household income and a NZ average at over 6x is a radical departure from NZ’s historically narrow rich/poor divide.
176 comments
[ 129 ms ] story [ 2996 ms ] threadPerhaps they should try reducing the red tape required to build new homes.
Many countries require some form of either citizenship or residence in order to qualify as a real estate buyer.
I just wanted to make it clear that that isn't the only, or even biggest, culprit in the current housing crisis.
...like China.
It's reasonable for cities to ask that people show that they have some skin in the game, that they're living, working, paying taxes and contributing to and enhancing the community.
As far as not allowing housing as a speculative financial investment, there are some significant unintended consequences there.
Edit: oops, Canada does have a property tax, and New Zealand has something like it. So it’s just Australia (on first residences) and the UK that don’t. Well, China also. I’ll take my downvotes gracefully.
https://vancouver.ca/home-property-development/property-tax....
You can look up what they are for a property and get an idea of the property value on local government websites.
https://www.aucklandcouncil.govt.nz/property-rates-valuation...
When calculating the affordability of a home, the total monthly cash flow requirements (housing costs as a percentage of income) are critical. I live in an area where the rates are 10x that of Auckland. A $600k home valuation requires a ~$250 weekly rate commitment vs only about $27 in Auckland - a significant difference. It's still an expensive home by any metric, but considerably more affordable.
From a speculation perspective, an investor in Auckland can sit on a very expensive property with almost no cash flow burden, reducing the need to even rent.
If an external rentier enters the market and realizes yield, other rentiers will follow. This increases demand for housing assets, not necessarily housing utility. this is the problem they are trying to solve.
In NZ, ROI on property is targeted to be around 8% [3]. The owner will take that ROI either in capital increase or in rent. [2]
If the property is appreciating, the rents will be allowed to slow down. If the property stops appreciating, then the rents increase to maintain the ROI. The entire market is targeted at 8%, particularly the property management companies.
Changing the property tax rules changes this equation, with a shift to higher rents.
New Zealand is trying everything to remove demand from the housing market. They first brought in new deposit rules (20% min for owner occupier[4], higher for investment properties 35%+[5]), now they've brought in foreign ownership legislation. It might affect the rate of capital increase, but that will only shift the ROI equation towards rental increases.
The government is looking at building more housing (FINALLY), but they are finding that all the regulations (houses with heating and insulation cost more!) means they can't do it for less that 600-650k [1].
[1] https://www.interest.co.nz/property/95345/housing-minister-s...
[2] https://www.interest.co.nz/saving/rental-yield-indicator
[3] https://www.yourinvestmentpropertymag.com.au/expert-advice/l...
[4] https://sorted.org.nz/guides/home-buying/buying-a-first-home...
[5] https://www.rbnz.govt.nz/education/at-a-glance-series/lvr-re...
You just can’t make a career out of construction with the current boom and bust way the cycle is going.
The challenge is health. It's a very demanding line of work where you have to carry weight, wake up in the early morning and work in the cold. People don't want to work like that. It's very hard on the body and you're broken when you reach your 50's.
When you are in your 20's. You fall from a ladder, break some bones, you heal and get back on your feet one year later. When you are in your 50's, you are more fragile and less resilient, same thing happens, you might never be able to work again. It's brutal.
There are huge markups in the local market on building materials due to a duopoly. It is cheaper to fly to Australia buy NZ made siding there and ship it to NZ than to buy it locally.
The ROI is the +appreciation + rent - expenses.
If the property depreciates you have least return on investment. There is nothing you can do about it. You can't increase rent to compensate, people can't pay more rent. Your reasoning is absurd, if you could increase rent you should be doing that right now already.
Looking it up, I see USA is somewhere around 30% of income [1] as housing cost, while NZ is about 17% [2]. Seems to indicate there is room to grow under tight supply conditions.
[1] https://www.businessinsider.com/how-to-save-more-money-2017-...
[2] https://www.stats.govt.nz/information-releases/household-inc...
Not yet, but soon. They did tighten up the rules around businesses that _never_ make a profit a while ago (I seem to remember).
CONSULT YOUR ACCOUNTANT.
