The “massive” shortage of housing in New Zealand needs to be eradicated without house prices falling, Labour Party leader Andrew Little has said. Prices need to remain steady while tens of thousands of new houses come on-stream over coming years, he said.
Amongst those new properties, Labour’s 10-year Kiwibuild policy for 100,000 new homes priced between $550,000 and $600,000 would help increase the supply of more affordable housing.
Speaking to media in Parliament on Tuesday about the need for more affordable housing, Little was asked whether he welcomed the recent drop in Auckland valuations. “No, I want to see more houses built, and I want to see more New Zealanders getting the chance to own their own home,” he said.
“We have a massive, massive shortage in housing. Property markets go up and down. It’s (price change) not a solution to the problem. We simply have tens of thousands of houses less than what we need to accommodate the population that we’ve got here,” Little said.
“There is no answer to our housing crisis other than more houses. A lot of those will be own-your-own homes, some will be social housing, many of which will be owned and developed by Housing New Zealand. That’s the only answer you've got to a housing crisis [and] a chronic shortage of housing.”
'Build more bloody houses'
Interest.co.nz put to him that one way to improve housing affordability was that house prices dropped, rather than incomes rising.
“Falling house prices doesn’t add a single extra house in a market to a market that is at least 60,000 houses short of what we’ve got,” Little replied.
“You don’t have to study Econ 101 to know that when you’ve got X population and we’re 60,000 houses short, just trying to manipulate the prices of existing houses, isn’t going to provide that 60,000 extra houses,” he said.
“There’s only one answer to the housing crisis, and that is build more bloody houses. That’s what we’re going to do.”
The follow-up from Interest.co.nz was that Econ 101 would imply that increasing the supply of housing could put downward pressure on prices.
“It adds to the houses available to the people who can’t get in them,” Little replied.
“We have chronic overcrowding problems in housing in New Zealand. We talk about the homelessness problem. Most of the homeless in New Zealand are in houses. They’re just overcrowded houses because we don’t have enough houses. That’s what we need to do.
“Having the right number of houses, or closer to it, stabilises prices, it doesn’t collapse prices.”
'We need stable house prices'
Labour’s policy requiring non-residents to build a new house if they wished to own one in New Zealand would help dampen speculation in the market, Little said. Likewise, changes around the bright line test and getting rid of negative gearing would help.
“There are some people who clearly have an advantage in the housing market. It’s not fair to first home buyers any more. It is speculators who have assets behind them and leverage, and they are hiking the prices of houses,” Little said.
“We are in an unusual situation where the level of house price growth is as excessive as it is, and it is a responsible thing for government to do to say, ‘we’ve got to control house price growth, we need stable house prices.’
“They do it in Germany, they do it in other countries, we can do it here. What sits at the core of the problem is the fact that we have way too few houses to accommodate the population that we’ve got now,” he said.
$600,000 Kiwibuild home more affordable in Auckland than currently
Another question from the media pack was that if 60,000 houses were added to the nation’s housing stock and the average house price in Auckland stays at $1 million, how would that help solve affordability?
“Because the houses that we will build as part of our Kiwibuild, will not be priced at $1 million, they’ll be considerably below that. They will be affordable houses to first home buyers,” Little said.
A large proportion of the Kiwibuild price would be based on the price of land. “There are economies of scale we can get with long-term supply commitments from building materials suppliers for a long-term building contract,” he said.
“But that is what we think we can achieve. It sounds expensive, for example if you’re living in Nightcaps, but if you’re living in Auckland that is a better price than you’re getting at the moment.”
The Kiwibuild policy would create a first home buyer market where people were required to sign up to live in a Kiwibuild house for at least five years. Buyers would be tested on whether they had already owned a property.
The land registration system could be used to track whether people had on-sold Kiwibuild homes before their time was up, and a top-up fine potentially added, although there would always be exceptions, Little said.
On whether a Kiwibuild house would have to be on-sold to another first home buyer, Little said the fullness of the policy would come in time, with the broad brush of it having been laid out already; “We are continuing to refine things.”
“What we are totally committed to is addressing the massive and chronic shortfall in housing in New Zealand and particularly for first home buyers,” he said.
Meanwhile, Kiwibuild would require roughly a three-year ramp up period before building hits full steam.
“There will be affordable homes built over that time. But in terms of ‘full steam ahead’ it would take us a while. Part of it is getting workforce in place, getting the supply agreements in place, getting the land released, working with private property developers, councils, Iwi, whoever, to get all that in place.”
192 Comments
Looks like they are going to selectively pick FHB's or poor people or some strange criteria to allow them to buy these houses at 600k : Effectively giving them probably 500k min free money on some messed up criteria of who can buy them.
After 5 years: these people who lacked the ability to save to get on ladder before now can sell their house for 1.5 mill and be millions, thanks to the genius of Labour.
They have to be sold at market value, to all market participants, in which case they will be sold for 800k plus
Agreed 110%
There will be scenarios like a couple on 100k combined income get a $300k discounted house while a couple on 101k don't.
I'm happy for the government to build houses if they must, but they have to be sold at market rates. They possibly could have covenants preventing being a rental.
Simon, your comment is absurd. So what you are saying, is it was ok for your to buy a house ten years ago for 300k, with NO deposit, that is now worth 1,5 million, due to National's ridiculous support of international money laundering, but it isn't ok for the next generation to receive the same 'favour' under Labour? Needless to say I am shaking my head at you as I write this!
