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Overseas buyers just get permanent residency and citizenship and buy houses. A few years ago you just needed ~$NZ5m invested in the country and you get permanen

Overseas buyers just get permanent residency and citizenship and buy houses. A few years ago you just needed ~$NZ5m invested in the country and you get permanent residency. There is no way the prices are driven by domestic money. My factory supervisor brother has a house in Mangere Bridge, a blue-collar suburb, built for ~$100k 20 years ago is now well over $1m. It is batshit crazy. I hear of eye-watering prices in Manurewa, Otahuhu, Papakura. Edit: https://www.stuff.co.nz/life-style/homed/real-estate/125475682/heres-what-aucklands-median-house-price-can-buy-around-the-world https://www.stuff.co.nz/life-style/homed/real-estate/1254756.... Jesus the median is now $1.14m.

Mandatum 5y ago
Family just missed out on a $1.6M art-deco 3 BR in Mangere Bridge. They were sad about it. It's fucked.
- cheesecake_luvr 5y ago
  Personal questions and you don't have to answer at all: Did your family really have the money to pay it? Where did your family get it from? Don't have to answer if you don't want to.
  - Mandatum 5y ago
    Yes. They sold their last house for $1.4M. They bought it for $400K 12 years ago. They've never had a job that earned them more than $100K. They have just bought something else for $1.5M which needs $200K spent to get it to how they want it (renovating bathrooms, kitchen, etc).
    - itsoktocry 5y ago
      >They have just bought something else for $1.5M which needs $200K spent to get it to how they want it (renovating bathrooms, kitchen, etc). They are putting $200k into an asset which is already 10x+ their income? Ouch. I can't wrap my head around a financial decision like that.
      - lepton 5y ago
        By "income", parent is referring to employment income. But their true income is the real estate investment of their primary residence, which nearly doubles their income. They are borrowing $300k I guess (1.5m + 0.2m, less 1.4m), and will likely sell their new house for far more than $1.5m when they sell again in another dozen years.
        itsoktocry 5y ago
        >and will likely sell their new house for far more than $1.5m when they sell again in another dozen years. Why do you assume this to be the case? It has been the story of the last 20 years or so, sure. But it could be a complete aberration in the historical timeline of real estate, which for many decades had real rates of return around 1% annually. Houses were not investments. It's wild that people now assume it's "normal" that you buy a house a triple your money in a decade.
      - IkmoIkmo 5y ago
        If you look at income and ignore their wealth, maybe it seems strange. But they have > 1.4 million in equity. They're allocating < 15% of their equity. At the end of the day they'd be sitting on a mortgage that's only 2-3x their annual income, that's very reasonable.
        itsoktocry 5y ago
        >that's very reasonable. If you look at current prices, and think that they can only rise, that's very reasonable. Otherwise, that equity can be wiped out pretty quickly. I suppose what I find strange is killing it on an investment (turning 400k into 1.5M) then turning around and reinvesting in the same inflated asset-class. Hence my comment regarding buying a more expensive home AND dumping money into it.
crummy 5y ago
You think the price of 500k houses has been driven to 1m thanks to people who can throw around 25m?
- deleted 5y ago
  [deleted]
- eurasiantiger 5y ago
  Yes. Those people buy multiple properties in an effort to launder their drug money. Just look at the situation in Marbella.
  - petre 5y ago
    You probably mean this? https://www.theguardian.com/news/2021/may/20/a-united-nations-of-how-marbella-became-a-magnet-for-gangsters https://www.theguardian.com/news/2021/may/20/a-united-nation...
    - TedDoesntTalk 5y ago
      That’s a great read. Thank you. I was in Marbella in the 1990s, in awe of the ostentatious wealth, but had no idea it was from drug trafficking.
    - eurasiantiger 5y ago
      Yes. The situation is likely similar all over the world where there is a housing bubble and large markets for drugs.
  - voisin 5y ago
    An unexpected benefit to legalizing and taxes drugs: lower incentive for drug dealers to Jack up the price of houses!
teruakohatu 5y ago
> A few years ago you just needed ~$NZ5m invested in the country and you get permanent residency. There is no way the prices are driven by domestic money. In 2019-2020 just 38 of this class of visa was approved, which seems to be about the average per year over the last decade. It was just 16 in 2020-2021. I don't think these people are buying decrepit Auckland villas, two bedroom semi-detached or tiny one bedroom apartments, given they have $10 million spare to invest. Prices are also driven by cheaper interest rates domestically.
- cheesecake_luvr 5y ago