What I'm trying to say is walking into a house here in winter still doesn't feel like a place in say, Northern Europe. I don't think it's that onerous.
Sources: Partners brother in law is a builder, parents just had heat pumps installed, our landlord just installed underfloor insulation and it's currently 12 degrees C in the house.
So it's not like the foreign investors are beneficial in any way, besides maybe paying their bit of water/electricity/police costs (and if they only pay their share, then why bother accomodating all the volatility to house prices they bring?)
Also property taxes here are not tied directly to house valuations - there's a fixed component, plus a component that's calculated from your valuation divided by the sum of the valuations of ALL the properties in the city. That means that if everyone's valuations are doubled your taxes don't change, if your house value goes up faster than the average you do pay more, if it goes up more slowly your taxes go down.
Here's an article about the struggles of retailers in Vancouver's Coal Harbour neighbourhood, which has estimates of around 20-25% empty housing.
https://www.theglobeandmail.com/real-estate/at-vancouvers-co...
Just ask the people in London who live among all the empty properties that have been bought by various Russian oligarchs or other people who want to exfiltrate their wealth from the countries where they "acquired" it.
Do you want to ban vacant or mostly vacant housing stock for its constriction of housing supplies? Why only foreign owned? Don't vacant holiday or investment homes of residents have the same impact?
Do you also want to ban renter occupied homes where a landlord is profiting excessively? How do you define excessive? Why only foreign landlords? Don't domestic landlords have the same impact? Don't investment trusts have the same impact, regardless of who owns the shares? Or is there a problem with your tax system, so the foreign-consumed profits are not taxed at the source?
If you dislike speculative investment, shouldn't you really dislike renter occupied homes where the landlord isn't profiting? They might accept a tenant at a partial loss, as long as it costs less than holding the property vacant, but this behavior depends on their speculative expectation that the future value is worth the holding costs. It is not sustainable for rent to be lower than the total holding costs (taxes, maintenance, depreciation, risk).
It is interesting to imagine a strict owner-occupation requirement. Nobody can own a home they don't live in as primary residence. Obviously, that means nobody can own a second home unless you zone some special vacation-home areas. And nobody can become a landlord, owning and operating rental properties. No person and no corporation nor trust. Ignoring the obvious disaster of how to get there from here, how would such an economy work? Does everybody at every income level get access to financing to buy their own home? It's hard to define a similar rule for commercial properties, since corporations can fractionally live in many places and it will be hard to define a minimum occupation density to distinguish real use of a commercial property from token use of a speculative holding. The same problem applies to wealthy home owners---what's the difference between a huge estate/mansion and an apartment building other than resident density?
At the other extreme, what about a strict public-owner requirement? What if every property had to be owned by a trust available on open markets? Everyone could buy into shares of every trust, and everyone would pay rent to some trust owning their residence. Everyone could benefit from real estate investment whether they have enough assets to own 1/100, 1, or 100 homes. Independently, they would decide what kind of housing and cost are best for them. What would happen to rents and property values...?
This happened in BC, Canada. It’s a popular spot for vacation homes for Canadians, this they get slammed with a tax as well.
Govt backed down and created exemptions for large swaths of BC.
EDIT: Downvoters, what gives? Just asking a question...
An investor doesn't buy groceries at the local store, doesn't go to local music venues etc.
They help out the construction industry and the FIRE (finance, insurance, real estate) industry, but local neighbourhoods weakly benefit.
Again, I'm not advocating for foreign investors; just trying to understand the problem.
Even if these properties are being rented out, persons with foreign capital buying power that exceeds that of locals have a distortionary and, from the point of view of a local, a negative impact on the real estate market, as they are able to out compete locals and bid up the price of housing. A person which may have normally been able to buy a home can no longer buy, and now has to devote more of their income to renting from a foreigner. Why would any local support this state of affairs?
At a high level "skin in the game" means involvement and having some commitment. That can mean monetary involvement or otherwise and I'd use the broader definition. An absentee foreign buyer has tenuous involvement in a city beyond the impact of their foreign capital. Sure they've risked their capital on an investment, but from a locals point of view they have no real personal stake in the community.