Not to mention that previous government builds were one of the factors that created affordable home ownership back then too. How quickly those who benefited forget such things, and come instead to believe they pulled themselves up entirely by their own bootstraps.
You are right blue meanie. This was not any mistake, it was a favour from national for a whole generation. I don't know why people are upset about it?
I would propose one change to this brilliant policy, that every generation is entitled to, that being to just print the money and hand it over directly. Save's on admin overhead.
That's exactly what has been going on...except the lucky ones were the boomers who benefited from government builds before them (and other measures targeting affordable home ownership), but then failed to carry such efforts forward for the next generations.
Young Kiwis are having to take out huge mortgages so boomer investors can have their portfolio growth.
Blue, I think it is you who is being absurd. You mention the property being worth $1.5 mil - until it is sold or borrowed against this is meaningless. Paper value means nothing until some attempt is made to realise it. To make your statement is unfair and unrealistic. Boomers and all subsequent generations will be significantly better off if residential properties were a quarter of their current prices. The consequences of the failures that the subsequent generations are having to deal with now are not the boomers fault but that of successive Governments, both Labour and National, when they have forgotten who they are supposed to serve, and become too self-serving. If we want to put specific blame - list all prime ministers since Lange because none of them acted to address the issues and most made it worse.
... so . .. little Andy says that $ 600 000 is the price for an affordable house in Auckland ...
Does this imply that all the staff at McDonalds , Countdown , and the Ryman retirement villages have been given a 1000 % pay rise overnight ?
... flipping heck ! ... that is good news , is it not ....
Thats hot hot plate news, all day Sunday, Gummie because that would be for 65 sqmetres, that there.
http://www.radionz.co.nz/national/programmes/ninetonoon/audio/201839973…
Think he implies that you subdivide the lounge, frame it up with 40 x 12 mil, use a board.
Perfect for bunks, snugg as a bug..
.... there's a job.
Correct. Without suitable covenants on the title, any new "affordable" houses will become "unaffordable" the first time they are sold. I was personally despondent after reading Little's comments. I thought I was listening to Bill English: "We can only fix the housing problem by increasing supply". He quotes Econ 101. Market economics state that prices are determined by both supply and demand. I thought of Star Wars; Help me Obi Wan Kanobe (read Winston) you are my only hope"!
Agree... not sure he understands maths.
Building more houses (or more correctly, more dwellings, as Auckland needs more desirable dense housing options) is a GOOD thing, both in terms of number but also quality of stock. But this HAS to mean that prices come down on average... which is also a GOOD thing, then they are currently bubble priced.
The fact is, he's trying to pander to the current spruikers who don't want to see the value of their over-leveraged "investments" fall.... as if there is a magical world where housing affordability can be accomplished without lowering prices or increasing wages.
Obviously it is not only the National caucus that has heavily invested in housing, so has the Labour Party caucus. So, whatever the outcome of the election, we can be confident that NZ institutions will continue to protect and support property investors and owner occupiers.
Peri you're absolutely correct! All political parties membership are heavily invested in the ponzi housing market!
Time to ditch them all including the Greens who had senior members with multiple rentals !
The only difference is Nats decided to turbo charge
the market by opening door wide to foreigners
A tiny island e conOmy like NZ just cannot cope with
mass migration Proof of this every day
Most politcans are in property investment and when looking at policies - do they look at NZ interest or what suits them and their friends interest.
Different type of corruption but yes corruption that is making Kiwi - alien / uncomfortable in their own country.
Time for change.
another fail for labour, again showing they are not far away from national in policy,
while I agree about non residents only being able to build new, they have not fully addressed the demand side of the equation and are focusing mainly on supply
so they will need immigrants to build for immigrants etc etc
WP must be rubbing his hands with glee with all the foot in mouth going on
I suspect if Labour does fail this time around they'll need to follow the growing discontent in NZ and - in 2020 - abandon housing investors outright. It'll be a pitting of young and upcoming Kiwis (and their concerned parents / grandparents) against specuvestors who have no concern for anyone except themselves.
So there it is!
Even though Little has said that housing is unaffordable, his previous affordable houses that he was saying were going to be $450k are now $600k.
He is also saying that he doesn't want prices down!
Why are many on here now think that Labour/greens are going to be the saviours for them to be able to enter the housing market?
Do you think that 600k is affordable?
You couldn't really say that the 2 leaders of the above political parties have been that successful financially themselves, so why do you think they could lead the country successfully?
but what are the details, there are many labour MPs invested in properties, so whilst I agree bright line needs to go to 5 or 10 years with a clause allowing OO to sell and buy for work, school etc
and neg gearing to go
don't expect quick changes more like a national like plan of 2030 before it comes in
No they can't!
You pay tax on profits don't you?
There is no way in hell that they can tax you on your gross rental income before expenses including interest on lending!,,,
There would be no one at all able to do this!
You run a business you are able to claim expenses, end of storey.
They COULD do that but they would be crazy to as it would destroy the rental market quite quickly meaning rents would go through the roof. Something like:
1. removal of interest expense offset against rental income means many private landlords would be forced to sell, others would choose to sell to take their money to other investments that DO allow interest costs to be offset (e.g. shares), pay off their mortgage, or just spend
2. this would result in some short term pain for existing private landlords, property prices might fall, rents would rise as the same number of renters compete for fewer properties available to rent (noting that the vast majority of renters are not interested or not able to purchase their own home)
3. Broader impact to property prices in the short term due to reduced investor demand. Existing home owners can't sell for high enough price to upgrade, building activity slows
4. medium-long term supply constraint worsens due to less building resulting in increased property prices
5. end result = fewer private landlords, maybe a few extremely wealthy individuals/companies owning large numbers of rental properties with little/no debt. This would hugely decrease competition in the rental market. Small number of landlords would have the entire population of renters over a barrel. Rents go up. A lot.