  You may be right for that class of visa, but there are many others: https://www.immigration.govt.nz/new-zealand-visas/options/live-permanently/all-resident-visas https://www.immigration.govt.nz/new-zealand-visas/options/li.... And yes, the prices can be driven up by cheap loans, but from memory they were already rising steadily before the covid stimulus measures. I am still unconvinced that there exists in NZ a mechanism that can generate so much money and drive up the prices to these levels. Haven't been back for a while but family and friends back there are just as bewildered as I am with these price rises.
  - Mandatum 5y ago
    I think what you're seeing is everyone previously investing in stocks, business, etc. are now going all-in on property. Mum and Dad are pulling their supers and investments and gifting it to their kids for their first home. It is entirely unsustainable. But we've been saying this for 15 years now.
    - archibaldJ 5y ago
      Intersting. In where I live (Singapore), it's very common for young married people to get a loan/etc from their parents to cover the down payment (~25%) for a 20-30 year mortgage. Also, rent here is so expensive that most Singaporeans still stay with their parents even in their late 20s~30s. (Most people renting a room or apartment are none-Singaporeans (30% of the population).) So buying a house makes perfect economical sense if you are married and can somehow cover the down payment. I wonder if this is becoming a trend across all first-world countries, as the world gets less predictable and people get more risk-adverse. Esp when rents are driven up by none-citizens so it becomes economical to buy instead of rent.
deleted 5y ago
[deleted]
wuschel 5y ago
Let us assume it is not overseas buyers - what factors are left? Is it just access to cheap credit that drives investment into the housing market all over the globe?
- digislave 5y ago
  Why not? It seems obvious that cheap credit would drive up prices. For example people could just be bidding up to what they can pay off in about 30 years. If they simply do that, cheaper credit would rise house prices.
  - wuschel 5y ago
    I was just wondering. It's hard to understand markets, IMHO, and I have no feeling how a potential balance between cost of money, supply and demand should look like in a sector like housing. Do you have any references or literature that would give me a better understanding? Originally, I also thought that proper restriction of foreign investment might be a good solution. I agree with you that it must be domestic actors that are to drive prices upwards. On a social level, this is going to generate a lot of problems, as it locks out people w/o access to credit to take part in the market. It is crazy what happens in cities like Berlin in regard to gentrification. But even other cities that do not have a hype status are affected by this.
    - ChuckNorris89 5y ago
      >It is crazy what happens in cities like Berlin in regard to gentrification Can you elaborate on this?
      - wuschel 5y ago
        Sure. In the case of Berlin inner city districts like Kreuzberg, Prenzlauer Berg et cetera have been rapidly changing in the last 10 to 20 years. This is in part because population is dying off/moving away, but also because developers are buying apartments and are actively removing the old inhabitants in order to be able to charge higher rents. There are laws in Germany that regulate the increase in rental payments. However, with the current price levels in housing, only a new contract with a tenant can give an investor an income that justifies the price payed for a property. The 'historic' population that can not afford the new level of rent is pushed out to the outskirts of the city [1]. Other cities of this tier e.g. London have similar population and price effects. [1] "Plattenbau" in Berlin - not so trendy. See: https://www.bz-berlin.de/media/plattenbau-sanierung-in-marzahn-hellersdorf-2 https://www.bz-berlin.de/media/plattenbau-sanierung-in-marza...
vkou 5y ago
> There is no way the prices are driven by domestic money. How can you be so sure? With the way mortgages work, and the way people who bought starter homes ~10 years ago are more than capable of affording a downpayment on a bigger home, you don't actually need a large amount of domestic money for housing prices to be bid up into the stratosphere.
- thevagrant 5y ago
  Where I live there are empty houses. Very few locals can buy $1m+ homes and be so lazy to even bother renting them out. I looked up ownership of some I noticed empty for a long long time and the owners appear to be a string of shell companies.
  - vkou 5y ago
    They may be a factor driving the prices up, but the locals being able to keep up through borrowing is why the prices stick.
908B64B197 5y ago
> Overseas buyers just get permanent residency and citizenship and buy houses. With birth tourism, just transfer some assets to your nephew, a full born citizen of $country_of_conveinience and have him purchase the property.
ab_testing 5y ago
May be it is not foreign buyers but instead the new Zealand government that had been printing money over the last year in an attempt to spur economic growth. https://i.stuff.co.nz/national/politics/300223358/reserve-bank-repeatedly-warned-government-money-printing-would-lead-to-house-price-inflation https://i.stuff.co.nz/national/politics/300223358/reserve-ba...

