Latest news with #propertyinvestors
RNZ News
2 days ago
- Business
- RNZ News
'Topping up $300 a week': How much money do property investors actually make?
Last year more than 50,000 property investors were making losses on their portfolios. (File photo) Photo: Unsplash/ Artful Homes A big chunk of property investors do not make money from their investments - and those who do are pulling in an average of less than $16,000 a year. RNZ revealed last year, more than 50,000 of the roughly 120,000 property investors in the country were making losses on their property portfolios. Now, new data released under the Official Information Act has shown even those with a profit were making a limited amount. In the 2024 tax year, the average rental income made across all entities reporting a profit was $15,680. Based on the average house price, that is a return of 1.7 percent. Individuals were making $13,240 and trusts $26,490. The year before, the average income was $15,590. A year earlier, it was $16,680 and in 2021, $14,800. Simplicity chief economist Shamubeel Eaqub said it highlighted people were not investing in property for cash yields but for other reasons. Simplicity chief economist Shamubeel Eaqub said capital gains was a motivator for investors. Photo: Supplied Those included being able to borrow from the bank to invest in property in a way that other investments were not able to, and the lack of tax on properties not captured by the bright line test. "The real motivation is capital gains - because the cash return means tenants aren't the main business, the house is. "Roughly, if your cash earning yield is 1.7 percent, and let's say the cost of equity is 10 percent - probably a bit higher in NZ, then investors are assuming house prices will increase by over 8 percent a year forever. "So we have this weird setup, that encourages people to make a pretty serious financial bet, through tax and banking regulation, and cultural norms." Including capital gains, investors would have made 6.6 percent a year on average over the past five years. In 2022, they would have had a 19 percent return, and in 2021, 15. percent, before recording total losses in the most recent two years. He calculated investors would have made an average $179,672 in the 2021/22 year, thanks to capital gains, and $111.464 the year before. But they would have lost almost $85,000 in the 2023 year and another $21,362 in the 2024. NZ Property Investors Federation spokesperson Matt Ball said he was not surprised by the data. "We have one rental property ourselves and I'm putting in $300 a week at the moment because I'm stuck on an interest rate of 6.65 percent. "But we've been doing that for the last year, 18 months. We'll make a loss just because that's how it is." He said property investment was not "winning Lotto". "It's hard work and to make money out of it you have to put in some effort. You can't just buy a place and sit down and watch the money roll in. "That's why if you can add a bedroom or upgrade it so you get a bit of rent of rent or whatever, do some work to it, that's the goal." He said 85 percent of property investors had another job. "I think if you could put the money into other investments you'd probably be getting a strong income… the leverage is the difference, I can't borrow $1 million to put into shares." Sarina Gibbon, general manager at Auckland Property Investors Association said some investors would be operating across multiple entities. "Since FY22, when interest deductibility started being phased out, the IRD hasn't been privy to the economic reality of investing, let alone reporting it accurately. It has been reporting legislated distortion. In FY24, landlords could only deduct 50 percent of interest costs. Cash-poor portfolios got pumped into the system and spat out as paper-rich operations. "So, no, the numbers are not surprisingly low; they are deceptively high. We are taxing revenue, not profit. This sort of tax distortion is nothing else but political theatre. Here's the irony, though: flawed as the policy was, it did rewire investor behaviour from accumulating to improving. "Sure, more deductible repairs and upgrades led to better-quality housing, but also higher rents. So the adversarial policy borne out of flawed design and bad leadership cornered investors into action to benefit their tenants and no one else." She said now investors could claim their home loan interest against their income again and interest rates had fallen, there was some breathing room. "In the long term, I expect investment to be more dynamic, yield-focused and taxable income from the investor cohort to grow." Property investment coach Steve Goodey said investors starting out would usually make losses but people who had been investing for a while would often have properties without mortgages. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
The Guardian
04-07-2025
- Business
- The Guardian
Budapest's young people are joining the ranks of generation rent
When I left my family home to study at university in 2007 and moved to downtown Budapest, housing costs were hardly a topic of conversation among my friends. I rented rooms in centrally located flats for £80-£100 per month. Fast forward to 2025 and a similar room in a shared flat would set you back at least £200 – double the price of 15 years ago. Talk to anyone in their 20s in Budapest today, and the deepening housing crisis will inevitably come up as one of the defining struggles of their lives. The statistics paint an equally grim picture. Between 2010 and 2024, Hungary saw the largest increase of the housing price index among EU member states. While the EU average rose by 55.4%, Hungary's housing price index rocketed by 234%. Meanwhile, per capita net income only grew by 86% in the 2010s. Budapest, the capital, is the centre of this crisis. According to the Hungarian National Bank, residential property prices are overvalued by 5-19%. This is partly explained with the high proportion of investment-driven purchases: these accounted for 30-50% of all transactions in the last five