End result = a rental crisis to go along with the home ownership crisis.
I think his point is that normal Employees are disadvantaged... because we can't deduct, say transport costs, from our gross income before paying tax. Perhaps it's the PAYE system and/or annual tax returns system that needs to be addressed... for example household income tax v personal income tax which disadvantages stay at home parents.
This is a misrepresentation. People who run their own businesses carry other disadvantages. They don't get sick pay or an employer pension, they have to carry all of the risks of their business, including bankruptcy and pay their own insurances etc. PAYE employees don't carry these disadvantages. You cannot simply highlight one advantage, you are not comparing apples with apples.
I am comparing apples with apples - the deduction of expenses and payment of tax on net income. Nothing more, nothing less.
Employees have plenty of other risks - stagnant wages, restructures, living 50km from their workplace due to sprawl...
FYI, I am not convinced the extra 4-5 weeks makes all the difference if more than 10% of gross wage was spent on unavoidable expenses in earning income - EG transport, clothes, etc...
More misrepresentation. Business owners not only ALSO carry the risk of stagnating profits, they have to suffer LOSSES. Employee's don't.
Many business owners take loans to start their businesses using their home as collateral. If their business tanks, they lose their home. Another risk.
Are you suggesting that having your employer pay into Kiwisaver or a pension is not an advantage? This is an employer expense NOT and employee expense. Only the employee's own contribution can be compared because business owners have to pay their own pensions and have no one else adding to that.
Are you actually reading what i am writing?
I am talking NOT of the risk and reward of self employment v employed income, but the tax treatment of them. For what reason should direct expenses incurred in earning an income not be tax deductible, whether employed income or otherwise?
You are clearly self employed, so not sur why you are so vitriolic about a fairly low key statement!
I am sure your valium is tax deductible.
I will start to think youre in the RE game.. in which case, i understand why you're upset, since the ponzi scheme is fading
I think the real point is - a lot of specuvestors are also PAYE payers - they aren't self employed. So they do get to deduct all those expenses against their specuvestment, which they then offset against their personal income effectively lessening the amount of PAYE they pay.
For Instance, a friend of mine went through a marriage bust up, he had the children full time post this, his ex wife had specuvest tendancies, she was earning over 100k a year but was reporting a pittance of income because of her negative gearing, so she paid the minimum child support.
We've been through this before, the government can do what it wants and can have it both ways to try to deal with a social problem. Yes it might disadvantage one type of business over others, and that is exactly the point. Try reading up on the UK policy in this area.
Exactly - thinking he could buy land and build 3 bed houses in Auckland for less than 600k - was cloud cuckoo land - even at 600K they will need to be little shell boxes - at minimum specs on 300sqm sections in outer suburbs.
then he has the small problem of getting these through the consent processes in Auckland - the major shortage area - and finding people to build them - Not sure if he realises that there is currently a massive shortage of qualified tradies - and those that are here are already working flat out with high margins - so he can forget doing deals to keep prices down until the demand lessons - which could be a very long time - not to mention he is going to halt immigration - so no more sparkies plumbers, plasterers and roofers arriving to add to the workforce
He seems to miss the point that in the last year of the previous labour government, Housing New Zealand built less than 50 new homes and gave up ownership/control of nearly 500 - they cant manage their current stock with any degree of efficiency - what makes him think they can build and manage 10,000 more each year ?
kpnuts. Your point about building capacity being already at breaking point has been lost on Little. I get the government stepping in with taxpayer capital if that's the only solution to banks puling back on supply but we simply don't have the physical capacity to build that number.
And it is illogical to say you will put a large number of houses on the market at a price well under their current value but this won't reduce average values. Voters won't buy this spin.
Not a personal fan of Labour (especially after this remark on house prices not falling - at least Metiria Turei is honest enough to say they must come down) but the point on building capacity being lost on them is simply untrue. Point 3 of their housing plan is growing the building workforce: http://www.labour.org.nz/housing
I think most things are lost on Little! - Hopefully another crushing failure will lead to a new broom - and then maybe just maybe we will get an opposition back that can be constructive and offer an alternative.
And yes - supply and demand is lost on someone whose ideology does not include balancing the books or grasp that its working people who pay taxes for services - not the largesse of politicians
Where did he say "house prices can't drop"? All I see is them saying they are focusing on getting houses built and they would prefer "stability".
With Labour banning foreign buyers, negative gearing and cutting immigration it wouldn't take much of a recession or interest rate rise to end this tulip mania all on its own.
I agree, he didn't handle the questioning well at all but I think he was just trying to keep the focus on Labours plans to address the supply side. Even if the population of Auckland stopped growing today there is still a shortage of housing which needs to be addressed. As much as I want to see speculators burned badly in a hard fall a slow deflating of the market is probably the best thing overall for the country. i.e prices should remain 'stable' in the face of increasing interest rates as inflationary pressures build worldwide (and ideally wage growth following in its wake), the Fed unwinds its QE and migration also winds down as the settings changes take effect + any further changes as a result of the election.
Remove interest only loans
Remove the ability to write off losses on investment properties to other sources of income.
Non-citizens and NZers who are Non-Residents only purchase newly built houses.