Foreign owners are likely to move at least a portion of this money overseas, which takes it out of the local economy, reduces the ability of residents to innovate by taking financial risks etc etc.
First, stats show that foreign buyers own ~3% of homes. Everything else is kiwi-owned.
Second, there is another thing going on here -- KiwiBuild. Basically, government funds and builds 'affordable houses'. Prices (in NZD) are $500-650k, but now they want to have even more affordable houses - $300k. For comparison, actual average house price in Auckland is above $1kk.
My wife and I work really hard, NZ is not our country, English is not our language, the culture is different, we have nothing to inherit here. Why should we pay (with our taxes) for poor kiwis who can't afford a house? Shouldn't they work harder instead? Get education, get better job.
We wish we could buy a $1kk+ house in Auckland too, but we can't. If you can't afford a house, then buy an apartment because they are much cheaper. Yes, it is not that fancy, but at least you'll have a place to live in.
I mean, yeah, Labour party is in power in NZ at the moment, hence such policies like 'Let's increase salaries to poor workers, let's give them houses, let's increase maternity leave etc.'. The problem is that somebody has to pay for that.
UPD: another problem in my opinion is that Kiwi culture is very different. NZ is isolated from the rest of the world. It is very quiet here, people are very relaxed, everything goes slow. People are not used to work hard (in my opinion). It is common here to spend a year or two doing nothing, just traveling around the world after graduation. Many people don't want to build a career, they want to 'try many different jobs, find themselves, enjoy life'. Many people live with their parents, start thinking about career at the age of 30-35. At work, if it is 4pm (sometimes 5pm) -- people just leave and go home. "We have an urgent task" here means that it must be done within a week. In schools they teach children that everyone is a winner -- even if you have poor marks. Also, if there are any competitive games/sports, then sometimes they make it that the winner is not the one who actually won, but the one whose turn today is. And so on. Hence many people here, when they grow up, are not used to fight for survival. Just enjoy their quiet life in a beautiful country. But then they are 35, have no money, no career, but want a fancy house...
Sorry if I'm being too harsh, don't mean to offend. But this is my take on Kiwi culture, the way I see it as a non-native.
Why pay taxes at all for a country you're not citizen of? /s
Seriously now, it's because you live there. Their government makes the rules, you decided to live there and, by extension, decided to follow their rules.
> I mean, yeah, Labour party is in power in NZ at the moment, hence such policies like 'Let's increase salaries to poor workers, let's give them houses, let's increase maternity leave etc.'. The problem is that somebody has to pay for that
And, given which democratically elected government is in power, it's their right to choose how to spend their money.
That is just my view on such policies. As you might have guessed, I'm not a labourist.
Nevertheless at some point I started thinking: Maybe these guys are right and I'm wrong? Maybe there's more to life than this "fight for survival" and I shouldn't value my ability to do so so highly?
There's a level of, for lack of a better word, satisfaction I see on people's faces daily in Italy that I know I won't achieve, because I was born in a poor country in a rather poor family and had to claw myself out of poverty.
I think it's precious. I wish my (future) children lived in a world where they can have, like my SO likes to put it, "two youths" - one spent on doing personally meaningful, fulfilling things, and the other doing what's necessary to live an independent life.
And I respect people if they choose to live this way, not fight for survival, enjoy their lives. But I don't think it is fair if later they start complaining about lack of money, lack of career and expensive houses they can't afford and start asking the government (read 'other people') to pay for it.
There are apartments in Auckland for $300-400k, which is even cheaper than affordable KiwiBuild houses ($500-650k).
I do agree that NZers have this strange desire for bungalows in the suburbs, commuting and mowing lawns. I'm in an apartment downtown and love it.
Also have you look at the minutes from BC meetings? Going through just a handful will turn you off purchasing an apartment in no time.
New Zealand is a very wealth country by most metrics. It can definitely afford these things.
When I say "it" I mean: the people of New Zealand can afford to redistribute some of their wealth so the country can avoid the worst types of poverty, and probably a whole lot more.
https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe...
