Plenty of us say we want cheaper house prices, but do we really mean it?
Once you own a house, you usually have mortgage on it. The less your house is worth, the less equity you have.
Your net worth goes backwards.
In New Zealand, half of the average household’s wealth is land and property.
That is now worth 1.9% less today than it was a year ago.
Overall household wealth in this country has basically been flat for four years. That means we’re not getting richer and it’s because house prices have been soft.
Is this what you want more of?
This election there are parties planning to tax those assets. From capital gains to land taxes. That is likely to mean even lower prices.
When this happens, we get a bit worried about our situation in life and we get gun-shy with the debit card.
We stop buying stuff. We’re less confident. The economy slows down as a result.
Again, is this what we really want?
Now I know what you’re thinking, that’s all fine unless you’re trying to buy a house. Which is fair.
Except that house prices are now the cheapest they’ve been in a decade.
Cotality says the national house value has dropped to 6.7 times your income.
In 2021, it was nearly 10 times your income.
In Auckland, you can’t sell an apartment or townhouse for love nor money.
The question now is how low is too low?
Ryan Bridge is a New Zealand broadcaster who has worked on many current affairs television and radio shows. He currently hosts Newstalk ZB's Early Edition - where this article was sourced.
2 comments:
Yes hilariously our genius political parties have destroyed the one way the vast majority of Kiwis were actually able to accumulate wealth, namely the housing market. They put in the foreign buyers ban, wildly and recklessly zoned Auckland for a million or two new houses without infrastructure & now threaten capital gains tax on property. Should there be high yielding alternative local investments to substitute into that maybe fine. But there aren't. Since housing reform was not combined with any other substantial reform, like slashing corporate tax rates, there's nothing left. Instead only a group of underperforming NZX 50 stocks, run by inbred chumocracy accounting and legal matey mates, most of whom have presided over crashing share prices of their outfits. Yes, go buy Air NZ which is about to bankrupt & be bailed by government. Or Spark. Or Ryman. Or Fletchers. Or SkyCity. Our parliamentarians are geniuses at destroying value. Maybe our Universities can add value. Oh hang on, Otago is run by a guy called Grant Robertson. NZ needs an overhaul.
A land tax will send many kiwis over the edge. Especially on top of rates.
It doesn't matter what the property prices will be when you are talking about taking a cut from a 6 or 7 figure valuation.
It's a despicable and nasty idea that punishes those who worked hard and made large sacrifices to spend decades paying off a mortgage.
Property is a "non-liquid" asset and property owners paying a mortgage will be even more severely punished.
The "gap" between have and have nots will just become an enormous "chasm" extending beyond the horizon.
This is what happens when socialism and Marxism take control. We were warned but no one apparently listened.
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