Land tax on undeveloped residential land.
Incentive for first home buyers to build a new home.
Why should FHB be locked out of deciding if they want to build a new home or not? That's for them to decide! And FHBs aren't expecting their first home to be a new build; it's simply one option. It can be a perfectly viable option when you consider the mediocre quality of the NZ housing stock.
I'd rather have honest politicians myself. The idea that one should vote based on the politician lying about a position is rather amusing. What other aspects of the platform shouldn't be believed?
If the sum of the statements add up to a different result than the individual statements, I'd be disinclined to vote for the person/party as stupidity shouldn't be promoted.
In the interest of preventing rampant disinformation, here are Labour's announced housing polices, from the horses mouth.
Agreed we will get a lot of this MSM twisting and turning what Labour are doing over over the next few months......
Even if they don't drop under Labour least they will not go up by over 100,000 a year as they have been doing lately under NATIONAL.... the Foreign Buyer Party .
yep- they sure wont go up under a Labour / green / NZ first / Mana / Maori government - pretty sure the only thing going up will be public spending followed by taxes and interest rates
Same people who touted from the roofs how important a CGT was - now dropped - that property values were inflated and needed to drop ( every year for the last five ) but now see no need for a CGT or for values to drop ....
That's so true - Any policy that labour puts out will be instantly trashed by the Herald. I came across this definition the other day.
Sandbagging (media), obtaining an interview or footage rights from someone expecting a positive piece, then cutting or contextualizing it into a negative story.
Well that was bloody disappointing. We are never going to see affordability return in my lifetime unless prices DO fall, as earnings are never going to hit the stratosphere as house prices have. What an utter debacle this has been allowed to become.
I would not, on principle, allow National the reins again for having done absolutely nothing in their 9 years to address this, in fact fueling the fire in a way that could not have been imagined when they first came to power.
To be fair you have been jumping on the band wagon with a lot of other ridiculous commentators on here spouting property crash for the last 2-3 years. Your vile comments have probably put a few people off buying (They probably thought you know what you're talking about) who have been waiting and waiting for this crash and they move further and further from ownership.
Rediculous comment DGZ - the causes of the issue should be perceived as the crimes. That is property speculation, mass immigration, loose credit lending, money laundering, local council and government incompetence/ignorance.
Your use of hindsight to promote your position is extremely narcissistic (and to be blunt, quite unintelligent).
It's akin to being in 1929 and telling people that they were fools for not buying stocks in 1925. How do you know what the future holds?
If you invested on value - you'd understand why Bernand has avoided the Auckland market and why long term its perhaps a smart move.
Agreed. There will be no property "crash" that many commenters on here seemingly can't wait for. However, there may be a correction in Auckland that will negate the last year of price rises. Or, if the the immigration numbers continue at similar levels, prices will be at or above current levels.
There are also some commenters on here that confuse property investors with property speculators.
Investors like ourselves have good quality well maintained rentals with very low tenant turnover. It requires considerable time and effort (work) to achieve this. We are nowhere near negatively geared, and think it's a bit daft that there is still a tax advantage on this.When prices rise, it gives us some increased equity, but our investment model does not count on this - that's a speculation model.
When prices fall, we purchase more property.
I suggest that if you are constantly wringing your hands about Auckland property prices, move.
Errm, everything I say is "honest".
I see the Auckland market as being very risky for investors. I agree the yields are too low, so the way it is being approached by many is to either buy, hold and sell when the market gains, or buy properties with some potential and inject capital and skill into releasing this potential before selling.
Both of these strategies are dealing with big property "units" 700K - 3m, and if one goes tits up it's serious.
These punters will probably be O.K. in the short to medium term, but if I was them, and didn't have plenty of financial grunt behind me, I'd have trouble sleeping.
We are South Island based and do not have property in Auckland.
Auckland is a strange situation. I have some rental properties that are more or less neutrally geared in that income equals expenses. It occurs to me that many people will be in this situation, either being slightly negative, neutral or slightly positive but with quite high equity. For example many landlords may have a property worth 1.5m with a mortgage of 750k. The rent on such a property only just covers interest and rates so the return is more or less nothing. Yet if the Landlord sold the property he would have 750k to invest elsewhere for a real return. Even just a bank deposit would return $360 a week after tax which is quite a lot more than nothing. Yet the landlord chooses to keep the property, even continuing to live a frugal life. It does seem irrational. Obviously the landlord doesn't really need the money. I guess he is still expecting some capital gain. Just 2% capital gain per year would return close to $600 a week on 1.5m.
The problem seems to be caused by landlords having too much money, probably because they still have a day job and their partner does too. A modest capital gain is assumed at around 2% per year on total value of property held which is enough to finance their retirement on top of Kiwi Saver and other savings.
Probably a lot of property owners could sell up and make much more money in other ways but they don't. Perhaps they might if prices stagnate for several years. Unfortunately many have made much more than 2% per year over the last few years and feel they have sufficient reserves to weather a downturn and still, at the end of the day, come out on top.
Zac! I am impressed. Excellent, well though out answer. I guess the fundamental issue is, when the numbers only work with capital gains, if the market takes a turn for the worse, or stagnates, what happens then?
For example, if it looks like those who bought in last 18-24 months have zero CG and the gross yield is <3% and reach the tipping point, if they try to sell in a falling or stagnant market, it could easily turn into a run. That's usually how these things play out. I really worry of course, because there's a lot of down stream impact.
