[Super_BQ]

In a way i'm not surprised but here's the info:

http://www.stuff.co.nz/stuff/dominionpost/3962182a6000.html

http://www.nzherald.co.nz/section/story.cfm?c_id=204&objectid=10424059

and a ranking among other industrialised countries:

http://www.chron.com/disp/story.mpl/ap/world/4553708.html

Is it lack of funding by the NZ gov't or is it most families find it hard to balance between excessive work vs. spending time with their children? I think the articles need to address that nowadays, it's more difficult to make ends meet then previous generations were families with single income (the father being the bread-winner) were the majority.

BQ

[Trigirl]

NZ isn't even in the ranking you've given?

As I've said in both the other threads already started on this - reading the report itself will give you a better informed view on what its trying to say than reading the newspapers opinions on it. bad news sells more papers than good and NZ came out pretty well in some of the tables. having said that i agree that the stats on accidents and injuries make pretty shocking reading.

so anyway here's the actual info....
http://news.bbc.co.uk/nol/shared/bsp/hi/pdfs/13_02_07_nn_unicef.pdf

[dean1968]

I don't want to be cynical here but the government's answer is to usually set up another Ministerial government agency to address the problem. There are so many beauracratic government agencies.... it is over the top.I don't want to name them but it has gotten out of hand. One department spent more money on themselves then they did on the actual needy users.

[SharpBlade]

The Child benefit you are entitled to in NZ is just a joke, in my opinion. I know it is not the answer but it would be a start.
Laura

[speckythecky]

IF the nz gov would like to start another quango / ministerial comittee with input from a non nz citizen, I am available at a very reasonable cost.

[Carol]

The Child benefit you are entitled to in NZ is just a joke, in my opinion. I know it is not the answer but it would be a start.
Laura

It took some getting used to Laura - not to get a cent - when we came here.

On the other hand - it doesnt seem to have done the UK much good either from their position in the tables.

I truly think the problem is - wages here are dire.

It is incredibly hard to make ends meet on one wage.
So of COURSE - it is so tempting to have both parents working full time.
Just to cover basic day to day running costs.

Life with 3 kids IS expensive - I had forked out nearly $1000 already this year (2 weeks in!!) in school "stuff" - books, uniforms, shoes, fees etc etc etc

But that whole "on the run" type of life with two full time working parents is not always ideal.
If there is only one parent - the difficulties are magnified.

[stu70]

I truly think the problem is - wages here are dire.

I am always stumped reading this(though not the first time). How can a country have a booming real estate market where house prices are sky rocketing at an awesome rate yet the wages are so pathetic? Is there something I am missing? The "boom" in property market can not all be attributed to supply and demand (NZ is no Singapore where land is just not there) or immigrants flooding in with ton of cash! So whats the deal?

[ruthyroo]

The "boom" in property market can not all be attributed to supply and demand (NZ is no Singapore where land is just not there) or immigrants flooding in with ton of cash! So whats the deal?

There's certainly a perception that cash rich immigrants, not just from the UK, are pushing up house prices - don't know if the statistics back it up. In my hopelessly unscientific observation the Property Pages ads which say "UK Investors - come and see what vendor want's to sell!!!!" tend to be for massive, 5-6 bedroom, multi-million $$$ houses.

IMHO the main reason that NZ has what is seen to be a booming real estate market is that there is nothing - NOTHING - else for Joe Bloggs kiwi to invest in. Bricks and mortar and land are what kiwis invest in- end of story. The stats show (that I remember reading anyway) that a very small % of them regualrly invest in the NZ stock market, and even smaller fraction invest in Aus, and an teeny weeny tiny fraction in other markets - UK or US. Virtually every kiwi over the age of 50 that I know have investment properties and a family crib / bach / section somewhere that has rocketed in value. Many kiwis I know under that age has property investments or is working to paytheir mortgage off so that they can invest in other properties. Enough people - usually skilled, educated, often had an OE in London and brought back lots of GBP, or have parents who have sold up said beachside family crib for squillions - can afford to do this to keep the market spinning upwards.Also don't forget that the majority of commerical investors in NZ are not from NZ, many of those squillion $$$ developments are paid for with OZ $$$, or US $$$. So prices that seem massive to us here in NZ probably seem like bargains to overseas investors.

