There are conflicting poll results leading up to this years general election in New Zealand. TV1 has Labour in front while TV3 say National has extended its lead in front. They can't both be right. To find what the problem is I'd suggest looking at the sample sizes and methodology behind each poll. My guess is that TV1 is biased toward the large metropolitan areas while TV3 is biased toward the regions. Considering there are far more people living in cities, I'd pay more attention to the TV1 poll results.
Something else to think about, NZ First usually does better on election day. A myriad of reasons for this, including when asked people won't admit to supporting NZ First, or they're older people and always leave the answer-phone on and so can't be polled.
My money is still on a Labour/NZ First coalition. Labour on 40% plus NZ First's 9%, = 49% and with lost or wasted votes a majority in parliament. This MMP is a stupid system foisted on us by the Greens way back in the day, it's brilliant that same system is going to dump on them. Ha ha you bunch of naysayers.
Showing posts with label Auckland Housing Market. Show all posts
Showing posts with label Auckland Housing Market. Show all posts
September 13, 2017
April 28, 2016
New Zealand Investors
I've been thinking long and hard about the Auckland house price inflation. The banks have a role to play, they're willing to lend on real estate almost exclusively. But the way the New Zealand investment landscape is structured also has a major part to play.
Broadly speaking a New Zealand investor has three options:-
1. Buy investment real estate,
2. Start or buy a business, and;
3. Invest in shares, bonds, bank deposits or government stock - passive investment in other words.
Before any of the three are implemented, paying off debt must be a priority. Assuming that is achieved (at least substantially), and the investor maintains a sensible retirement superannuation account, then the three options present themselves this way:-
1. The investor buys houses or residential flats and apartments. The ideal is to invest in industrial and possibly commercial real estate, but the reality is residential purchases are easy to achieve. It's easier for a small investor to get their foot in the door with residential property. For starters, they needn't be registered for Goods and Services Tax (GST).
2. Buying or starting up a business is limited by the experience of the investor and the size of the market. Some people can't run a business or they don't have skills in the right areas to do so. It's a risky option for most.
3. Then lastly, they can access the New Zealand and Australian stock exchange listed companies very cheaply and easily. They only pay tax on those gains that are realised (if long-term investment then only the dividends are taxed). Outside of that however, if the investor buys shares in companies listed on the NYSE, Nasdaq, LSE, Borse Frankfurt or elsewhere, then over a certain threshold they'll pay tax on gains when they occur, not only when realised.
Conclusion:
Investors are strongly encouraged to invest in real estate, which has to impact Auckland house prices, given the size of that market. Investors cannot start or buy a business as the opportunities are scarce, given the relatively small scale of commerce in New Zealand. Allied to that, investors are discouraged from spreading their net wider, effectively limiting their share investments to the local scene. No wonder then that investor money pours into Auckland housing and real estate in general.
Recommendation:
Allow investors to invest in shares outside of New Zealand, on the same basis as they invest in shares listed in Australia, that is, invest in any company listed on recognised exchanges in the USA, Canada, Japan, the U.K., and Germany (elsewhere by approval). By doing this, money would be diverted from the overheated Auckland housing market. The effect would be to lessen demand for Auckland houses, and prices would stabilise.
(The change to NZ's tax regime regarding investment in foreign shares has had a knock-on effect to the Auckland housing market. This is the law of unintended consequences)
Edit to add (off the topic but looking at investment as a NZer investing overseas)...
The following NZ Herald article traverses many of the issues a NZ investor faces when investing overseas...http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10738730
The article mentions hedging, and what I've done in the past is not very sophisticated but effective, I've maintained a US Dollar account with a NZ bank. You're not dealing with a foreign desk, but the money is effectively offshore. Many people do not realise they can have a US Dollar account with a NZ bank. The good part of this is you get higher level people within the bank with better advice attached (the down side is that over a certain amount your name gets on lists in New York and you'll be bugged by investment houses on Wall Street. This is a freedom of information thing, I recall an outfit by the name of Whale Securities was one such calling all the time - look them up they were on Wall Street - you have to develop a thick skin and know how to say no).
Most 'experts' recommend using funds, such as unit trusts. My experience is they don't do that well. I'd guess my returns over a 20 or more year period would be about 1% annually going down that road. Don't be sold unit trusts.
