All about New Zealand

[a warren]

Re: All about New Zealand

I think the NZ housing bubble is going to take a lot of popping. Prices have fallen substantially, but many people simply will not believe that house prices will not rise again & see this as a buying opportunity. Also NZ can always turn on the immigration tap, as this thread illustrates, and immigration supports house prices.
Other major differences between NZ and USA re housing are that you cannot walk away and leave the problem with the bank on mortgagee sale. You still have to pay. Also loan interest rates are rarely fixed for more than a five year period. Floating interest rates or 1 - 3 year fixed loans are the norm. And 8% is regarded as an average interest rate. Historically, house price inflation has come to the rescue of most borrowers, and maybe it will again. But I don't think so. Its a bubble about 40 years in the making. Thats all most people know. Parents advise their children to buy the most expensive house they can convince the bank to allow them to afford.
No government in NZ has had the courage to introduce capital gains tax on housing and interest expense is tax deductible. So revenue losses and capital gains is what attracts people to 'investment' wooden boxes that rot.

[waysouth]

Re: All about New Zealand

the bubble that is going to take a lot of popping..is probably very nearly ready to go

on an affordability basis(payments as a percentage of income)house prices are about double the long run norm

the country is so deeply indebted it has no hope of repaying this debt at the current exchange rate(unlike Australia which has its superannuation savings equivalent to its debt,97% of NZ savings are in housing)

so a currency crisis is inevitable..which will lead to a sudden stop in investment..which will lead to mass unemployment..and a shortage of capital to sustain the giant housing ponzi scheme that masquerades as our government..

[metalman]

Re: All about New Zealand

the bubble that is going to take a lot of popping..is probably very nearly ready to go

on an affordability basis(payments as a percentage of income)house prices are about double the long run norm

the country is so deeply indebted it has no hope of repaying this debt at the current exchange rate(unlike Australia which has its superannuation savings equivalent to its debt,97% of NZ savings are in housing)

so a currency crisis is inevitable..which will lead to a sudden stop in investment..which will lead to mass unemployment..and a shortage of capital to sustain the giant housing ponzi scheme that masquerades as our government..

=

[a warren]

Re: All about New Zealand

Now you are scaring me!

Iceland 64 degrees north. NZ 40 degrees south. At least we can sleep outdoors for part of the year.

[metalman]

Re: All about New Zealand

Now you are scaring me!

Iceland 64 degrees north. NZ 40 degrees south. At least we can sleep outdoors for part of the year.

seriously... and i don't mean to be mean... but what's the major difference besides cod vs sheep?

[a warren]

Re: All about New Zealand

A major difference is that our big four banks are in fact Australian banks, or subsidiaries of aussie banks. And the aussie banks are among the best capitalised in the world as I understand it. Our banks have borrowed in foreign currency to lend to house buyers, but that borrowing is hedged I think.
So when or if foreign lenders stop lending to NZ we have the currency crisis, inflation and high interest rates. Then the foreign money comes back in chasing the high interest rates and they all lived happily for ever after.
The most recent issue is the dairy farm subsidies in Europe and USA. Dairy is our biggest forex earner, followed by tourism.

[lakedaemonian]

Re: All about New Zealand

I would largely agree with Louie's points.

I'm also in agreement with Louie's, aWarren's, and waysouth's opinions on the state of the real estate market.

I'd say 99% of people here in NZ are genetically programmed to gamble on real estate....it simply doesn't add up.

Residential real estate here is still dangerously expensive......the rising long rates combined with continued layoffs is going to hammer residential real estate another 20%+ in my opinion.

I don't see how residential real estate prices can continue to be propped up when we source 40% of our borrowings from overseas.

I don't fear trade barriers(even though there are "noises" of scuh coming from US/EU dairy subsidies), I fear barriers to credit.

Commercial real estate is somehting I'm quite familiar with as I've recently sold my last commercial property. We sold a bluechip property...excellent location.....excellent global brand tenant....excellent long-term lease.....with a cap rate of just shy of 8%........and it was a battle.

Vacant CRE is simply NOT moving...and inventory is growing.

The only good thing is lending against CRE didn't get TOO silly....but there's just far too much of the national wealth in it....

I'd really like to see how the NZ/OZ banks that rate so highly look after their balance sheets get smoked from upside down mortgagee sales in the next few years.

Where I disagree with Louie is in the "cheap" South American dairy farming.

I know some folks who did very well in NZ and had a go in South America.....the land may be cheap.....but the infrastructure to support dairying in much of South America is lacking.....some things better, some things worse.