Logic has gone out the window regarding sensible planning, it's all politicised and no longer serves the greater good.
House prices could be slashed overnight with the stroke of a pen in many cities on earth.
At first we were looking for an apartment, but then realised that it was just hopeless to find affordable apartments which a of reasonable quality.
2. Watered down by interest groups: https://www.reuters.com/article/us-newzealand-economy-housin...
This is where you setup a local trust, and purchase the property through that trust (and not a non-resident).
People can also still purchase properties through local proxies.
Local sells to foreign buyer for $500k
Local has lots of money
Local buys an equivalent house to the one they sold for $500k + transaction fees, which scale based on the price of the house
Local has less money than when they started
There's a simple solution to avoiding buying in expensive locations though - buy in cheap locations.
Fortunately there are many places that someone in NZ can buy a house.
https://www.realestate.co.nz/3379275
For example is proavly affordable on minimum wage of $32k, certainly with two incomes.
It’s a town of 1700 people, described by Wikipedia as a “gang town”. If your point is that it’s possible to buy a house in NZ, sure. But quality of life is totally a thing, no?
And even then, your example requires a $40k deposit while earning $32k, a salary which doesn’t appear to have a whole lot left over and the end of the week.
My understanding is that skyrocketing housing prices aren't much of a benefit to anyone who doesn't own more than one home. Because you always need to live in at least one place, your economic elasticity only kicks in when the number of homes you buy and sell is greater than one.
How so? They may not have an option to not pay it(as we're seeing happen in cities all over the world)
Definition of reasonable[https://www.merriam-webster.com/dictionary/reasonable]
1 a : being in accordance with reason - a reasonable theory
b : not extreme or excessive - reasonable requests
c : moderate, fair - a reasonable chance a reasonable price
d : inexpensive
Economic theory says that if the price is unreasonable, people won't pay it.
So, no, supply and demand theory kinda doesn't stack up when it comes to housing.
https://www.trademe.co.nz/property/residential-property-to-r...
Should be able to save $450 a week out of that. After 3 years that's $70k, a 20% deposit on https://www.realestate.co.nz/3341361, with a mortgage then costing about $330 a week.
The problem people who complain about house prices seem to have is that they want to live in very specific and desirable locations (Certain parts of Auckland for instance). There is a high demand for these locations, therefore price is high. But clearly the price is reasonable as people can afford to live there, otherwise they wouldn't pay the rent/mortgage.
When people stop paying high prices for rent in aukland, and instead live elsewhere, then companies in Aukland will have to either
1) Relocate to cheaper locations to attract staff
2) Pay staff more so staff can live in the area
It's the same the world over. You can buy a house in the UK half an hour out of two major cities for £125k. That's a £7k deposit (£44/week or £190/month for 3 years) and £550 a month after that.
If you can afford £600 a month for housing costs (£400 rent plus £200 deposit), you can rent for 3 years, then buy, within 35 minutes of Leeds and Manchester. Minimum wage is about £1200 a month after tax.
The current govt promised to build ambitious numbers of new affordable homes, but I haven’t seen any strategy on how they plan to execute on it.
Oddly enough, other places with that attitude are the same ones where moving further out is a solution. Pejoratively dubbed "sprawl", there is less focus on centralized things like limited property sizes and intra-city public transportation. If the land is available, it offers reasonable scale despite the detracting urbanites' cries of culture loss.
Maybe it's not the attitude that's terrible, but the inability to support it possibly caused by people not embracing the reality that the attitude exists.
By banning foreign investors you're basically saying: "nah, we don't need more money, we have enough".
What about all the people who have already purchased and are just holding onto an empty house for speculative reasons?
Feel free to come up with constructive solutions though.
The rent is set by the market — if I charged a million bucks a month (it’s a one bed flat) it would be empty.
No matter what my costs are, the number chosen by my agent has to be both “as high as possible” and “no higher”.
I do know the government can mess up and if you Google “rent controls” the standard downsides there are real problems if the government goes too far — but there is room to improve the current unreasonable (in my favour) mess.
The market dictates what I can charge.
And if I have good tenants I’d rather keep them than immediately try to recover costs.