Mandatum 5y ago

Family just missed out on a $1.6M art-deco 3 BR in Mangere Bridge. They were sad about it. It's fucked.

cheesecake_luvr 5y ago
Personal questions and you don't have to answer at all: Did your family really have the money to pay it? Where did your family get it from? Don't have to answer if you don't want to.
- Mandatum 5y ago
  Yes. They sold their last house for $1.4M. They bought it for $400K 12 years ago. They've never had a job that earned them more than $100K. They have just bought something else for $1.5M which needs $200K spent to get it to how they want it (renovating bathrooms, kitchen, etc).
  - itsoktocry 5y ago
    >They have just bought something else for $1.5M which needs $200K spent to get it to how they want it (renovating bathrooms, kitchen, etc). They are putting $200k into an asset which is already 10x+ their income? Ouch. I can't wrap my head around a financial decision like that.
    - lepton 5y ago
      By "income", parent is referring to employment income. But their true income is the real estate investment of their primary residence, which nearly doubles their income. They are borrowing $300k I guess (1.5m + 0.2m, less 1.4m), and will likely sell their new house for far more than $1.5m when they sell again in another dozen years.
      - itsoktocry 5y ago
        >and will likely sell their new house for far more than $1.5m when they sell again in another dozen years. Why do you assume this to be the case? It has been the story of the last 20 years or so, sure. But it could be a complete aberration in the historical timeline of real estate, which for many decades had real rates of return around 1% annually. Houses were not investments. It's wild that people now assume it's "normal" that you buy a house a triple your money in a decade.
    - IkmoIkmo 5y ago
      If you look at income and ignore their wealth, maybe it seems strange. But they have > 1.4 million in equity. They're allocating < 15% of their equity. At the end of the day they'd be sitting on a mortgage that's only 2-3x their annual income, that's very reasonable.
      - itsoktocry 5y ago
        >that's very reasonable. If you look at current prices, and think that they can only rise, that's very reasonable. Otherwise, that equity can be wiped out pretty quickly. I suppose what I find strange is killing it on an investment (turning 400k into 1.5M) then turning around and reinvesting in the same inflated asset-class. Hence my comment regarding buying a more expensive home AND dumping money into it.

crummy 5y ago

You think the price of 500k houses has been driven to 1m thanks to people who can throw around 25m?

deleted 5y ago
[deleted]
eurasiantiger 5y ago
Yes. Those people buy multiple properties in an effort to launder their drug money. Just look at the situation in Marbella.
- petre 5y ago
  You probably mean this? https://www.theguardian.com/news/2021/may/20/a-united-nations-of-how-marbella-became-a-magnet-for-gangsters https://www.theguardian.com/news/2021/may/20/a-united-nation...
  - TedDoesntTalk 5y ago
    That’s a great read. Thank you. I was in Marbella in the 1990s, in awe of the ostentatious wealth, but had no idea it was from drug trafficking.
  - eurasiantiger 5y ago
    Yes. The situation is likely similar all over the world where there is a housing bubble and large markets for drugs.
- voisin 5y ago
  An unexpected benefit to legalizing and taxes drugs: lower incentive for drug dealers to Jack up the price of houses!

teruakohatu 5y ago

> A few years ago you just needed ~$NZ5m invested in the country and you get permanent residency. There is no way the prices are driven by domestic money. In 2019-2020 just 38 of this class of visa was approved, which seems to be about the average per year over the last decade. It was just 16 in 2020-2021. I don't think these people are buying decrepit Auckland villas, two bedroom semi-detached or tiny one bedroom apartments, given they have $10 million spare to invest. Prices are also driven by cheaper interest rates domestically.

