[Croft]

Interesting article on why some UK residents are (supposedly) considering a move to NZ. Apologies if it's already been posted.

http://www.nzherald.co.nz/section/8/story.cfm?c_id=8&objectid=10428579&ref=rss

Brits look to NZ for first step on property ladder
2:40PM Tuesday March 13, 2007
By Colin Marshall

Young British people are so desperate to get on the property ladder they are considering moving to New Zealand for a "cheap" house with the aim of saving enough to then buy a house back in Britain.

A new survey by Britain's National Savings and Investments (NS&I) has found a quarter of Britons trying to buy their first house would consider moving overseas to do so -- and a third of those had their eye on New Zealand or Australia.

NS&I spokesman Mark Brooks said a property boom in Britain had caused average house prices to double over the past six years.

Told that New Zealand's own property boom had pushed the national median in this country to about $330,000 or 119,000 pounds, Mr Brooks said that was unlikely to deter British househunters.

"Ours is 200,000 pounds ($563,539)."

NS&I surveyed 1000 people who did not own their own home for its latest Quarterly Savings Survey.

Mr Brooks said it was surprising to find so many people would consider immigrating to New Zealand or elsewhere to buy property but with more households in Britain than houses available, people were looking for a solution.

"It's harder and harder for people when they're looking for new homes to actually get on the housing ladder and first time buyers especially.

"Instead of either staying at home longer, living with their parents, or alternatively renting, which is also expensive, the survey shows that people are looking for alternative ways to get on the UK housing ladder."

New Zealand's "cheaper" prices appealed, as did the weather, and a strong affinity with New Zealanders, many of whom had lived in Britain, Mr Brooks said.

Also, many young British people had travelled to New Zealand on extended holidays.

"They see New Zealand and think 'what a great place to live' -- that's why it's higher on the agenda than it would have been previously."

Mr Brooks doubted British people would be aware New Zealand had had its own property boom.

He said property ownership was part of British culture and moving to New Zealand was just one way of fulfilling that "normal" dream.

"Getting on the housing ladder is very important."

Other destinations considered by British people looking to move abroad to buy a house were Spain (43 per cent), America (22 per cent) and Eastern Europe (20 per cent).

New Zealand's national median property price eased in January to $327,000 from $330,000 in December.

Auckland's median was $415,000, Wellington $351,868, and Canterbury/Westland stayed the same at $290,000.

In Waikato/Bay of Plenty, the median was $307,875 while Southland, the fastest growing region, had 25.6 per cent growth from from $124,250 in January 2006 to $156,000 this January.

Other median prices for January included Manawatu/Wanganui $215,000, Taranaki $272,500, Northland $305,000, Hawke's Bay $280,000, Wanganui $215,000, Nelson/Marlborough $307,000, Central Otago Lakes $432,200, Otago $221,750.

Reserve Bank Governor Alan Bollard last week raised the official cash rate from 7.25 per cent to 7.5 per cent in a bid to cut household spending, citing the booming housing market as a main reason.

- NZPA

[NooDleS]

That is part of my reasoning. Plus the flatting 'scene' in NZ is incredibly mature compared to the UK.

I cannot afford a shared forty year mortgage in the UK and I'm not prepared to fork out a small fortune for a dinky terrace/flat given Gorden Brown's current farce of an economy. How much would my £130,000 2 bed terrace be worth in 10 years time?

[aliceinwonderland]

We have just had that article quoted at us after my husband explained that we couldn't afford to move to Auckland at a salary of $100K. If we could move to anywhere in New Zealand then maybe the article would hold some truth, even though we're not first time buyers. But being confined to a very few school zones in Auckland with interest rates some 3-4% above our UK fixed rate, we didn't feel that the article really rang true at all.

[willowshouse]

Must have been a slow news day .. what a load of tosh! People do not move to the other side of the world just so they can afford to buy a house. I wonder what their agenda was when they commissioned the report?

Dawn

[Moorf]

Must have been a slow news day .. what a load of tosh! People do not move to the other side of the world just so they can afford to buy a house. I wonder what their agenda was when they commissioned the report?

Dawn

:nice1 Thought the same! Surely that's not a valid reason to move yourself halfway round the world? And cheaper? Not in the scheme of things!

[incredible hulse]

as did the weather Mmmm ....:laugh

[NooDleS]

Actually folks, it rings true for me! At least partially.

[Super_BQ]

As mentioned before from other posts, the more immigrants that come to NZ, the more difficult it makes for local New Zealanders to be able to afford a home.