Broadly speaking a New Zealand investor has three options:-
1. Buy investment real estate,
2. Start or buy a business, and;
3. Invest in shares, bonds, bank deposits or government stock - passive investment in other words.
Before any of the three are implemented, paying off debt must be a priority. Assuming that is achieved (at least substantially), and the investor maintains a sensible retirement superannuation account, then the three options present themselves this way:-
1. The investor buys houses or residential flats and apartments. The ideal is to invest in industrial and possibly commercial real estate, but the reality is residential purchases are easy to achieve. It's easier for a small investor to get their foot in the door with residential property. For starters, they needn't be registered for Goods and Services Tax (GST).
2. Buying or starting up a business is limited by the experience of the investor and the size of the market. Some people can't run a business or they don't have skills in the right areas to do so. It's a risky option for most.
3. Then lastly, they can access the New Zealand and Australian stock exchange listed companies very cheaply and easily. They only pay tax on those gains that are realised (if long-term investment then only the dividends are taxed). Outside of that however, if the investor buys shares in companies listed on the NYSE, Nasdaq, LSE, Borse Frankfurt or elsewhere, then over a certain threshold they'll pay tax on gains when they occur, not only when realised.
Conclusion:
Investors are strongly encouraged to invest in real estate, which has to impact Auckland house prices, given the size of that market. Investors cannot start or buy a business as the opportunities are scarce, given the relatively small scale of commerce in New Zealand. Allied to that, investors are discouraged from spreading their net wider, effectively limiting their share investments to the local scene. No wonder then that investor money pours into Auckland housing and real estate in general.
Recommendation:
Allow investors to invest in shares outside of New Zealand, on the same basis as they invest in shares listed in Australia, that is, invest in any company listed on recognised exchanges in the USA, Canada, Japan, the U.K., and Germany (elsewhere by approval). By doing this, money would be diverted from the overheated Auckland housing market. The effect would be to lessen demand for Auckland houses, and prices would stabilise.
(The change to NZ's tax regime regarding investment in foreign shares has had a knock-on effect to the Auckland housing market. This is the law of unintended consequences)
Edit to add (off the topic but looking at investment as a NZer investing overseas)...
The following NZ Herald article traverses many of the issues a NZ investor faces when investing overseas...http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10738730
The article mentions hedging, and what I've done in the past is not very sophisticated but effective, I've maintained a US Dollar account with a NZ bank. You're not dealing with a foreign desk, but the money is effectively offshore. Many people do not realise they can have a US Dollar account with a NZ bank. The good part of this is you get higher level people within the bank with better advice attached (the down side is that over a certain amount your name gets on lists in New York and you'll be bugged by investment houses on Wall Street. This is a freedom of information thing, I recall an outfit by the name of Whale Securities was one such calling all the time - look them up they were on Wall Street - you have to develop a thick skin and know how to say no).
Most 'experts' recommend using funds, such as unit trusts. My experience is they don't do that well. I'd guess my returns over a 20 or more year period would be about 1% annually going down that road. Don't be sold unit trusts.
April 26, 2016
Auckland House Prices
More news about house price rises in Auckland. I'm still amazed that this issue has not been presented accurately by the media. Is this because they also own houses in Auckland?
The situation is this - inflation is out of control. Residential housing was dropped as a link to the CPI (Consumer Price Index) some time ago. If it was still there we'd be seeing inflation like that of the mid-1980's, not this silly 0-2% we have reported now.
It's monetary inflation, the banks are pumping cash into the system. It's ever increasing flows of cash chasing the same stock of housing. It can't go on as incomes will not be able to service the debt. New Zealand is headed for a bust.
The situation is this - inflation is out of control. Residential housing was dropped as a link to the CPI (Consumer Price Index) some time ago. If it was still there we'd be seeing inflation like that of the mid-1980's, not this silly 0-2% we have reported now.
It's monetary inflation, the banks are pumping cash into the system. It's ever increasing flows of cash chasing the same stock of housing. It can't go on as incomes will not be able to service the debt. New Zealand is headed for a bust.
August 15, 2015
More About What Is Going On
Standard & Poor's today announced the downgrading of the big four banks in NZ. Confirmation about what I said earlier then, the banks are becoming overheated...
>>LINK<<
>>LINK<<