Where people may get confused is in ignoring the land appreciation assumptions built into a speculative investment. They don't always recognize that a capital-rich investor might be perfectly happy to buy a property and sit on it for decades without thinking of it as a revenue source. They can only imagine a more leveraged landlord where the property is purchased with a minimal down payment, the rents have to cover all mortgage, tax, and other operating bills, and the landlord may only have a limited amount of emergency capital.
If he thinks a property will appreciate and make money, he will absolutely buy it and let it just sit on his books for a decade while the RE value increases and he waits for an opportune time to develop or rehab it.
https://news.ycombinator.com/newsguidelines.html
Has the US ever learned anything from Canada?
I think if we see house prices drop significantly in NZ it’ll be more to do with other economic changes than this rule.
(Note: I am in favor of requiring buyers of all property to be residents of the country. I think this should be pretty standard in any country.)
Housing can't both be affordable and an 'investment' that always appreciates in value.
Focusing on 'the foreigners' is not addressing the root cause of the problem.
This is a hard problem, and isn't made easier by moralizing, which seems to happen heavily on both sides.
Personally, in the US, I think we'd be better off trying to make our mid-sized cities more desirable than turning our handful of large cities into giant skyscraper-filled concrete grids. We have plenty of space for everyone in the US. The problem is people all want to live in an increasingly small fraction of it. Increasing the density of that tiny fraction while the rest of the country empties out doesn't seem great to me.
Personally I would love to live in that kind of city. And apparently this is also true for a lot of other people.
The low density people have 99% of the world to live in. Why can't us high density people get the 1% that WE want?
Let's just let everyone live how they want. There is more than space for both skyscrapers and suburbs.
As well as more room so they can all have their own bedroom, we can have a family area, etc.
When they leave the house, I’d probably move back to the city to an apartment.
In essence, I’m agreeing with you but I think it also depends which life stage you are in as to what you prefer.
Nothing at all, and I get that some people dig that.
> Why can't us high density people get the 1% that WE want?
You can. What I disagree with is the moralizing tone that people take when others don't want their existing city turned into that.
> There is more than space for both skyscrapers and suburbs.
I agree, but this discussion usually takes place when people argue that the existing single-family homes should be torn down and replaced with greater density.
I'm probably overly sensitive because I live in Seattle in a single-family home. But it gets really tiring always being made to feel like a bad person for liking the way I currently live.
Literally nobody argues this. Pure strawman. What people argue is that property owners should be _permitted_ to build _slightly_ larger buildings on _their_ property. The law today for most land in most American cities says that property owners are forbidden from building anything but detached single-family dwellings. To remove this prohibition and to allow property owners to develop their own land, if they want that, is not the same as bulldozing the existing neighborhood.
What I want is for every major city to have a singular 1 square mile area, with zero building height limits, so that people who want to build tall building on their own property, are allowed to do so.
There is more than enough room in Seattle that is already allocated to single family homes. Now let's pick an area, and get rid of all zoning limits in that singular area.
In the US, zoning and land use regulations are mostly enacted at a city level, so they're pretty much to blame. Of course, they could be preempted at a state or even national level if the political will were there, but the current mess can be laid at the feet of our cities' regulations.
That’s absurd for a relatively small city of 1.4m people.
It has further negative effects: everyone gets into property as their only real path to financial freedom, with 95% of new loans using family financial assistance. It’s stifling innovation and business that could be providing employment and international business.
All in the name of “real estate always goes up” and “if I don’t buy now I’ll never be able to”.
I don’t think it’s going to end well.
If you live in a place and earn your income there you should be able to buy or rent residential property. Otherwise you have no business exploiting the inflexibility of the market to adjust the available housing. Rent is becoming an indirect tax to the rich in many major metropolitan areas around the world. And it's massive, often up to 50% of the median wage.
https://www.interest.co.nz/property/house-price-income-multi...
https://www.google.co.nz/amp/s/amp.theguardian.com/commentis...
That's quite a normal multiplier in today's low interest and 2 income world (in parts of London the multipler is 38!)
What you're saying is that you can't afford to live in nice areas of Auckland. So don't.