Bottom line - LABOUR NO LONGER REPRESENTS THE WORKING CLASSES! Clearly he is not smart enough to connect the average wage with the cost of providing a roof over your head, be it owning or CHOOSING to rent. "Choosing" in capitals because many are forced to rent today as owning when on or under the average wage is almost impossible. Yes there are a few individuals who manage with with very tight discipline and maybe a little luck, but the average person (the majority) or family cannot get there.
Housing is still very affordable NZ.
Australia is far more unaffordable,in the major cities.
You can buy nice solid homes for less than renting throughout the country but not AUCKLAND!
If you aren't happy with a situation then alter it!
What on earth is it with people from Auckland that they think it is the only place to live?
1) Median house price to income ratios for NZ are 10:1. This is not affordable. Houses are cheaper in the regions but there far fewer white collar jobs there to pay the mortgage, unless you rent the house out. Sure, if you're a freezing worker or farmer buying a house in Gore or Tarras might be viable, but if 90% of jobs in your field are located in Auckland or Wellington you don't have much choice.
2) Houses can be more expensive in Aussie cities, but salaries are higher and the quality of life is higher, so the house price to income ratio is either the same as NZ's or lower.
3) People want to live in Auckland because that's where the majority of jobs in NZ are! Why can't you grasp this simple fact? Point to some IT organisations, national government departments, engineering firms or telecom companies located in Dargaville or Murchison or Westport? If everyone simply bought a house in the provinces we'd all be on the Jobseekers benefit or digging ditches for a living earning $15 an hour. Brilliant!
Houses *ARE* more expensive in Sydney and Melbourne - where the jobs are. I lived I Sydney (ratio 8.5 in March 2016) and Christchurch (ratio 5.55 Feb 2017). The salaries behind these ratio's in nominal terms are relevant in nominal terms.
The quality of life in Sydney is absolutely *not* higher than Christchurch. You must be talking some mythical, 'grass must be greener' philosophy. Sydney is a hot, damp, over populated dump, full of hidden taxes everywhere you look, with a totally dysfunctional roading system that makes commuting times huge. Their corruption is worse, their crime is worse, their racism is worse, their politics is worse and they have illusions of grandeur.
Melbourne is cooler but more corrupt and unless you are a big fan of sweat and sleepless nights I have no idea why you would go to Brisbane. Maybe if you loved cane toads and snakes ..
Christchurch is a major city, as it is the second most populated in NZ.
As for liveability and value for money, it does leave Auckland for dead, but then everyone is allowed their opinion.
Just seems that most on here that live in Auckland moan and bitch all the time about everything without doing anything about it!
The selfish older generation built the hydro dams, bridges, schools, hospitals and roads that you young ones inherit as a birth right for having been born in NZ Rick. When National became government the gov dept was just over 9 billion so all that infrastructure was almost paid for.
Unfortunately we have been allowing a city of immigrants to arrive in NZ each year and they get their share of this infrastructure for free. Not a bad deal if they are educated and will pay tax for 40 years, thats a win win. But mostly they are a burden if the full picture is looked at.
Foreigners are buying the housing and too many immigrants is the problem Rick. Not the selfish oldies who built this country.
>The selfish older generation built the hydro dams, bridges, schools, hospitals and roads that you young ones inherit as a birth right for having been born in NZ Rick.
These things too are paid for with borrowed money, though, as you've noted. The logic is always that because the future generations will benefit from it they contribute through servicing that debt, yeah. And yeah, you're right...one good thing Labour did do was paying down debt during the good times.
Agree, the biggest fault young people find with these most recent decades of politicians (and those who have voted for them) is that they've gone to sleep on and basically outright abandoned the housing situation, turning it from one of affordable home ownership - a great accomplishment of previous generations' efforts - to investments for themselves. Labour and National both had their parts to play in it, and every time you see a specuvestor hoping for more of the same, salivating over the thought of attracting more foreign investors, avoiding like the plague any solutions for Kiwis...well, that's the older generation the young Kiwis see no reason to hold in any esteem at all.
And Bill English's cynical foisting of the pension burden on the young whilst carefully avoiding any effect on boomers...well that was just another snubbing.
Did you read the article or just see a headline that you liked? Nowhere in here did he say actually say this and I think it is a bit to quite misleading for the headline of this article to be in quote marks when this isn't directly attributed to "Labour" anywhere in the article. In fact he even says "markets go up and down". The author can interpret it as he wants but the absolute statement "House prices can't drop" was not said by AL in the provided quotations in the article.
This is quite incredible positioning by Labour's Andrew Little. I am a home owner and have been a Nat Party voter but was swaying towards voting Labour, in part because I thought they were being more honest about the housing crisis and would take steps to address it. Yet this is the same BS we get from National - "its just a supply issue". Its not just a supply issue, its largely driven by the increase in local and overseas investors and speculators entering the market and the lack of action by government to make property less attractive to them through stamp duties or the like. Little is handing Peters the best early Christmas present he could ever hope for!
Some more from Labour on the Kiwibuild policy coming a bit later today, everyone.
And Brock, he's saying prices need to remain stable while new supply comes on line, in response to questions about whether he welcomes the recent drop in house prices, and on the economics behind extra supply potentially putting downward pressure on prices. I interpret that as him saying he doesn't want prices to drop.
