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Telling half of the truth about the housing market – is misleading information a lie? Pricewise all three homes delineated in the TV show “Our First Home” have been sold on auction between 898k and 720k. Would you consider these homes affordable?


Mislead Housing Market – How does it affect you?

Housing Politics

Is telling the half truth a lie?


Well, this question came up reading the latest property market reports and watching the final episodes of the TV1 series “Our First Home”. 


Firstly—I haven’t written blog posts for quite a while, but I am still here. We have been extremely busy over the last 5 months by actively doing what many media reporters only write about. We upgraded two homes in a row, curious? Hope the pictures below give you  an  impression (you can rent them from us).

















On the Internet I have seen lots of speculations about the housing market and changes proposed and in discussion. The recent TV1 reality show summarized how the housing market is sold to the public. False or true—do you believe the story and the profit  the Schreuders (winners of the Our First Home series) actually made? On the website they wrote “They sold their Titirangi home on Monday night (13 April 2015)  for $721,000, making a profit of $190,400 and a percentage gain of 35.88%.


In this show the difference between reserve price and auctioning price—they called it “profit”. Let me assume the reserve price was the purchase price plus renovation costs (material and trades people, etc). If you try your own renovation, you would have to add holding costs like interests for the loan, council levies for the property, insurance to cover your renovation and the selling agent for marketing.  Also you need cash for your household bills, when you don’t work in your job. In this TV reality show” surely they have made certain arrangements to sweeten the deal for the contestants to cover their costs.  You wouldn’t participate in a show without payment either, right?



Concerning truth about reality


This reality show is TV entertainment, a sweet story better than crime stories, but be sure  most work has been done by people off camera and the production crew. Pricewise all three homes have been sold on auction between 898k and 720k—certainly not a price range ordinary Kiwis would consider “affordable homes”.

In parts I watched there was information to save money with “combining FlyBuys points” and split the homeloan in fixed and floating—but no words about taxation rules! Did you catch up with the misleading information about profits—Sure, the taxman watched, too.

To look at the given information in this series you may wonder, and rightly so, how many people might come to the conclusion as “the Wardlaw family sold their three bedroom Te Atatu South home for $898,000 resulting in a profit of $228,550” that is easy money.



Just because it is on national television doesn't make it true. Buying a home for renovation and selling it on for profit is a taxable activity and GST and income tax do apply. In the case of the Wardlaws the GST (15%) on the selling price is 134,700 Dollars and income tax on profit (>70k income is taxed by 33%) are another 75,421 Dollars that lead to a profit from selling of only18,428.50 Dollars. When you share that amount with two families for months of hard work that is not an overwhelming result, really.


My concern is misleading information should never be on TV, right? We have learned that the pursuit of renovating a home involves big decisions, sacrifices, usually it takes place over a prolonged period of time and requires that sort of money kiwi families only have on national television otherwise the housing stock would be in better shape.




Five year in the making—what actually is the result?


Needless to say people are looking desperately to find a home for rent or to own – that is especially a problem in Auckland as the housing prices soar to new heights. The housing market is everyone’s concern and even better for selling eye catching stories.

No wonder discussions about changing taxation (CGT), lending rules for homebuyers and interest rates flared up again to dampen the housing market - actually it is the Auckland market as the rest of the country is quiet and it is risky to trigger another recession.

Most of you will remember, we had already a distortion of the housing market in 2010 by changing the taxation rules that initially triggered the housing shortage when developers and investors fled the market. In Auckland it grew bigger and bigger because of migration numbers. If you really want to understand the housing problems, then follow the path the money goes including council levies, sky rocketing costs for building material, insurance premiums and profits made by the finance industry.


Take away from a home renovation show

Watch out; renovating a house with the intention to sell for profit and upgrading a rental property (replacements old with new or re-decoration) are two different pairs of shoes and are taxed differently. The first case is a taxable activity that attracts on sale GST and income tax. On the opposite for investment properties (rentals) are only rent deductible expenses classified as repairs and maintenance (wear and tear) for keeping the investment in good working order. House improvements for investment properties like changing the footprint of the house, a new deck, insulation, plumbing, electrical wiring, etc are not rent deductible expenses and have to be capitalized.


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Klauster Blogs lead to a real person, IT professional, investor, landlord and business owner with interests in technologies, properties and trading.



His passion, making experiences available and helping people like you, comes from extensive travelling and the principles of life—how to avoid pitfalls in unfamiliar territory when investing or forming relationships.


The philosophy to treat life, partnerships and hobbies as an investment has helped people in his circle. Life is a dream with a deadline, happiness comes from making the right choices and having realistic expectations.


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Housing market - is misleading information a lie?


House renovation