I would agree that a good number of Waikato, Canterbury, and to a lesser extent Southland Dairy farmers that bought at ridiculous valuations are going to get destroyed. We are on the West Coast, paid a fraction of what the "prime" locations cost, and have all the free water we want.....but it will be a challenge in the next few years as a lot of folks get shaken lose from the industry...I think it's going to get very ugly.

We have been shifting as much of our net worth OUT of property and OUT of the NZD for the last 2 years as we can...we are down to just our home and our farm.

PM, Energy, and foreign currency is how we plan on weathering the coming decade.

As far as lifestyle/education goes, I'd agree with Sharky mostly.

We have two young children.

We fully expect them to receive an excellent education from our local public school(primary school is very well regarded). But it is up to us to ensure our kids are getting the most they can from it and supplementing their education with selected extracurriculars.

NZ will be a great spot to weather the coming decade......but we are ensuring our capital and income is as protected as possible to weather it as best we can.

I really should put up some photos of the Southern Alps...absolutely magic!

Hunting and fishing is world class!

[metalman]

Re: All about New Zealand

A major difference is that our big four banks are in fact Australian banks, or subsidiaries of aussie banks. And the aussie banks are among the best capitalised in the world as I understand it. Our banks have borrowed in foreign currency to lend to house buyers, but that borrowing is hedged I think.
So when or if foreign lenders stop lending to NZ we have the currency crisis, inflation and high interest rates. Then the foreign money comes back in chasing the high interest rates and they all lived happily for ever after.
The most recent issue is the dairy farm subsidies in Europe and USA. Dairy is our biggest forex earner, followed by tourism.

thx. that makes perfect sense. at least your farmers won't be paying cow fart taxes like ours will

[lakedaemonian]

Re: All about New Zealand

thx. that makes perfect sense. at least your farmers won't be paying cow fart taxes like ours will

Actually cow fart taxes have been bandied about. I should know this, but I think it was last year that the dairy industry was given 4 years until it has to start paying a tithe to the Church of Global Warming.

[Sharky]

Re: All about New Zealand

My understanding of NZ's foriegn debt issue is that it's somewhat unique, and nothing like Iceland's.

Most of the foreign debt is held by private parties, rather than governments. About a third of it is in the form of capital invested in NZ companies, so it's offset by increases in the asset site of the balance sheet for NZ companies. Another third is in the form of bank deposits and debts.

NZ Treasury argues that national net worth is increasing, and that the high levels of foreign investment have actually helped fuel that growth:

http://www.treasury.govt.nz/publicat...8/08-03/04.htm

Also, most of the debt is on the investment side. On a current account basis, NZ usually sells as much or more overseas as it imports. NZ isn't engaging is massive borrowing to buy foreign goods, as happened in the US.

I'm not saying that it isn't a concern, but I do think it's not as big of a concern as it might first appear.

BTW, there's a very interesting wildcard at play on the foreign debt and foreign exchange side of things. NZ has recently significantly ramped-up it's oil exploration and development projects. If significant additional reserves are found, I would expect that to have an effect on the NZ economy and the NZ dollar. The probability of such an event isn't high, but it's certainly larger than zero.

[jtabeb]

Re: All about New Zealand

Picking up the conversation about New Zealand from another thread:

http://www.itulip.com/forums/showthread.php?p=101362

I'm a native Californian who immigrated to NZ in Dec 2006. I live in Nelson, on the north coast of the south island.

If you have any questions about NZ or the immigration process, or if you have any requests for photos of particular areas, please post them here.

I know there are a number of others in NZ on iTulip too (both expats and natives) -- your feedback/input/stories/photos would also be most welcome!

Can I own property in NZ as a US citizen? Or do I have to be a NZ citizen to own property there?

V/R

JT

[Sharky]

Re: All about New Zealand

Can I own property in NZ as a US citizen? Or do I have to be a NZ citizen to own property there?

Yes, you can own property in NZ if you're a US citizen.

The only restrictions are with property that's on the coast, or larger than about 10 acres, or that's next to a national park. In those cases, you have to be a Permanent Resident (or a citizen) before you can buy. You can own any other property even if you never come to NZ.

[lakedaemonian]

Re: All about New Zealand

Yes, you can own property in NZ if you're a US citizen.

The only restrictions are with property that's on the coast, or larger than about 10 acres, or that's next to a national park. In those cases, you have to be a Permanent Resident (or a citizen) before you can buy. You can own any other property even if you never come to NZ.

Yup......and there are folks who have gamed the system easily enough around the low restrictions.