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Comment by lawnchair_larry | Hacker News Reader

Good move. More cities need to adopt this. There is a flood of foreign capital into major western cities that is hurting those economies. And a lot of denial that this is happening.

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As much as I like this solution it always seemed to me that if the problem was too many people buying houses the best thing to do would be to build more houses.

The reason it's an attractive investment is because such investors expect that cities will never allow this and never allow prices to fall.

Sounds like a great idea, but NZ is struggling to build fast enough. NZ has a terrible attitude where everyone must have a backyard, and public transport is horrendous, so moving further out often isn’t much of a solution.

The current govt promised to build ambitious numbers of new affordable homes, but I haven’t seen any strategy on how they plan to execute on it.

> NZ has a terrible attitude where everyone must have a backyard, and public transport is horrendous, so moving further out often isn’t much of a solution.

Oddly enough, other places with that attitude are the same ones where moving further out is a solution. Pejoratively dubbed "sprawl", there is less focus on centralized things like limited property sizes and intra-city public transportation. If the land is available, it offers reasonable scale despite the detracting urbanites' cries of culture loss.

Maybe it's not the attitude that's terrible, but the inability to support it possibly caused by people not embracing the reality that the attitude exists.

Moving farther out has its own set of problems: longer commutes, and much costlier infrastructure. At least in the US, outlying areas frequently don't pay enough in property taxes to maintain the amount of infrastructure necessary to reach those outlying areas, putting strain on municipal budgets. Nobody wants to pay more taxes.

I'm seeing, also at least in the US, a combination of remote work and business moving out of the confines of a large metro's downtown into the sprawl themselves. This reduces commute. I'm also seeing more inter-burb infrastructure becoming private and not relying on funds from the municipalities they traverse. I feel like inner city space is more constrained than outer city budgets.

Yeah, I think that would really be a great solution. With NZs 3 year terms, no govt is prepared to invest heavily in infrastructure, which leaves privatization. Which kiwis really really hate. The insane choke point that is the Auckland harbor bridge could be resolved if a private company put in a second crossing, but nobody is prepared to pay or let it be in their backyard. Having lived in large cities including the US, I do love the attitude to just do stuff.

Local owns house they bought 20 years ago for $50k

Local sells to foreign buyer for $500k

Local has lots of money

Foreign buyer has to sell for significantly higher to profit..or just squat on it...not so great for local people looking for a house...

Local still needs to live somewhere

Local buys an equivalent house to the one they sold for $500k + transaction fees, which scale based on the price of the house

Local has less money than when they started

Not when the local is downsizieng from a 4 bed house and garden to a 2 bed apartment for retirement, or they simply die and it's local's kids that sell it.

There's a simple solution to avoiding buying in expensive locations though - buy in cheap locations.

So the local sells to a foreign buyer and downsizes. That’s great for them. But their kids are now priced out of the market, and will never own a home but rent from someone who lives 15h flight away.

Sure. Life sucks doesn't it

Fortunately there are many places that someone in NZ can buy a house.

https://www.realestate.co.nz/3379275

For example is proavly affordable on minimum wage of $32k, certainly with two incomes.

I’m not sure the point you’re trying to make here.

It’s a town of 1700 people, described by Wikipedia as a “gang town”. If your point is that it’s possible to buy a house in NZ, sure. But quality of life is totally a thing, no?

And even then, your example requires a $40k deposit while earning $32k, a salary which doesn’t appear to have a whole lot left over and the end of the week.

There aren’t any cheap locations. Fractionally less expensive, but still many multiples of a yearly wage.

You want somewhere that's affordable for 1x yearly wage? Care to point to some time in history that was possible?

Having New Zealand cities with average prices at 10x yearly average household income and a NZ average at over 6x is a radical departure from NZ’s historically narrow rich/poor divide.

https://www.interest.co.nz/property/house-price-income-multi...

https://www.google.co.nz/amp/s/amp.theguardian.com/commentis...

Christchurch is 4.87 times median income. New Plymouth 5.03. Hell parts of the capital are under 5x.

That's quite a normal multiplier in today's low interest and 2 income world (in parts of London the multipler is 38!)

What you're saying is that you can't afford to live in nice areas of Auckland. So don't.

Local's kids gotta live somewhere too.

My understanding is that skyrocketing housing prices aren't much of a benefit to anyone who doesn't own more than one home. Because you always need to live in at least one place, your economic elasticity only kicks in when the number of homes you buy and sell is greater than one.

Local kids can't buy house and is renting forever at unreasonable price. The world is not just about giving everyone the opportunity to become rich. Just making a decent living for most is a nice objective.

Why would they pay an unreasonable price? It's clearly reasonable for the person paying the rent.

You gotta pay back the investment/loan for the new expensive house price, and the rent will match it.

> It's clearly reasonable for the person paying the rent

How so? They may not have an option to not pay it(as we're seeing happen in cities all over the world)

Definition of reasonable[https://www.merriam-webster.com/dictionary/reasonable]

1 a : being in accordance with reason - a reasonable theory

b : not extreme or excessive - reasonable requests

c : moderate, fair - a reasonable chance a reasonable price

d : inexpensive

Unless you live in a tiny country like singapore, you have a choice where to live.

Economic theory says that if the price is unreasonable, people won't pay it.

You have to live somewhere though, and in NZ cities rents are high enough that they prevent many renters from saving any money at all.

So, no, supply and demand theory kinda doesn't stack up when it comes to housing.

2 bed house, $310 a week, that's under half the minimum wage. That doesn't seem too extreme to me. That's for a two bed remember, so if you are a couple on median wage, you'll be earning $1800 a week pre tax, about $1500/week take home.

https://www.trademe.co.nz/property/residential-property-to-r...

Should be able to save $450 a week out of that. After 3 years that's $70k, a 20% deposit on https://www.realestate.co.nz/3341361, with a mortgage then costing about $330 a week.

The problem people who complain about house prices seem to have is that they want to live in very specific and desirable locations (Certain parts of Auckland for instance). There is a high demand for these locations, therefore price is high. But clearly the price is reasonable as people can afford to live there, otherwise they wouldn't pay the rent/mortgage.

When people stop paying high prices for rent in aukland, and instead live elsewhere, then companies in Aukland will have to either

1) Relocate to cheaper locations to attract staff

2) Pay staff more so staff can live in the area

It's the same the world over. You can buy a house in the UK half an hour out of two major cities for £125k. That's a £7k deposit (£44/week or £190/month for 3 years) and £550 a month after that.

If you can afford £600 a month for housing costs (£400 rent plus £200 deposit), you can rent for 3 years, then buy, within 35 minutes of Leeds and Manchester. Minimum wage is about £1200 a month after tax.

And hence live and crappy houses or very far away from work, good scools and social life.

I am afraid your math doesn't add up. Influx of foreign capital can never be bad because it fuels the local economy. It brings new jobs in construction and other related services, transtively bringing more money to government because every human activity is taxed.

By banning foreign investors you're basically saying: "nah, we don't need more money, we have enough".

It doesn't do any of those things.

So if John Doe buys a $10 million home just to have, the NZ economy is not benefiting? Just build more

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