Polity by Rob Salmond

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Polity: House-buying patterns in Auckland

521 Responses

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  • Paul Campbell, in reply to Sacha,

    Sacha doesn't Australia have a law that prohibits foreign house purchasers from buying existing dwellings? .... the only way they CAN buy one is by building a new one.

    Mind you they also charge foreign real estate investors 30-45% capital gains tax

    Dunedin • Since Nov 2006 • 2606 posts Report Reply

  • Jim Cathcart, in reply to BenWilson,

    I know full well that what would happen is that the banking sector would be bailed out by the taxpayer, because that’s one of the only two scenarios that ever do happen. Either that, or the whole system shits itself big time. Both can and have happened.

    Yes, there is an implicit guarantee. Much like SCF. We know that banks won't suffer in the slightest, which I think is appalling.

    Since Nov 2006 • 228 posts Report Reply

  • Jim Cathcart, in reply to Katharine Moody,

    And the Japanese probably need it, but there are far more sensitive issues to consider there.

    Since Nov 2006 • 228 posts Report Reply

  • nzlemming, in reply to BenWilson,

    Now I’m thinking you were quoting Orphan Black

    No, it was Cats and Dogs. Great film.

    Waikanae • Since Nov 2006 • 2930 posts Report Reply

  • BenWilson, in reply to Swan,

    You ask me to give you an example of a housing bubble bursting not being an issue, but I could equally ask you to find a situation where house price declines have caused issues without strong credit growth beforehand.

    I guess there's a first time for everything. Maybe there could be a giant correction one day that doesn't screw the economy in which it happens causing untold misery to the locals. But I wouldn't bank on this being that time, on effectively no evidence of it ever happening anywhere before. Nothing but the Reserve Bank's assurances that at least the banking sector would come through OK isn't really something I want to bet the whole country on.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • Marc C, in reply to Danielle,

    “2. NO ONE is saying that collecting demographic data about this issue is a Bad Thing, per se.”

    So how is that “demographic data” then supposed to look like? Maybe not even the Real Estate agencies have data on persons’ residency status? There have been ample comments by many people going to auctions, even by some working as real estate agents, that there is a large number of persons belonging to one demographic group. As that is so, how would you describe such a group then, by not naming it?

    “3. What people who object to this move by Labour ARE saying is that:
    a) The data is suggestive but inconclusive, particularly as the government isn’t really doing diddly to collect *actual* data;
    b) Labour has framed the suggestive data in a really racist dogwhistley way. Not the Nats. Not the Crazed Social Justice Warriors of the Left. Not the sheeple. LABOUR.”

    How are we supposed to get better than “suggestive” data, when the government does not even want to gather data, has no reliable data, when even the IRD has inconclusive data on the wider situation?

    While I would have preferred a different way for the problem with Auckland house price inflation, with speculation and with buyer groups from off-shore to be presented, yes, Labour’s Phil Twyford did this, after receiving lists of data from an apparently leading Auckland real estate firm.

    The person who leaked it will have risked her or his job doing this, and if we had not got it, we would never get any suggested idea about who the likely off-shore buyers may be, apart from anecdotal evidence.

    And we know that the government and vested interest parties rubbish anecdotal evidence. Phil Twyford has in my view not put all Chinese into the same drawer, he merely pointed out, that it appears to be mainly Chinese buyers from off-shore who help push up prices for real estate here in Auckland. He further clarified this with comments on Monday.

    I am afraid that your over-reaction just shows your own personal oversensitivity, which is fair enough, and thus a warning voice, but I still do not get it, why people cannot accept that it seems quite logical, that of the many new rich Mainland Chinese, and some perhaps from Hong Kong, Singapore and other places, take opportunities to invest in Auckland housing, some simply to make gains, even leaving homes stand empty for periods.

    Sadly the truly “racist” will try to exploit the information that was presented, but I do not believe that Phil Twyford is one into “dog-whistle” politics, he has never given me nor many others I know that impression.