years in Hungary. Unlike in many other EU capitals, property investors in Budapest are not primarily foreign nationals – who accounted for just 7.3% of transactions between 2016 and 2022 – nor are they institutional players. Instead, they are typically individual Hungarian citizens. As real estate has become an increasingly appealing investment for upper- and middle-class households amid growing economic uncertainty, the result has been a deepening polarisation within Hungarian society. The problem has become so glaring that, after a decade of silence, even the ruling rightwing Fidesz government has begun to acknowledge it in recent months. Since coming to power in 2010 with a constitutional majority, Fidesz's housing policies have focused mainly on subsidising home purchases for middle-class families. Only about 10% of all housing-related government spending has targeted lower-income groups. Meanwhile, Hungary's public housing sector has shrunk dramatically, from covering 20% of the housing stock in 1990 to a mere 2% today. The government's longstanding neglect of the housing issue is no accident. It stems from a deeply rooted ideological narrative. In 2014, the prime minister, Viktor Orbán, declared in an interview: 'My basic principle is that my house is my castle – I am a believer in owner-occupancy and family homes.' This narrative – common across former eastern bloc countries – paints home ownership as a kind of cultural destiny, portraying the state socialist era's large-scale public housing programmes as historical aberrations. But this view is neither historically accurate nor economically realistic. In fact, socialist-era housing policies bore strong similarities to public housing systems in western Europe. Affordable housing developments helped the upward social mobility of millions, creating opportunities that had previously been unimaginable. Yet after 1990, anti-communist sentiment combined with 'shock therapy' reforms – including the rapid privatisation of half a million dwellings – forged a political imagination that has sidelined rental and public housing, replacing it with the dream of universal home ownership. Today, however, that dream is slipping further out of reach. Over the past decade, the proportion of households living in rented housing in Budapest has grown from 12.7% to 17.5%, with young people overrepresented: 35% of this group lived in rented accommodation in 2022. In the past year alone, rents climbed by roughly 10%. Although Hungary's national home ownership rate remains around 90%, a 'generation rent' is clearly emerging in the capital. Young people without family financial support increasingly see home ownership as an unattainable goal. A recent survey found that 38% of the adult population of Budapest would consider renting – if affordable and secure options were available. As the myth of full-home ownership becomes more visibly unworkable, demand for affordable rental housing is growing. Despite the lack of systematic government support for affordable housing in Budapest, a few hopeful initiatives are beginning to take shape. The municipality of Budapest recently launched a social housing agency, inspired by successful models from the civil sector. With 16.7% of the city's dwellings being unoccupied in 2022, the agency works to connect vacant properties with households in need, offering secure management services to owners and affordable rents to tenants. Another promising move is that the municipality was recently able to use a legal loophole to buy an 85-hectare (210-acre) brownfield site from the government. Initial plans for the site envision a large-scale sustainable development that could include thousands of affordable housing units. These local government-led interventions, while promising, face constant obstruction from the Fidesz national government, which opposes initiatives led by the green opposition mayor of Budapest. In the meantime, residents and civil society groups are trying to create bottom-up solutions. The Alliance for Collaborative Real Estate Development, for example, is experimenting with community-led housing models. Inspired by Germany's Mietshäuser Syndikat, the Zugló Collective House Association bought a residential unit in 2018 and has managed it according to cooperative principles, ensuring affordable rents for seven tenants. Without access to public support or ethical financing, the project was funded by direct loans from friends and activists. Similar efforts are being taken on in other capital cities of the region, and the network of these pioneering housing cooperatives – Moba, meaning 'self-build through mutual help' in Serbo-Croatian – is already set up. These grassroots initiatives could offer some hope for a generation otherwise facing increasing hardships. However, the systematic transformation of these housing regimes can only be imagined if these governments change course – and if the EU starts to channel more direct funding towards affordable housing in Hungarian and other eastern European cities. Csaba Jelinek is an urban sociologist based in Budapest, focusing on housing and urban development. He is co-founder of Periféria Policy and Research Center and board member of the Alliance for Collaborative Real Estate Development
The Guardian
04-07-2025
- Business
- The Guardian
Budapest's young people are joining the ranks of generation rent