Cheers
Finally some sensible thinking coming from Labour. This is actually a very smart move despite what jaundiced commenters at Interest.co generally think. A decent house for 600k is affordable for working couples partnerships and successful singles prepared to take on flatmates. Gone are the days of a single income earner bringing up a family in Auckland being able to buy a first home that is suitable for this purpose. This is not necessarily a bad thing. What a lot of commenters here seem to want is a radical change of the system, primarily for Auckland, that would necessitate the introduction of policies and laws that would be reminiscent of socialist banana republics or full blown fascist states. Generally sophisticated and intelligent people reject that sort of thing.
More energy should be devoted to raising people's incomes and work and saving attitudes.
Wanting a higher rate of Kiwis owning homes makes you "jaundiced?" Bloody hell. Show some compassion.
So what you're saying is only wealthy individuals and couples earning $60k plus each (so only people aged 35 and up) can own a house in Auckland and that's not necessarily a bad thing? Renting for your entire life is not necessarily a bad thing? Not having a chance or the option to own a somewhat okay house in Auckland is not necessarily a bad thing? Slightly sociopathic there Zachy.
As for saving attitudes, pushing interest rates up to 8% again would do wonders for savers, but you property spruikers don't like high interest rates, do you? You can't bear to lose your hundreds of thousands of dollars of unearned capital gains and would be the first to complain if you were at risk of losing it.
Don't forget, nice folks like Zachary need to ensure their tenants keep stuck working for them, so Zachary and co can have a more comfortable life at their expense. Any chance of letting those tenant folk be able to afford their own house and excape Zachary's grasp, so they can look after themselves instead, needs to be strongly shouted down. Otherwise Zachary will have to actually produce something of worth to get by, just like his tenants all currently do.
We must live in different worlds, I have worked in Banking, Telecoms and Manufacturing with some pretty smart grads, and not many were on that high a wage, 90K. Most who were on more then that had many years experience and worked overseas.
But NZ is made up of more then Grads, there seems to be some type of snobbery here. What about the many who work in maufacturing, labouring, people that do the service work that we need. So people like you can order their lattes.
From a simplistic view, it's "affordable" based on the idea that the family unit has to exchange more labor for accommodation compared to elsewhere. That doesn't account for the less disposable income to be spend in other areas of the economy. NZ doesn't have the economies of scale like the U.S. or Japan (think Dollar Club or Daiso) that makes living in Auckland a more viable proposition. Of course, you can trundle out other solutions: alternative incomes (2nd or 3rd jobs; dealing meth; putting the kids to work or charging them rent).
How many times does this "savings attitude" lie have to be addressed with actual facts before it stops being repeated by investors who had the genius to be born at the right time?
"People who are currently in their late 20s or early 30s are saving at higher rates than their parents did at the same age"
Perhaps this period will be known as 'The Real Estate Age' when we look back from the future. A time when the housing monster became too big to fail, threatening to consume almost everything, and no politician had the fortitude to speak against it.
At times like this, our own version of Roosevelt could change politics in a big way, but I don't know who that might be. I suspect that we might have to have a recession first, as no-one wants to rock the boat right now.
I am unsure if Labour is being disingenuous or don't understand economics. If supply increases and demand remains the same then prices have to go down. The only way for house prices to remain the same if there is more supply is if demand also increases.
However, the more interesting point is that Labour generally agrees with the government on this matter - it is a supply issue. Labour thinks the government should supply, National thinks the market should supply. However, the regulatory issues still need to be addressed. There are far too many NIMBYS around especially in the inner suburbs.
Wow, Impressive that Little can see reality and has the balls to call it as it is, despite the political backlash (just look at all the negative comments on here).
I so much disagree with the majority of the comments here that seem to desire a huge drop in house values. Yes, it would be nice if everyone could buy a house for $300-400k (actually you can in many places outside Auckland) but house values cannot significantly drop for 2 reasons:
1) If house values were to halve, a huge amount of people would have the banks knocking on their door to take their house back as their mortgage exceeds the value of their house, not nice. Many small businesses have a loan secured against a house and they will have to shut down as well. That means that people, who may not be house owners, will lose their jobs. People who lose their jobs and houses stop spending meaning more businesses close and more people lose their jobs...
2) If house prices halve, there will be no more new houses built at all because you can't buy land and build a new house for half the price it's worth! Simple as that. Builders and tradies will be out of a job, not good again, they will stop spending too which in turn will lead to even more business closures and people losing their jobs.
Would the majority of commentators here prefer that maybe, the greens or Winston, promise them to build houses for $300k and do whatever it takes to halve the value of existing homes ? Really ?
Point 1 - So then, why have property markets (or any market in fact) crashed in the past? At no point in time has a deep recession been saved by the whimsical notion of "oh, we can't afford that right now".
Point 2 - You say house prices will drop, but land values will still be high? How exactly does that one work?
To quote you..."Really?"
Point 1 - So then, why have property markets (or any market in fact) crashed in the past? At no point in time has a deep recession been saved by the whimsical notion of "oh, we can't afford that right now".
Point 2 - You say house prices will drop, but land values will still be high? How exactly does that one work?
To quote you..."Really?"
Now who's naïve?
As we all know, because NZ property market has never crashed it can never ever ever crash.
You must have a Masters in Delusion.
Now, before I get reamed out - I am NOT saying there SHOULD be one, but you cannot use your logic. This is the same logic used by everyone before every bubble burst since Daffodils.
You can logically say that it would harm the economy in many ways if property prices crashed in a significant way.
What you can't say is that property prices can and will never crash. No one can know all the factors, no one can predict the future in that way.