    As the government does all to keep true figures away from the public, does not even make any effort to bring in a buyers’ register, there is NO other way to get and present some indicative data, than to do it as Phil Twyford did.

    If you have any better ideas and solutions, perhaps present them to us.

    Akl • Since Oct 2012 • 437 posts Report Reply

  • Kumara Republic, in reply to Russell Brown,

    That’s the weak part of his post, for sure. Attributing the problem to consents and zoning is pretty much an unsupported assertion.

    Bureaucracy gone mad? Or NIMBYs, especially the 'Epsom property rights' kind?

    The southernmost capital … • Since Nov 2006 • 5416 posts Report Reply

  • Kumara Republic, in reply to Paul Campbell,

    Sacha doesn’t Australia have a law that prohibits foreign house purchasers from buying existing dwellings? …. the only way they CAN buy one is by building a new one.

    Mind you they also charge foreign real estate investors 30-45% capital gains tax

    They do indeed. And it's the most popular choice in the unscientific Herald poll, with the UK foreign CGT option a distant 2nd. And for the BNZ's Tony Alexander.

    The southernmost capital … • Since Nov 2006 • 5416 posts Report Reply

  • Hilary Stace,

    Andrew Little just mentioned on Morning Report that those of Chinese ethnicity in Auckland have lower than average household incomes - so are unlikely to be buying up the Auckland real estate. There is another issue there - of ethnicity and poverty. Also indicates large inequality within the Chinese community - I wonder whether the margin between the very poor and the very rich is wider than for other ethnic groups?

    Wgtn • Since Jun 2008 • 3196 posts Report Reply

  • Russell Brown, in reply to Hilary Stace,

    There is another issue there – of ethnicity and poverty. Also indicates large inequality within the Chinese community – I wonder whether the margin between the very poor and the very rich is wider than for other ethnic groups?

    I think that’s largely related to the fact that a big chunk of the resident Chinese population are students.

    Auckland • Since Nov 2006 • 22749 posts Report Reply

  • Russell Brown, in reply to Kumara Republic,

    They do indeed. And it’s the most popular choice in the unscientific Herald poll, with the UK foreign CGT option a distant 2nd. And for the BNZ’s Tony Alexander.

    They've just begun a crackdown after acknowledging they have huge avoidance problems.

    Auckland • Since Nov 2006 • 22749 posts Report Reply

  • Alfie,

    Steven Joyce responds by saying the government will finally start to collect data on foreign buyers from October 1st. Those who suggested that Labour's release of limited data would force National's hand have been proved right, although Joyce was a bit woolly on detail and couldn't say when that data would be released or in what form.

    There's still no sign of any government restrictions on new builds, stamp duty on overseas investors, etc. So expect more of those of Chinese ethnicity in Auckland with lower than average household incomes AND local IRD numbers to be involved in expensive property purchases on behalf of uncles, cousins...

    Dunedin • Since May 2014 • 1386 posts Report Reply

  • Russell Brown, in reply to Alfie,

    Steven Joyce responds by saying the government will finally start to collect data on foreign buyers from October 1st. Those who suggested that Labour’s release of limited data would force National’s hand have been proved right, although Joyce was a bit woolly on detail and couldn’t say when that data would be released or in what form.

    That’s because the legislation is utterly and apparently deliberately vague on that issue.

    There are huge holes in the Taxation (Land Information and Offshore Persons Information) Bill, because it only requires a local IRD number and bank account. It will also allow property purchases via trusts, which inevitably will have the effect of obscuring the level of foreign purchases. It doesn’t require a register of foreign property transactions, merely allows for the possibility that LINZ might at some point publish aggregated information.

    Irony: the way they’ve done it means it will capture New Zealand citizens with foreign tax status.

    Louise Upston’s first reading speech has some of the detail.

    Auckland • Since Nov 2006 • 22749 posts Report Reply

  • Alfie, in reply to Russell Brown,

    There's something else in that legislation which I find odd -- the so-called brightline test. That says income tax has to be paid if a residential property other than the seller’s main home is bought or sold within TWO years.