cheesecake_luvr 5y ago
You may be right for that class of visa, but there are many others: https://www.immigration.govt.nz/new-zealand-visas/options/live-permanently/all-resident-visas https://www.immigration.govt.nz/new-zealand-visas/options/li.... And yes, the prices can be driven up by cheap loans, but from memory they were already rising steadily before the covid stimulus measures. I am still unconvinced that there exists in NZ a mechanism that can generate so much money and drive up the prices to these levels. Haven't been back for a while but family and friends back there are just as bewildered as I am with these price rises.
- Mandatum 5y ago
  I think what you're seeing is everyone previously investing in stocks, business, etc. are now going all-in on property. Mum and Dad are pulling their supers and investments and gifting it to their kids for their first home. It is entirely unsustainable. But we've been saying this for 15 years now.
  - archibaldJ 5y ago
    Intersting. In where I live (Singapore), it's very common for young married people to get a loan/etc from their parents to cover the down payment (~25%) for a 20-30 year mortgage. Also, rent here is so expensive that most Singaporeans still stay with their parents even in their late 20s~30s. (Most people renting a room or apartment are none-Singaporeans (30% of the population).) So buying a house makes perfect economical sense if you are married and can somehow cover the down payment. I wonder if this is becoming a trend across all first-world countries, as the world gets less predictable and people get more risk-adverse. Esp when rents are driven up by none-citizens so it becomes economical to buy instead of rent.

deleted 5y ago

[deleted]

wuschel 5y ago

Let us assume it is not overseas buyers - what factors are left? Is it just access to cheap credit that drives investment into the housing market all over the globe?

digislave 5y ago
Why not? It seems obvious that cheap credit would drive up prices. For example people could just be bidding up to what they can pay off in about 30 years. If they simply do that, cheaper credit would rise house prices.
- wuschel 5y ago
  I was just wondering. It's hard to understand markets, IMHO, and I have no feeling how a potential balance between cost of money, supply and demand should look like in a sector like housing. Do you have any references or literature that would give me a better understanding? Originally, I also thought that proper restriction of foreign investment might be a good solution. I agree with you that it must be domestic actors that are to drive prices upwards. On a social level, this is going to generate a lot of problems, as it locks out people w/o access to credit to take part in the market. It is crazy what happens in cities like Berlin in regard to gentrification. But even other cities that do not have a hype status are affected by this.
  - ChuckNorris89 5y ago
    >It is crazy what happens in cities like Berlin in regard to gentrification Can you elaborate on this?
    - wuschel 5y ago
      Sure. In the case of Berlin inner city districts like Kreuzberg, Prenzlauer Berg et cetera have been rapidly changing in the last 10 to 20 years. This is in part because population is dying off/moving away, but also because developers are buying apartments and are actively removing the old inhabitants in order to be able to charge higher rents. There are laws in Germany that regulate the increase in rental payments. However, with the current price levels in housing, only a new contract with a tenant can give an investor an income that justifies the price payed for a property. The 'historic' population that can not afford the new level of rent is pushed out to the outskirts of the city [1]. Other cities of this tier e.g. London have similar population and price effects. [1] "Plattenbau" in Berlin - not so trendy. See: https://www.bz-berlin.de/media/plattenbau-sanierung-in-marzahn-hellersdorf-2 https://www.bz-berlin.de/media/plattenbau-sanierung-in-marza...

vkou 5y ago

> There is no way the prices are driven by domestic money. How can you be so sure? With the way mortgages work, and the way people who bought starter homes ~10 years ago are more than capable of affording a downpayment on a bigger home, you don't actually need a large amount of domestic money for housing prices to be bid up into the stratosphere.

thevagrant 5y ago
Where I live there are empty houses. Very few locals can buy $1m+ homes and be so lazy to even bother renting them out. I looked up ownership of some I noticed empty for a long long time and the owners appear to be a string of shell companies.
- vkou 5y ago
  They may be a factor driving the prices up, but the locals being able to keep up through borrowing is why the prices stick.

908B64B197 5y ago

> Overseas buyers just get permanent residency and citizenship and buy houses. With birth tourism, just transfer some assets to your nephew, a full born citizen of $country_of_conveinience and have him purchase the property.

ab_testing 5y ago

May be it is not foreign buyers but instead the new Zealand government that had been printing money over the last year in an attempt to spur economic growth. https://i.stuff.co.nz/national/politics/300223358/reserve-bank-repeatedly-warned-government-money-printing-would-lead-to-house-price-inflation https://i.stuff.co.nz/national/politics/300223358/reserve-ba...