I also find it bizarre that you chose a specific time period (ie 40 years) so that you can exclude the HUGE property crash between 1974 and 1980 when NZ house prices deflated by 40%
https://www.greaterauckland.org.nz/2016/07/11/remember-the-last-time-ho…
Well, okay then. Perhaps I don't. Perhaps I do.
The big thing is that at least I don't post comments of the substance that you just did.
Point 1 - That is so incredibly stupid to say. I bet the Americans said that, too. And the Japanese, and the Irish. Look at any investment cycle graph - the people saying stuff like this are not those with the smart money.
Point 2 - And, I quote, " If house prices halve, there will be no more new houses built at all because you can't buy land and build a new house for half the price it's worth!"
So, again, why will house prices halve and the price of land stay constant?
The nz property market has dropped, 1991 1992 1998 2008 pretty much every ten years it corrects like any investment cycle
http://www.rbnz.govt.nz/statistics/key-graphs/key-graph-house-price-val…
if you open the spreadsheet you will see a big correction around the GFC,
so we could have another one soon as the cycle is roughly every ten years, and we don't know what the trigger will be
long time property investors normally are ready for that opportunity
value of housing 2008Q1 616 billion dropped to 578 billion 2009 Q2 a drop of 38 billion
drops were
2008 Q2 -4.5%
2008 Q3 -6.7%
2008 Q4 -9%
2009 Q1 -9.1%
2009 Q2 -3.1%
a fantastic buying time towards the end of the cycle
Lol @ Yvil saying that Nymad has no idea and then rolling out "NZ Property market has never crashed" as though that somehow magically means it could never ever crash at any stage in the future.
You know that's not how markets work right? They don't look at the past and then only move in between the bounds they've moved in previously.
There was no historical precent for the real price increases we've seen over the last few years either. By your 'logic' sustained real price rises like we have seen should not be possible.
Yet they happened! What does that tell you about your 'logic'?
Because Auckland accounts for over 140 Billion of New Zealand's outstanding mortgage debt, and its regional growth over the past two decades has been driven primarily by those sectors linked to the housing market. Affordability will matter' little' on the way down. Are you enjoying your walk.
I would argue that Queenstown is a symptom of Auckland. In the "humble" '90s, every well-to-do Aucklander had a holiday home on the Coromandel Peninsula somewhere. Now that simply won't do! So very many of the massive places in Queenstown are now Aucklanders using their massive equity to buy a home on the lake shore and for skiing in the winter. If Auckland sneezes, Queenstown will catch ebola.
Less than 5 years ago, the median price of an Auckland home was under 500K. The notion that Auckland is not upon the precipice of a massive housing unwind is disturbing.
Yep. And Aucklanders didn't see their incomes explode over that time period or find a pot of gold under the sofa.
They know that supporting a price drop is political suicide. So the solution is to go after investors and speculators as they're less likely to be Labour voters.
Perhaps the end result will be expensive houses in good suburbs maintaining their upward momentum and houses at the lower end dropping, especially when higher interest rates bite and if Labour become government and implement these policies.
If labour retains all the houses they build as rentals it could work. It would provide more affordable rents to low income earners and take a lot of the demand out of the rental market which in turn will help keep house prices down. By not adding them to the owner occupied stocks it will not add upward pressure to house prices.
It's interesting AL mentions the German housing market. One big difference is that 'choosing' to rent is not stigmatized in Germany and people with high income do make that choice when it suits. Looking after rental properties is mostly the tenants responsibility allowing a degree of freedom for renters that is unknown in New Zealand. The property has to be returned to original state when a renter moves out. People happily stay for decades in a rental and invest their money elsewhere (in spite of non existent interest rates). Look at private household savings in Germany. Even the Australians beat us in NZ hands down on that one! On the downside, German renters are so well protected by law that being a landlord can be a double edged sword and I know landlords that leave their property empty for long stretches when they get tired of the hassle.
The bigger German cities have also taken on the likes of Airbnb and can now hand out huge fines (up to 100,000 Euro) to help with rental shortages.
Might be some inspiration for our politicians from a country that is about 25% bigger and has twenty times NZ population .
Haw haw .....double haw haw for DGZ and ZS ....or should that be Double "Gloat" Zone and Dr (of property spruiking) Zachary Smith.
Why don't you 2 little boys just run along and play and leave it to us 0.01%ers !! ......the likes of moi and my ilk.
Instead of wearing out the keyboard, get out there and buy, buy and buy !
We need those mortgage interest payments rolling in ......profit, pure profit... haw haw
Until you can come up with anecdotes ....true or otherwise....tell the local mortgage serfs about your New York, Paris and London property deals .......minimum price worthy of mention USD 5,000,000 .....anything below is "chump change" ...haw haw
Meanwhile carry on dreaming that you are the "King of the Castle" .....you have a long way to go ....to Tiipperary .....oh oh CC can feel a song coming on.....
See the little property spruikers, all in a row
Listen and wait, as they put on their show
Everything is rosy in Auckland property land
Buy now, buy now before things get out of hand
Its a "winners" game
There is no shame
In debting yourself to the eyeballs
You're in it for the long haul
The more you borrow
The more interest for moi tomorrow
Cashflow what's that ?
As long as it coming to me flat !
You all know what to do
Get out there and be true
Buy that property today
And keep me rolling in the hay !
Anyway, no dilly dallying, what are you loitering around here for ....back to work you bourgeois and keep forking out all your mullah to me !! .......another rhyme no less, haw haw !
This article is the whole issue with New Zealand politics. I understand why some people are unhappy with National. They've clearly dropped the ball on housing and some other issues.