    Brief backstory
    Back in the early 2000s the IRD had a crackdown on property investors in the Wakatipu. They declared that anyone who had bought a property and resold within TEN years was a speculator or developer and they chased everyone in that category for back taxes. They pulled in tens of millions as a result.

    We were accidentally caught up in that trawl. I was injured on a skifield when a large Japanese snowboarder straight-lined me at speed, breaking my ribs and giving me a frozen shoulder which put me off work for more than two years. ACC wheeled out two tame surgeons who declared my injury "hereditary" and declined cover. Bastards!

    So we sold our retirement plan -- a section we'd owned for three years -- to keep paying the bills. The IRD decided we were speculators and chased us for around $90k in back tax. It took me five years and a lot of stress to finally overturn that decision.

    My point is, as ten years was the cutoff point a decade ago, why has the new legislation been set at a mere two years? Surely most offshore investors will have no problem waiting two years to take their tax-free capital gains? It seems to me that the Nats aren't serious about taxing foreign speculators, even though it could bring in hundreds of millions of dollars for the country.

    Dunedin • Since May 2014 • 1386 posts Report Reply

  • Hilary Stace, in reply to Russell Brown,

    There are probably many in minimum wage work such as retail, restaurants and hospitality. While many of the students might come from wealthy families. Demography is fascinating.

    Wgtn • Since Jun 2008 • 3196 posts Report Reply

  • Katharine Moody, in reply to Alfie,

    It seems to me that the Nats aren’t serious about taxing foreign speculators, even though it could bring in hundreds of millions of dollars for the country.

    Yes, puzzling to say the least. That is the reason I think that if we are to continue down the road of welcoming foreign ownership of land and housing assets, then that direct foreign investment should be taxed (and heavily) on the way in (i.e., a stamp duty on purchase). Capital gains is an entirely separate matter - one that should apply equally to local and foreign property investors.

    Wellington • Since Sep 2014 • 798 posts Report Reply

  • Corin H, in reply to Russell Brown,

    There are huge holes in the Taxation (Land Information and Offshore Persons Information) Bill, because it only requires a local IRD number and bank account. It will also allow property purchases via trusts, which inevitably will have the effect of obscuring the level of foreign purchases. It doesn’t require a register of foreign property transactions, merely allows for the possibility that LINZ might at some point publish aggregated information.

    You also have to provide the tax identification number from your home country if you are NZ nonresident.

    Another loophole is the exemption for purchasers of 'main homes' from supplying an IRD number, which the IRD explicitly advised against.
    IRD also said the requirement for a NZ bank account was superfluous as the Anti-Money Laundering screening they do when issuing an IRD number is as stringent as that of a bank issuing an account.

    Since Jan 2007 • 14 posts Report Reply

  • Deborah, in reply to Alfie,

    My point is, as ten years was the cutoff point a decade ago, why has the new legislation been set at a mere two years?

    The ten year cutoff would have been an operational decision within IRD about which transactions to target, just as they make operational decisions from time to time about which industries to investigate. For example, a few years back they made an operational decision to investigate tradies in northern Auckland suburbs where here seemed to be an awful lot of work going on, but not much income tax being paid, suggesting that lots of work was being done on a cash basis.

    The two year brightline test will be law ie. they don't even have to investigate anything. Maybe as an operational policy they were already looking at these short term transactions, but now they won't even need to investigate.

    /heading back to hanging my head in shame now

    New Lynn • Since Nov 2006 • 1445 posts Report Reply

  • Moz, in reply to Russell Brown,

    They've [Oz] just begun a crackdown after acknowledging they have huge avoidance problems.

    But a fair bit of the avoidance is lawful, which makes it difficult. The two big holes you can drive a truckload of cash through are that residents can buy existing houses, and that no-one is actually required to track this stuff to enable enforcement.