If higher real estate prices continue, expect higher interest rates in the future. The wealthy people that already own real estate will get richer while those on the mortgage will continue to bear the costs. It doesn't stop here as you'll find many kiwis don't stop at owning their 1st home, but also aim to own a 2nd home as a rental property.

My cousin and her fiancee have already book to move to the UK from Auckland - to spend a minimum of 4 years in London leaving end of April. Their ambition is to be able to save as much $ as possible there and bring back to NZ to pay off a house. In their point of view, I don't think the article makes sense?

BQ

[Croft]

My cousin and her fiancee have already book to move to the UK from Auckland - to spend a minimum of 4 years in London leaving end of April. Their ambition is to be able to save as much $ as possible there and bring back to NZ to pay off a house.

Funny, my parents said that in 1970 when they left the UK - except for them it was 2 years abroad to get some money together before returning. 37 years and 7 countries (most of them several times over) later they're still abroad! Admittedly they do have rather a large amount of savings now, and a very nice place back in the UK.

[leeb]

I read an article in a UK paper the other month that said lots of Brits were buying houses all over the world in places like Nz and the obvious places like spain, portugal and france and were actually in many cases the cause of the rising property prices in these countries.

the article was in the daily express so naturally also said it had something to do with the death of princess diana as well:D

[veronica]

its not so far of the beam. A lot of people who have travelled here as part of the gap year have loved it so much that when they settle down to proper jobs and as couples they think back to here and come over as immigrants, part of their thinking is there is no way they can afford to buy a house in the UK. young couple we know in christchurch has done just this.

[stu70]

I think it is a tad too far fetched given the general consensus on lower wages in NZ and high cost of living. That can not be all that conducive to building "wealth" to return to say UK where property prices are not the cheapest. But then whatever works for people eh!

[David with a dream]

I saw this article on the news the other morning and it did make me laugh out loud. NZ = poor exchange rate at the moment and it will never be able to compete with sterling. The cost of living in NZ, high intrest rates, increasing house prices and not over genorus salarys all tell me that for some one thinking of making a quick $ on the NZ property market and then jumping ship to try and get on the housing market in the UK are in dream land, sorry to say. David

[incredible hulse]

My cousin and her fiancee have already book to move to the UK from Auckland - to spend a minimum of 4 years in London leaving end of April. Their ambition is to be able to save as much $ as possible there and bring back to NZ to pay off a house. In their point of view, I don't think the article makes sense?

BQ
That's been happening for years (with Aussies as well) as it is so easy for them to come in from an immigration perspective - parental citizenship, non-UK enforcement of gap year rules, etc. I would say the rise in the NZ housing market is more to do with Kiwi's bringing large amounts of sterling back (from IT contracting and off-shore tax savings for example) than poms selling up and emigrating.

[stu70]

I saw this article on the news the other morning and it did make me laugh out loud. NZ = poor exchange rate at the moment and it will never be able to compete with sterling. The cost of living in NZ, high intrest rates, increasing house prices and not over genorus salarys all tell me that for some one thinking of making a quick $ on the NZ property market and then jumping ship to try and get on the housing market in the UK are in dream land, sorry to say. David

On this topic, I spoke to a few Kiwis (here in Canada and the recruiters there over the phone) & they had the same sort of comment "no one goes from North America to NZ to get rich". They thought the move was for other reasons but money. I have never been there but would agree with the assessment.

[constablechuck]

My wife and I owned our home in the U.S., with all the taxes and fees, ie: township tax, county tax, school tax, sewer rent ect...it didn't really feel like we owned it, we felt like we were "renting" from the government since the government would take the house if we didn't pay all their taxes and fees, we had a mortgage on our first home and we felt even less ownership with mortgage payments hanging over our heads, also as a homeowner we were responsible for all maintenance, expensive repairs can catch you by surprise and when you read the fine print in your insurance policy there are a lot of disasters that aren't covered.

We also had investment properties, we did make some money but it wasn't worth the headache, it was hard to get responsible tenants, we were constantly having to deal with people not paying rent, damaging the property, violating the lease by having too many people living there, too many cars and other junk on the property, the good tenants complaining about the bad ones making noise and causing other problems, the eviction process was a nightmare, the tenant could appeal and drag the process out for months all the while living rent free, and if they filed bankruptcy the eviction proceedings stopped, we had one woman that filed bankruptcy before the eviction was final and she lived in our rental for free for more than a year and had everything she owed us wiped clean in her bankruptcy, she also caused a lot of damage to the property, we sued her for the damage and won, that was 4 years ago and we still have not been able to collect, it wasn't for lack of trying, as a Constable part of my job was enforcing judgements so I knew my way around the system, unfortunately there are a number of people in the U.S. that are judgement proof.