When I left my family home to study at university in 2007 and moved to downtown Budapest, housing costs were hardly a topic of conversation among my friends. I rented rooms in centrally located flats for £80-£100 per month. Fast forward to 2025 and a similar room in a shared flat would set you back at least £200 – double the price of 15 years ago. Talk to anyone in their 20s in Budapest today, and the deepening housing crisis will inevitably come up as one of the defining struggles of their lives. The statistics paint an equally grim picture. Between 2010 and 2024, Hungary saw the largest increase of the housing price index among EU member states. While the EU average rose by 55.4%, Hungary's housing price index rocketed by 234%. Meanwhile, per capita net income only grew by 86% in the 2010s. Budapest, the capital, is the centre of this crisis. According to the Hungarian National Bank, residential property prices are overvalued by 5-19%. This is partly explained with the high proportion of investment-driven purchases: these accounted for 30-50% of all transactions in the last five years in Hungary. Unlike in many other EU capitals, property investors in Budapest are not primarily foreign nationals – who accounted for just 7.3% of transactions between 2016 and 2022 – nor are they institutional players. Instead, they are typically individual Hungarian citizens. As real estate has become an increasingly appealing investment for upper- and middle-class households amid growing economic uncertainty, the result has been a deepening polarisation within Hungarian society. The problem has become so glaring that, after a decade of silence, even the ruling rightwing Fidesz government has begun to acknowledge it in recent months. Since coming to power in 2010 with a constitutional majority, Fidesz's housing policies have focused mainly on subsidising home purchases for middle-class families. Only about 10% of all housing-related government spending has targeted lower-income groups. Meanwhile, Hungary's public housing sector has shrunk dramatically, from covering 20% of the housing stock in 1990 to a mere 2% today. The government's longstanding neglect of the housing issue is no accident. It stems from a deeply rooted ideological narrative. In 2014, the prime minister, Viktor Orbán, declared in an interview: 'My basic principle is that my house is my castle – I am a believer in owner-occupancy and family homes.' This narrative – common across former eastern bloc countries – paints home ownership as a kind of cultural destiny, portraying the state socialist era's large-scale public housing programmes as historical aberrations. But this view is neither historically accurate nor economically realistic. In fact, socialist-era housing policies bore strong similarities to public housing systems in western Europe. Affordable housing developments helped the upward social mobility of millions, creating opportunities that had previously been unimaginable. Yet after 1990, anti-communist sentiment combined with 'shock therapy' reforms – including the rapid privatisation of half a million dwellings – forged a political imagination that has sidelined rental and public housing, replacing it with the dream of universal home ownership. Today, however, that dream is slipping further out of reach. Over the past decade, the proportion of households living in rented housing in Budapest has grown from 12.7% to 17.5%, with young people overrepresented: 35% of this group lived in rented accommodation in 2022. In the past year alone, rents climbed by roughly 10%. Although Hungary's national home ownership rate remains around 90%, a 'generation rent' is clearly emerging in the capital. Young people without family financial support increasingly see home ownership as an unattainable goal. A recent survey found that 38% of the adult population of Budapest would consider renting – if affordable and secure options were available. As the myth of full-home ownership becomes more visibly unworkable, demand for affordable rental housing is growing. Despite the lack of systematic government support for affordable housing in Budapest, a few hopeful initiatives are beginning to take shape. The municipality of Budapest recently launched a social housing agency, inspired by successful models from the civil sector. With 16.7% of the city's dwellings being unoccupied in 2022, the agency works to connect vacant properties with households in need, offering secure management services to owners and affordable rents to tenants. Another promising move is that the municipality was recently able to use a legal loophole to buy an 85-hectare (210-acre) brownfield site from the government. Initial plans for the site envision a large-scale sustainable development that could include thousands of affordable housing units. These local government-led interventions, while promising, face constant obstruction from the Fidesz national government, which opposes initiatives led by the green opposition mayor of Budapest. In the meantime, residents and civil society groups are trying to create bottom-up solutions. The Alliance for Collaborative Real Estate Development, for example, is experimenting with community-led housing models. Inspired by Germany's Mietshäuser Syndikat, the Zugló Collective House Association bought a residential unit in 2018 and has managed it according to cooperative principles, ensuring affordable rents for seven tenants. Without access to public support or ethical financing, the project was funded by direct loans from friends and activists. Similar efforts are being taken on in other capital cities of the region, and the network of these pioneering housing cooperatives – Moba, meaning 'self-build through mutual help' in Serbo-Croatian – is already set up. These grassroots initiatives could offer some hope for a generation otherwise facing increasing hardships. However, the systematic transformation of these housing regimes can only be imagined if these governments change course – and if the EU starts to channel more direct funding towards affordable housing in Hungarian and other eastern European cities. Csaba Jelinek is an urban sociologist based in Budapest, focusing on housing and urban development. He is co-founder of Periféria Policy and Research Center and board member of the Alliance for Collaborative Real Estate Development
Daily Mail
01-07-2025
- Business
- Daily Mail
It was the pandemic boomtown with thousands moving in. Now it's in crisis... and homeowners are freaking out
Nearly half of for-sale homes in Austin bought after July 2022 are at risk of selling at a loss. That's the highest share among major US cities and, at 48 percent, it's nearly three times the national average of 16 percent, according to Redfin.