    All those foreign students can, and many do. I've been to a few inspections where there was a student arguing with parents that the house was too far from where they would be studying. Not many, because we were not looking for the sort of house that buy'n'hold investors find attractive (property developers, OTOH, we saw a lot of).

    The enforcement is as much of an issue. There's no point in the process where you have to prove anything more complex than "I have the money", and if you have it in the bank the whole deal could be done by writing two cheques (possibly one, if you got your solicitor to handle all the paperwork). If real estate agents had to see proof of residence at some point that might help, but when we bought that was not the case.

    Sydney, West Island • Since Nov 2006 • 1195 posts Report Reply

  • Danielle,

    I am afraid that your over-reaction just shows your own personal oversensitivity, which is fair enough, and thus a warning voice, but I still do not get it, why people cannot accept that it seems quite logical, that of the many new rich Mainland Chinese, and some perhaps from Hong Kong, Singapore and other places, take opportunities to invest in Auckland housing, some simply to make gains, even leaving homes stand empty for periods.

    I'm not sure how many times and in how many different ways I can say that the two issues - racist dogwhistles and overseas influence on the Auckland housing crisis - are not mutually exclusive. I think I'll have to leave it there because I want to retain my sanity.

    In general terms, I must say it is a bit bloody rich to have both Keith *and* Tze Ming write great posts about the dodginess of Labour's approach *on this very site* and have their concerns handwaved away in *three* different threads. Unreal.

    Charo World. Cuchi-cuchi!… • Since Nov 2006 • 3828 posts Report Reply

  • Stephen Judd,

    In lieu of "like" button -- what Danielle said.

    Wellington • Since Nov 2006 • 3122 posts Report Reply

  • David Hood, in reply to Hilary Stace,

    Attachment

    I wonder whether the margin between the very poor and the very rich is wider than for other ethnic groups?

    Not in income. from NZStat Selected ethnic groups (total responses) by total personal income (grouped), for the census usually resident population count aged 15 years and over, 2013 (RC, TA, AU)

    Dunedin • Since May 2007 • 1443 posts Report Reply

  • BenWilson, in reply to David Hood,

    I’ve always thought personal income is quite a dodgy figure for young people*. I was technically poor, working in McDonalds as an early student, just to pay for food and gas. But I lived in Herne Bay amongst the very well-off, with all the privileges that go with close association with highly educated upper class people. I knew that in the long run parental support in big capital decisions was guaranteed, something a poor kid from a poor family doesn’t have. When I fucked up a big capital investment in my early 20s, I had the support of family to avoid being aggressively pursued into bankruptcy by creditors. I had the surety that a probably high future income would get me out of the shit. I was able pay off that debt over time to them. Other people would have lost 20 years of their earning life over that – I only lost 5. Similarly when it comes to leg ups, kids can have no money of their own, but if they get the deposit given to them (even if they have to pay it back) they can get into the property market, despite technically having not enough income. This is exactly how it worked for me, and I fully expect it works that way for foreign students, a group very likely to come from middle to upper class families from their nation of origin.

    *ETA: Dodgy when used as a way of guessing at their class, or their actual financial status in the bigger picture.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • BenWilson,

    Essentially what I'm saying is that when money affairs are managed as a family (even if somewhat loosely) then breaking it down to individuals doesn't really capture the picture. This comment goes not just for foreign Chinese, but local ones, and also everyone else. Family money is one of the main sources of social difference in NZ right across the racial spectrum.

    Auckland • Since Nov 2006 • 10633 posts Report Reply

  • Steve Barnes,

    Labour could have avoided the racist tag by, instead of using Asian/Chinese sounding names, using Foreign sounding names. Then they would have been labeled Xenophobic instead. The report would have been totally useless and said nothing of any worth, apart from indicating that Maori are buying very few houses.
    But the handwringers amongst us would still find a way of badmouthing Labour because... well, that's what we do here, slag off Labour and wonder why National is still shafting all of us.
    Sigh.

    Peria • Since Dec 2006 • 5521 posts Report Reply

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