A reader emails about the housing coverage

A reader is not impressed with the wailing over housing LVRs.

These crocodile tears from Labour for the poor first home buyer and the wall to wall coverage of it is getting on my nerves. Cunliffe trots out this graduate working at Deloittes who is crying because he can’t buy an investment property for 450k with a 10% deposit at age 23.

Bob Jones wouldn’t get 90% LVR on an investment property and for good reason, the rent won’t cover the interest let alone insurance rates and maintenance. 

And to help this poor budding property speculator he wants to ditch the independent Reserve Bank and bring in a CGT which has worked a treat in every other property market in the world and force very other borrower be there business or personally to pay higher interest rates instead.

The thing that annoys me is the media don’t ask why has a CGT not worked anywhere else on earth why will a CGT stop investors in the property market but have NO effect in any other areas of the economy that it applies too. And most of all David Parker was advocating macro prudential tools at the last election including LVRs.

So, Labour want to nationalise power,

  • Macca

    Some very good points.
    Maybe the only way the media will ever get to change their tune is IF the left manage to buy/bribe their way back in to power and the interest rates on these ignorant journos mortgages head back in to double figures! Of course, sadly, we’ll all be fucked by then so it won’t really matter!
    The MSM keep parroting the CGT but once again, they won’t tell the public that the policy was never actually costed by Labour and apparently won’t even break even for some 4-5 years if my memory serves me!

    • AnonWgtn

      I believe your 4-5 years ids far too short – at that it will not cover the administrative costs – try 15 years as being realistic..

    • johnbronkhorst

      It won’t collect any money for 4-5 years (Australian model).
      Break even…..10-15 years.
      It will be a cost to all businesses and investors, as valuers will be needed to set the day zero valuation, accountants will need to be employed by ALL business owners to keep up with the news taxes and costs.
      All money that could be spent on expansion and new employment.
      Not to mention the new branch of IRD required to police a CGT.
      More public servants and even higher taxes to pay for them!!!
      etc etc etc….No up side here!!

    • philbest

      The Lamestream media also don’t ask where is the evidence that CGT’s have stopped speculative property price bubbles anywhere in the world. Ans: nowhere.

      It is just another revenue stream for politicians who have no intention of actually bringing house prices down.

      Labour of course wants as many people as possible dependent on a State-provided home, another reason they have no intention of actually bringing prices down. No “property owning democracy” if they have their way.

      • Patrick

        Property rights are not respected by Socialists anyway, won’t be long before Cunliffe is advocating the State seizes all the big flash houses & turns them into bedsits for the poor & needy.

        • niggly

          And he’ll do so without any hint of irony regarding his situation!

  • Dave

    Hmmm I think Deloittes need to review this grads employment on the following basis.

    1) He is bringing their good name in to disrepute, by being incredibly dumb, and by showing him up as a whinging leftie, where such an honorable adviser should be neutral.

    2) Surely after 3 to 5 years at uni, the grad understands the economics and can do the basic math on a simple leveraged scenario, and a ROI. If he can’t, perhaps he should consider stacking shelves at a supermarket.

    3) Another option is to visit his friendly union, and ask for an advance, better still get a job with the union, i hear they pay top dollar, heaps of perks, and they are not expected to perform at all.

  • blokeintakapuna

    Once again – Labour are all SNAFU…

  • Col

    They don’t show a person on a lower income, living in a nice home up the hill, with a view, and they don’t want to move, as the taxpayer is helping with the rent, why would you walk out of your comfort zone.

  • blokeintakapuna

    As of 12.50pm today – in Auckland, for $500,000 or under, Trade Me are advertising 4740 properties for sale…
    But some of those properties will be the 1st rung on the property ladder and not the 6th or 7th as some of the Chardonay socialists think they are entitled to.
    Perhaps someone should borrow Winnie’s “No” card and on the reverse put a bloody big TradeMe emblem on it to then wave it under Cunning CV’s nose!

    • philbest

      Try looking for prices in comparable US cities, where they don’t let urban planners and Greenies drag them around by the nose, to learn what fair housing value is.