News.com.au
21-06-2025
- Business
- News.com.au
The truth about Melbourne, Sydney ‘exodus'
In the years since the pandemic first began to unfold, the perception of Melbourne and Victoria more broadly in the nation's collective imagination has changed dramatically. Prior to the pandemic Victoria had the fastest rate of population growth in the nation in both nominal and per capita terms, while the state's economy was one of the fastest growing of any in the nation. Yet despite Victoria's relative economic strength prior to the pandemic, today the perception of Melbourne and Victoria could scarcely be more different. But is that reputation deserved? Or is Victoria experiencing a hangover of pandemic era perceptions that are no longer reflective of reality, years after the pandemic drew to a close. In an attempt to provide a concrete answer to this question, we'll be looking at three quantifiable metrics, comparing today's Victoria not only with the other states and territories, but also with where Victoria was at the eve of the pandemic. Housing In recent years Victoria has often made headlines for an exodus of property investors. Weaker than average growth in housing prices, a lowering of the land tax threshold and higher land taxes have all been put forward as reasons for investors exiting the market. For the sake of argument, we will assume that the rental bond data used to underpin claims of an exodus is correct, despite the extremely high likelihood of seeing the number of rentals in Victoria revised upward. If there has been an exodus of property investors from Melbourne, no real downside is being realised relative to other states and territories. As of the latest data from property data firm SQM Research, Melbourne has the highest rental vacancy rate of any the nation's capital cities and in relative terms has a vacancy rate 83 per cent higher than the average rate of the nation's other capital cities and 42 per cent higher than the national average. This not what you would expect to see if an exodus of property investors was negatively impacting Melbourne's renters. In recent years, an increasingly widespread perception of a mass exodus from Melbourne has developed, arguably as a response to the state's more protracted and more severe lockdowns than the national average. It is correct that population flows in and out of Melbourne have shifted since the pandemic. During the 2021-22 financial year, 24,450 people left Melbourne in net terms as a result of domestic migration. However, the largest loss of residents to domestic migration of any city during 2021-22 was experienced by Sydney, where 49,800 people exited the harbour side city in net terms. Fast forward to the latest data from the ABS which covers up to the end of the last financial year, Melbourne saw a loss of 7580 residents to net internal migration. Meanwhile, Sydney saw a significantly larger exodus of residents to domestic migration, with 41,100 exiting during 2023-24. While Melbourne has certainly seen a major shift from the pre-pandemic norm of domestically driven population inflows, the outflows it is now experiencing are a fraction of what became the norm in Sydney over a decade ago. The labour market When it comes to the labour market Victoria's performance is significantly less impressive. But first some good news, Victoria's unemployment rate is 0.47 percentage points lower than it was at the end of 2019 (4.85 per cent then vs. 4.37 per cent today). The bad news is that despite the strong improvement in the labour market compared with pre- pandemic, its improvement is the weakest of the nation's five most populous states. As of the latest data from the ABS, Victoria also has the highest unemployment of the five most populous states, with 4.37 per cent of the labour force out of work compared the best performing state, Queensland where 3.69 per cent are unemployed. While things are not going as well for Victoria compared with the other states on this metric, there is a silver lining. Since January, the unemployment rate in Victoria has reduced by 0.3 percentage points, even while the unemployment rate in New South Wales and South Australia has increased. The takeaway While Melbourne has seen domestic migration turn negative since the onset of the pandemic, claims of a mass exodus are overstated, at least when put into context with Sydney, which saw 5.4x residents exit to elsewhere in Australia in 2023-24. On the other hand, the news from the labour market is more mixed, unemployment in Victoria is significantly lower than where it was prior to the pandemic, but is 0.31 percentage points higher than the national average. Meanwhile, the best news for Victoria stem from its housing market, where it holds the title of highest rental vacancy rate in the nation and simultaneously the lowest cost house rents of any major city. Victoria certainly faces challenges on the road ahead, most notably from its state budget, as the Allan government attempts to get the state on a more sustainable fiscal path after facing a particularly damaging period during the pandemic. Ultimately, despite its other challenges, Victoria is not facing the problems claimed to the degree that is often perceived and in some important ways Victoria is excelling to a degree unseen in the rest of the nation's large states.