I'm in no hurry to buy a house, I sleep a lot better at night living in a rental, I just pay my rent and don't have to worry about rates, taxes, maintenance ect..., my life is a lot simpler and happier as a renter.

[veronica]

We have been in nz for 3 years but when we started to look at property 4 years ago it was possible to by an A frame house in methven $80,000 and a house in new Brighton opposite the beach for $140,000. both those properties have now more than doubled. If they had been rented out and the rent almost paid the mortgage then the people who invested will have made money in the region of over $200,000, convert that to english money and it gives you a sizable deposit for a house there.

[Super_BQ]

then the people who invested will have made money in the region of over $200,000, convert that to english money and it gives you a sizable deposit for a house there.

What's not holding true is property prices have risen far more than what local's people's earning ability (wage rates). Something doesn't add up and you'll soon believe (as i've mentioned in another discussion before) that there's a LOT of foreign investment going on in NZ. Specifically wealthy Shania Twain type migrants that buy ranches freehold with no mortgage.

There's also an illusion that people can consistently flip real estate properties in NZ for tax free capital gains. The 1st or principal home sold with a capital gain is tax free, but if you try to sell the 2nd propery within 2 years after selling your pricipal residence, don't expect the capital gain on the 2nd house to be tax free. It's easy for IRD to deem you as "speculatory" investment - we all know that people don't normally sell their house for a loss.

Several years ago the IRD tax laws were relatively lax in comparison to tax codes in other developed nation. The wording of the tax act made it easy for lawyers and tax accountants to find loop holes. A lot has changed, with the influx of immigrants, IRD has changed it's tune by passing new tax laws that 'equalise' any preferential tax treatment for those that reside in NZ (who come from a similar developed nation overseas).

Don't forget hindsight is 20/20. Nowadays, I don't think there's any preferential tax advantaged developed countries you can move to? I would tend to believe people move because they want a change in lifestyle and not for the coin. The old finance term "arbitrage theory" holds true in this case.

BQ

[constablechuck]

When homes are selling for double what they were a few years ago it makes you wonder if the value is going to continue to rise or if the bottom is going to drop out, some of the mortgage companies and consumers in the U.S. are in big financial trouble because people bought homes at inflated prices, now that the economy has changed ie: cost of fuel, interest rates and other things have gone up considerably faster than salaries have, some people can't afford to buy homes and others can no longer afford the payments on the home they have, this has created a buyers market and the once inflated home values have gone back down, there are people that owe $400,000 on a home that's now only worth $200,000, so they can't refinance and if they default they will probably end up in bankruptcy and the mortgage company will take a big hit.

It's seems like a lot of average Kiwi's are getting priced out of the housing market or being forced to make a lot of sacrifices to buy homes at the current market prices, I don't think their going to continue to put up with it forever and eventually the government may step in and regulate things, also what's happening in the U.S. could happen here, my guess is that the average prices of homes are going to drop in the future.

[stu70]

When homes are selling for double what they were a few years ago it makes you wonder if the value is going to continue to rise or if the bottom is going to drop out, some of the mortgage companies and consumers in the U.S. are in big financial trouble because people bought homes at inflated prices, now that the economy has changed ie: cost of fuel, interest rates and other things have gone up considerably faster than salaries have, some people can't afford to buy homes and others can no longer afford the payments on the home they have, this has created a buyers market and the once inflated home values have gone back down, there are people that owe $400,000 on a home that's now only worth $200,000, so they can't refinance and if they default they will probably end up in bankruptcy and the mortgage company will take a big hit.

It's seems like a lot of average Kiwi's are getting priced out of the housing market or being forced to make a lot of sacrifices to buy homes at the current market prices, I don't think their going to continue to put up with it forever and eventually the government may step in and regulate things, also what's happening in the U.S. could happen here, my guess is that the average prices of homes are going to drop in the future.

You are on the money. It is simply a matter of time. It is ebst to rent in times like these no matter how much one would like to buy a house. American market has really tanked. It will be very interesting next few weeks on the wall st.

[veronica]

OK then, whats the reason for the huge price rises in the UK property market so that it is now out of the reach of two young professionals price wise to buy a starter home on their own. Wealthy immigrants to the UK. I think not.
As for the likes of Shania Twains property buying in NZ, the property type she is looking at is not going to affect any but the most wealthy Kiwis. I don't dispute the fact that property is going up and it may be affected by immigration but a lot of kiwis I know own two or three houses and that too must have an effect. And the kiwis who sell these houses to us immigrants are the ones who set the prices and reap the rewards.