I think Carol's point is that the low wages here can really make life a struggle for those that are at the wrong end of the property boom. When people are struggling to pay the bills - and many people are - they get stressed, and there are impacts on their families, especially the children. I guess the rider on the 'low wages' statement should be 'low wages relative to the cost of living'. I've said it many times on here (sorry to those who are sick of hearing it)...the (single) average kiwi salary buys the average kiwi life (for a family), but this is not the same as the average UK life. It means no holidays, no new clothes except Warewhare and K-mart, it means an old banger of a car, it means no savings and no pension, it means eating lots of mince and sausages and drinking a lot of packet flavoured drinks. It means sending your kids to school with the cheapest pencils and notebooks that you can get. It means choosing between paying the leccy bill and getting the car fixed - not both. And people aren't stupid (well they are sometimes but lets give some credit here). They know when they are scrimping and saving - and failing to get anywhere. And that leads to stress, resentment, anger etc. that spills out into family life. Some families react by sending both parents out to work, and dealing with the problems that brings of childcare, time missed with kids. Some turn to benefits. Some turn to crime to fill the gap. A fair number head overseas.

Soooo where was I going with this? The NZ government's answer to low wages relative to the cost of living seems to be benefits, benefits and more benefits as well as programmes targeted at specific groups (maori, young single mums, disability beneficiaries) trying to lift their incomes to 'liveable' levels. But frankly, unless wages overall rise to a level where it actually is more profitable to work than to accept benefits, things aren't going to change. I was kind of in favour of the Labour gov approach when I first came here, but I find them increasingly patronising and ineffectual. They seem to be treating the country like a big sociological experiment.

[stu70]

Thanks ruthyroo for a very informative and detailed observation. It is very dangerous to be putting all the eggs in the real estate basket(for kiwis). A meltdown in the property market(caused by other lucrative alternatives for foreign investors who currently have gone long in NZ, a natural disaster like quake or tsunami) would leave a lot of investors very exposed to a sharp fall.Thanks for your input. Regards

[dean1968]

Someone is buying coastal property (tracts of land) and the evidence tends to suggest overseas buyers. Ruthyroo made some excellent points. I seriously doubt it is the average NZ Mum and Dad investor who would be struggling to raise a family with the current cost of living and low wages. Just paying the rates on a million property land valuation would be substantial without any rental cash flow income.

Ruthyroo is quite right property investment / speculation is the only game in town. There is investment seminars, television programs DIY Do It yourself makeovers for buying and selling property. It is on the radio, in the newspapers and magazines. The topic of conversation from politicians and the Reserve bank is about property. You can’t avoid it in the media and the after dinner conversation is about property. The latest newest market participant is for commercial mutual funds to buy residential property. Are we near the top? Obviously the party can’t last forever. Yes there is froth in the market. Eventually kwi dollar will go into free fall. It would only take a terrorism event, or natural disaster like an earthquake for the market to panic and dump the kwi dollar.

People buy high (property) and hope to sell higher. Especially a second investment residential property. I am aware of the property cycle and how they end in tears and it is not my style.

"Buy when stock prices (property) are low and hold on to your securities... People seem unable to grasp these simple principles.
They do not buy when prices are low.
They are fearful of bargains."
J. Paul Getty

Residential property investing does not attract gst (a tax) like commercial property nor is there a capital gains tax. That is why the great Kiwi love affair with buying property. Anything else has tax associated with it and the returns have been mediocre at best.

Average Auckland sale prices, Barfoot & Thompson
* 2000: $302,514
* 2002: $335,029
* 2004: $423,317
* 2006: $480,738
* December 2006: $523,793

Plus the leverage is wonderful when things are going your way. Banks love to lend money on property. Try to borrow money on other assets and the banks don’t want to know you or they hit you with a higher interest rate. Now we get to leverage. If you invested directly into residential property and bought one property for $300,000 in calendar year 2000 and rented it our and sold it in December 2006 for around $523,793. Your capital return is around 73 percent or 12 percent per annum. Inflation has been running at 3-4%. Disregard rental income, we are keeping it simple. Just imagine the rental income covers the rates, insurance, maintenance etc. You put in a 100 percent equity and paid $300,000 cash for a property, it would be a foolish investment if you could not get some rental income after paying expenses. We are keeping it simple. Now you decide to buy two properties paying $150,000 each and borrow the rest $300,000. Hopefully the rental income covers the rates, maintenance, interest etc. A lot of this stuff is tax deductible for an rental property investor which can be offset by other taxable income. Your returns are over 140 percent.