      For example, there are nearly 1000 homes in Nashville, on one site, for $150,000 or less – and most of them would be closer to $500,000 in Dorkland.

      http://www.realtor.com/realestateandhomes-search/Nashville_TN/price-na-150000

  • Grizz30

    To be the Devils advocate, 9 years ago I bought my house with a 10% deposit. Okay, son the Mortgage was less than $300,000. Now I own it freehold. I feel that on a case by case basis a lower LVR should be considered depending on circumstances. Yes criteria needs to be tighter, but a lesser deposit should not exclude every potential borrower.

    • Callum

      Low LVR is not banned, it is simply restricted to 10% of the banks loans. So banks will still make these loans available but on a far more discerning basis.

  • Jman

    I was amused by this statement from Cunliffe: ““What’s the point of putting a move like this on Palmerston North, where prices have been flat or other places down south where prices have actually been falling? ”

    This shows that Cunliffe doesn’t actually understand what’s going on. The whole point of the LVR rule from the reserve bank is to curtail the likelihood of borrowers going into negative equity, which can do serious harm to the economy. There’s a lot more chance of that happening in a place where prices have been flat or falling, than in Auckland where prices have been going up. Cunliffe seems to think this is all about helping first home buyers get into the market.

  • rockape

    Well i am going to admit to being a grumpy old man/winging pom before I start. What is this house ownership/kiwi dream crap? I have been in NZ just 13 years and my observation follows. The kiwi dream is to own a tax free asset that has great capital gain and is tax free. Take that away and two things will happen. 1, You will be out of Government at the next election and 2,Kiwis will become a Nation of renters like the Dutch who are not exactly poor.Myself a good example nearly mortgage free but wanted a new yacht. The bank was happy to bung it on the mortgage so I have a nice 44 ft yacht and am paying just 5% interest. Now that is what is and has been the Kiwi Dream!

  • cows4me

    To the simpleton socialist mind the right to tax is power and tax they shall. These brainless twits can not see the result of robbing Paul to bribe Peter. They speak of “tools” they should know, they are tools and not very sharp ones at that.

  • GazzW

    You can bet your bottom dollar that labour will be very loud about nationalising the purchase of power over the next couple of weeks. Cunliffe and sidekick Noddy Norman will want to kick the arse out of Meridian’s ISP. Labour’s sabotage of MRP effectively cost the people of NZ $200 million dollars worth of hospitals & schools to prove a political point so let’s see what they can achieve this time around. Bastards.

  • Sir Cullen’s Sidekick

    Curryleaf is economically more astute than anybody in NZ as he has an MBA from Harvard university and President Obama was his class mate…..

    • http://manymonkeys.co.nz/ Hamilton Lad

      The closest he ever got to Harvard was to visit the library. MPA (regarded as a soft and sometimes worthless degree) from Kennedy!

    • Patrick

      Obumma was in Kenya apparently (according to some) so did they both do correspondence courses??

      • Sir Cullen’s Sidekick

        Curryleaf can be in two places at the same time…..

        • Dave

          Prefer those two places to be outer Mongolia, and eastern Siberia, he would enjoy conversing with ppl of similar abilities.

  • rockape

    Has anyone(other than accountants thought about the reality of CGT. A clever person will get the max mortgage on a property even if he could buy outright. Offset the mortgage against his CGT liability Cunliffe says it will be 15%, use the money for toys,investing elsewere in things not subject to CGT.

    • http://manymonkeys.co.nz/ Hamilton Lad

      Correct. It simply alters the optimum gearing ratio on the investment.

  • rockape

    Cunliffe said the other day CGT will be on other investments at about 15%. What effect will that have on Kiwisaver? That nice little nestegg for your retirement will be hit by 15% tax to the Government.

    • johnbronkhorst

      and value of any business you might sell for retirement..especially franchises.
      Portable assets, such as inherited or purchased art works/jewellery.
      CGT effects, either directly or indirectly…every part of the economy.
      As other countries have found, it is like a cancer, once it’s in, you can’t get it out!! That’s why these countries are looking to minimise it’s effect, because removing it will KILL their economies. That’s how invasive it is!!!

    • Patrick

      So you paid 33% (approx) on any funds going into Kiwisaver & 15% on the same funds (& appreciation of the assets) on the way out. Sounds very much like a Labour Party plan Stan.

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