I think the main problem is not property prices rising but wages not going up as they should to keep NZ in line with the rest of the western world.

[constablechuck]

I don't know much about the UK other than there are far more people per square km than in NZ, also now that the EU has opened the door for eastern Europeans to come to the UK there must be a lot of immigrants coming to earn better wages, so the increase in home prices in the UK probably boils down to supply and demand.

I don't really blame immigrants for the drastic increase in home prices in NZ, I'm an immigrant myself, in fact they are taking a gamble by buying a home, I'm sure most would prefer that the housing be cheaper so they could leave more money in their savings, in comparison to the salary I earn in NZ and even what I earned in the U.S. I'm a bit envious of what people are earning in the UK, but when it comes down to it all the money they bring with them probably helps stimulate the economy, the real estate brokers and banks are the ones that have the most to gain, higher prices = more profit from commission and interest, I suspect these two industries have encouraged the drastic increases in home prices.

I also doubt that most Kiwi's are benefiting much when they sell their home for a profit, since the next home they buy has probably gone up in value as much as the one they sold.

[veronica]

Article here on house prices ets. but the kiwis will profit, especially the older ones who will look to downsize

http://stuff.co.nz/3995263a11.html

The othr reason for the rise in house prices is exactly the same as in the UK, supply and demand. with the population of NZ rising, natural and immigration more houses are needed, its a growing place. the building here seems to be held back a bit by lack of skilled workers so immigration again comes into play, more people more houses bit of a cycle really.

[Super_BQ]

All the NZ gov't has to do is impose a few new tax laws like full capital gains tax, restrictions on owning multiple titles, restricting foreign investment, etc. and then you'll see people running. At the moment, raising the reserve (central) bank interest rates will do little affect on those that do have $ to spend mortgage free.

Same applies in the UK. There's got to be filthly rich migrants from those eastern countries moving there. At least the economy there is attracting enough skilled migrants that do have the earning ability.

As stu70 mentioned in another post, it's the skilled workforce in that country that matters.

Is the obsession of owning a home really that worth it in life?

[stu70]

Is the obsession of owning a home really that worth it in life?

You hit it! As chuckconstable mentions how he is happy renting at the mo and does not have to worry about all the ownership issues, there are reasons to look into renting as an option. It might still be better in the long run to own than rent but not when there is a mad (MAD)rush to owning property and the prices are on the upswing. The other aspect of it is, do you want to join the rat race that will cost you peace of mind? Even if you win the race you are still a rat! If what you are buying is a primary residence then it is fine to some extent but not when you are hoarding a few for a quick buck

[veronica]

Got to disagree with both of you guys. Its far more cost effective to buy your own house than to pay out dead money in rent, and nobody can turn around and say that you have to be out of the property in 1 months time. And if through your own diligence you can afford to buy two properties and rent one out then good for you. Without those people who own two houses who do you think you wannabe renters are going to rent from.

[jo-and-jeff]

Lincoln Tan: NZ wages too meagre for home ownership dream (http://subs.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10429439)

[veronica]

Exactly what I said earlier, but the same applies to the UK too when you compare wages to houseprices.

[stu70]

here is an article (http://www.nzherald.co.nz/section/12/story.cfm?c_id=12&objectid=10429425) worth reading on the state of NZ economy. Ususally real estate tanks with signs like these on the horizon. I would be careful in investing till things have calmed down.

[Super_BQ]

I know a person that just bought his 2nd house just over a week ago. But he also bought his 1st house about 3 months ago. His occuaption? A tech support telecom employee. His 1st house costed him just over $550K, the 2nd place was around $200K. The $200k flat was strictly bought to rent out. Though i've worked out the #s and there's no way the rent on that place is enough to pay for the monthly mortgage payment. Hrm. something doesn't add up here.

The hidden key is that his parents run a fish n' chip shop. Starting to see the picture? Well it's commonly known that those kinds of operations have a lot of cash handled over the counter. I say a lot because over a period of several years, a fish n chip owner can save up a lot of cash. Undeclared cash? You tell me?

So when it comes time to re-introduce that cash back into the economy, what better way than to put it into some real estate? Your certainly not going to deposit all the cash into your bank account. :D

Apart from the example i've just given, there is more and more emphasis on the parents forking out a large portion of the mortgage for their next of kins. As we know it's quite clear that wages aren't making up for the stark rise in housing prices - There's GOtZ to be another reason?

Anyone else can think up of another idea? :exit