I am aware that history does repeat itself. The worse case scenario is Japan when the bubble burst in the 1990's with property. It has taken them a long time to dig themselves out of a hole. The regression of the mean would suggest property prices have to fall back to a more natural average selling price.

[stu70]

With fancy mortgage financing that was happening in some parts of the USA, it was on the minds of most investors as to when this bubble would burst. Though it has been happening for a while, it is just getting more accute in some markets.
http://money.cnn.com/2007/02/15/real_estate/home_prices/index.htm?cnn=yes

[dean1968]

stu70 this will have an adverse reaction to New Zealand. Where do you suggest New Zealander's parked their money? NZ kiwi dollar has been the third best performing currency in the last 6 months. It is predicted that the NZ Reserve bank will hike up interest rates again March,to curb inflation and the heated property market. If that does happen the normal tendency is for the NZ kiwi dollar currency to head upward again. The only thing left at his diposal is for the Finance Minister Cullen to use scare mongering tactics to try and talk the currency down, telling the Japanese not to invest with their SuperYen (borrow at .5 pecent in Japan and investt in NZ at 7.5 percent) or scare kiwis with a mortage levy on property. That went down like a lead balloon

[Super_BQ]

Interesting replies! I can see how everyone is trying to make a gain and get ahead so their children / family can live a better life. But is it really a better lifestyle for the family? (Both parents working extra hours just to pay for their insanely high mortgage on their 2nd house?).

Someone is buying coastal property (tracts of land) and the evidence tends to suggest overseas buyers.

We just did a 2 day trip from Kaikoura and between the people we were visiting and my aunt/uncle, the topic on investing into "coastal ocean front property" could not be avoided. The local friend told us of a person that bought ocean front land south of Kaikora for $2.2 million. Then 3 years later the Nga Tahu paid $9 million to reclaim that land back because the land was a major part of the maori heritage.

Not far further south was a potential sale by a guy that is splitting 1/20th sections of the land. Asking price $1 million per section. All had ocean front view. My question was how much a house could be rented out for? Not even considering the cost to build a 'batch/flat' there. All for the long term bet that some foreigner will come and snatch your $1 million investment for $9 million in 10-20 years time? Only time will tell. or during this period, a series of unknowns could happen. The NZ gov't could impose a foreign investment restriction that limit overseas investors so that the local NZ people can afford to buy property, to a more radical event like the Nga Tahu gov't could win property rights of all coastal NZ shores.

The idea of a weekend 'batch' doesn't appeal to me here in NZ. This particular location is a 2 hour drive north from Christchurch. Where I grew up in Canada (BC), the idea of a weekend batch was only a 30 minutes drive from town ; cabin on the lake in the summer and a cabin on the local ski hill. IME, my friends would have a small dock at their cabin where their parents had boats and jet skis, a big floating bardges where you would bring your BBQ, chairs, radio, fishing gear, and go float all over the lake visiting small islands. Somehow I don't think you could do that on the ocean fronts of NZ as either a) it's too windy b) sharks in the water or c) the UV from the sun will kill you.

BQ

[stu70]

Thing that comes to my mind is the investment in the market. If the govt devises a brilliant scheme(I know thats kinda an oxymoron for any govt. but still..)that provides incentives for Kiwis to invest in stock markets (similar to RRSPs here and 401k south of the 49th), perhaps that will help ease the pressure on real estate somewhat. I am familiar with the eurodashi thing, any further hike in rates will only have an undesirable side effect on such issues. If the goal is to allow average kiwis to participate in the home ownership, then this is hardly going to help achieve that objective. Investment in real estate is not to be blamed; it is the speculative nature of that investment that is not in the best interest of the nation in my opinion.