Forum Archive Index - May 2001

[Murdoch Dryden <m.dryden@auckland.ac.nz>]

Title: Re: [sharechat] Residential property again

Hi Michael
I have been talking with companies in the retirement home market and have aso worked the stats for StatsNZ.  I couldn't agree with you more regards changing trends in teh residential market as a result of the aging population.  the only panacea I see to this is immigration.  Between now and approx 2012, the percentage of the population over the age of 60 will double (I'm trying to remember my stats here so wouldn't hang myself on these figures, they're close though).  New Zealanders have been encouraged by a relaxed capital gains tax to vest their major investment in their house (and often a second and third one).  For many this is their retirement savings.  Trouble is that when they all start cashing out of their 3-4 bedroom family homes at the same time, there will be an oversupply on the market, and the cash needs of an elderly population often make them 'motivated vendors'.  These cheap houses are also going to negatively impact the rental market as this is teh market that will suddenly be able to purchase.

Never-the-less the rate of leverage continues to make it an easy investment to enter, and it is tempting.  Short term the tax benefits alone can be compelling, (its OK to pay some tax, its galling however to pay  more tax than the likes of fay and myers who can afford to sustain non-resident status and pay no tax whatsoever)

Max

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