But then the main alternative is this 'we're going to build heaps of houses and fix affordability without changing prices' nonsense. It clearly shows that Andrew Little is either:
A - Totally clueless about basic economics and even the simplest facts of markets
B - Absolutely dishonest in trying to pretend that what he says is even possible.
C - Part A and Part B
I have no idea which it is, I just know that someone like that shouldn't be let within 100 metres of anyone making a real decision, let alone running our country.
It's honestly disgraceful. You can almost taste the contempt of the journalist coming through in the article. It saddens me that some of the general public are dumb enough to buy this rubbish from Little.
The Labour Housing Policy has gone from being disjointed wishful thinking (and unworkable) to simply farcical .
Does any educated person believe this nonsense from the Labour party ?
I was hoping they would come up with a cohesive workable policy , but what do we get ?
Just more confusion .
very depressing. i wouldn't really mind giving the other side a go just to get some long term balance. Swings and roundabouts...
But they keep coming up with ridiculous statements. .
I honestly believe that the housing "shortgage" is more about price. Housing, whether to purchase or to rent is simply too expensive. I've heard estimates there are 30,000 empty houses in Auckland now.
There is a reason why the Auckland house prices can't drop, and here's the reason why...
QV Top 30 Suburbs Median Home Value's at at 1st Apr 2017:
1 Herne Bay $2,484,600.00
2 St Marys Bay $2,276,200.00
3 Remuera $2,025,850.00
4 Stanley Point $1,909,100.00
5 Campbells Bay $1,876,150.00
6 Epsom $1,850,400.00
7 Westmere $1,827,600.00
8 Mission Bay $1,811,500.00
9 Orakei $1,781,300.00
10 Kohimarama $1,770,050.00
11 St Heliers $1,726,850.00
12 Ponsonby $1,725,650.00
13 Takapuna $1,677,750.00
14 Glendowie $1,661,950.00
15 Castor Bay $1,645,950.00
16 Devonport $1,634,500.00
17 Mellons Bay $1,634,400.00
18 Parnell $1,597,550.00
19 Narrow Neck $1,530,300.00
20 Murrays Bay $1,513,600.00
21 Dannemora $1,478,900.00
22 Greenlane $1,476,700.00
23 Mt Eden $1,463,750.00
24 Mairangi Bay $1,461,950.00
25 Greenhithe $1,418,100.00
26 Pt Chev $1,416,250.00
27 Milford $1,402,900.00
28 Waiake $1,400,450.00
29 Bayswater $1,381,850.00
30 Northcote Pt $1,373,700.00
...and get ready to brace for Cyclone Cook, the worst since the 1968 Wahine disaster. We'll find out which suburbs survive on Friday LOL!
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11837045
My point is that these are the median prices people are paying for their new homes and if the prices fall 50% these people will suffer huge financial loss and it is not something that we would hope to happen to them. Hence we can't let the Auckland house prices to drop.
How many people will lose sleep if people who bought houses overpriced at these rates lost equity? Its not like every house bought in those suburbs had those prices... just qv based on recent sales.
Besides which, hoping something doesnt happen to some people doesnt stop the tulip traders losing their tunics.
They will only suffer loss if they bought the house in the last few years, and sold it.
If they have been in the house for awhile they wont suffer loss, they wouldnt have gained as much capital gain, so no loss.
If they bought the house recently they can live in the house like normal people and see where the market takes them over the long term.
Yeah DGZ, I don't think that the more expensive areas did so well in the last storm cyclones that we had only a few weeks ago, lots of land slips and flooding
Kohimarama cliff collapses on units as Cyclone Debbie hits NZ
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11831819
Auckland weather: Police catch wakeboarder riding Remuera floods
http://www.newshub.co.nz/home/new-zealand/2017/03/auckland-weather-poli…
I just did a quick walk around the block to see which houses that went for auction in the last week sold in the Greenlane/Epsom area and I see two of the three sold. Both were full sections and would have been 3m+. It certainly looks like these sorts of properties are a hot item right now. Probably a global shortage of such properties. Houses on half sections are harder to shift but do sell by negotiation after failing at auction.
Those "median" prices are out of reach, even for upper quartile earners in privileged circumstances. It could lead to a collapse of Auckland as functional city. There's now a strong incentive for engineers, scientists, lawyers, accountants etc to avoid Auckland and go elsewhere.
Here is some sage advice https://www.youtube.com/watch?v=NQnnFuVWnBU&list=PLFIwp8seCmF9pyQE7O82n…
Gummy , old rugby coach used to say, no matter how big they are they still fall on there face if you hold there ankles together..... Amazing false wealth stats right there.... thinking sharemarket
1 Ariadne
2 Tasman Properties
3 Brieleys
4 Robert Jones Investments
...
Dont know exact list but have seen this movie before, there is no fool like an old fool.
If Labour really want to fix the supposed Auckland housing crisis, all they need to is introduce the vacant home tax, this will provide revenue and persuade the non resident investors to free up unused property assets. Therefore lifting the pressure on the housing market and freeing up property.
Similar to British Columbia's new tax, to enable new business to flourish as they'll be able to attract staff particularly for the IT sector in to Auckland when property becomes more affordable. Most young and well qualified people are having to leave Auckland as it's simply too expensive to live here.
I would suggest that Andrew Little listens to Christy Clark's campaign message at the end of this article (See attached link). Residents scramble to avoid Vancouver’s vacancy tax
http://www.theglobeandmail.com/news/british-columbia/residents-scramble…
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