By Ryan Greenaway-McGrevy*
Property in Auckland is amongst the most expensive in the world when measured relative to what you can earn there. The average house is selling at ten times the average annual household income. That’s more expensive than London, New York or San Francisco.
To their credit, the Auckland Council has set itself a target for housing affordability. It wants the average price of a dwelling to be priced at five times the average household income by 2030. That seems reasonable. But at current income levels, that would require house prices to halve. Former Reserve Bank Chairman Arthur Grimes agrees, recently calling for a forty percent reduction in house prices.
In contrast, the stated policy target of our government is slower house price inflation. That is not good enough. If house prices do not come down, incomes must at least double to make housing affordable again. That is simply not going to happen anytime soon.
Let’s do a quick back-of-the-envelope calculation to understand why. Suppose that house prices stood still, and that nominal household incomes grew at 3% per year, which is slightly higher than the 2.7% average rate of general inflation since 2000. It would take about twenty-four years for nominal incomes to double. That would lock a generation out of the property market. (And that is with an optimistic inflation rate; there are significant deflationary pressures in the global economy that could be here for the long term.) Another way to look at it: If house prices stay at the levels they are at now, household incomes would have to grow at about 5.1% to hit the Council’s target by 2030. Unless we strike oil in the Hauraki Gulf, that is just not going to happen.
The calculus is inescapable: House prices have to halve. They have to go back to 2006 levels. That is a difficult reality to come to terms with. And it will be even more difficult to actually achieve.
We often see demand-side policies tabled as a solution to the problem, and I think all cards should be kept on the table. But it is clear that only the most heavy-handed of these policies would do enough to cut prices in half. Banning or taxing foreign investment would not do it, and this is probably not a realistic option anyway. Drastically reducing immigration or implementing a proper capital gains tax would not be enough. Even a low and broad land tax would not be sufficient: The Tax Working Group estimated that a one-percent land tax would bring down land values by only 17%.
The only demand-side policy that could do it would be to ban private investment in housing, full stop. This would ensure that demand for housing would be determined by what people can actually earn living and working in Auckland. Housing New Zealand would have to pick up the slack, buying-up the forced sales and renting them to the people who cannot afford property even at rock bottom prices, or who otherwise prefer to rent.
Like I said: only the most heavy-handed demand-side policy would actually cut prices in half.
It is possible that some combination of the more reasonable demand-side policies would succeed in bringing down property prices by fifty percent. But such a policy would be quite reckless, and possibly push the economy into recession. It would come at a huge cost to those who have diligently used housing as a savings vehicle. And it would also push the mortgage on many recently-purchased homes underwater. That is a terrifying prospect for many families, because it massively increases the downside of involuntary unemployment for the breadwinner(s). Moreover, the reduction in household wealth would likely cause property owners to cut back on spending, lowering economic growth, and exacerbating the risk of recession.
Any policy that caused property prices to halve would not be fair to these groups of people. But the status quo is not fair to prospective home buyers either. The only policy option that is fair to both groups is to increase urban density.
To understand why, first note that there is a distinction between the price of a property and the price of a dwelling. With increased density there will be an increase in new dwellings supplied to the market, putting downward pressure on dwelling prices. But this does not mean that the price of property has to fall. Property that can be redeveloped under the relaxed density restrictions will retain its value: You can always bulldoze the villa and build two homes that make better use of the available space. That option to redevelop will be capitalised into the value of the property – and could in fact increase property values – provided that the unitary plan grants the right to redevelop.
Which brings us to the crux of the issue.
Increasing urban density is the only policy that ensures that both current and prospective home owners can win. Any other policy – including the status quo – will punish one of these groups. With increased urban density the average price of a dwelling will come down – allowing families to purchase a home at a reasonable cost – but the price of developable property will retain its value – ensuring that many current property owners won’t lose on their investment.
Property owners that oppose increasing urban density in their suburbs should be aware that properties that cannot be redeveloped could fall in value once the supply of dwellings increases. If they are not comfortable with a capital loss, then they should be lobbying for greater density in their neighbourhood – not opposing it.
Some will argue that young Auckland families should forget about home ownership and get used to the idea of renting. Perhaps. But there are, however, substantial benefits to home ownership that should not be glossed over. But more importantly, rents are only going to follow house prices up. That puts further pressure on household budgets.
There will be other costs to increased density that everyone in Auckland will have to bear. More traffic. Upgraded infrastructure. Loss of character neighbourhoods. But with sensible urban planning some of these costs can be mitigated and, more importantly, shared across all the residents of Auckland – and not heaped onto the people living in lower socio-economic neighbourhoods.
And to be frank, the time for gripes over traffic and loss of character neighbourhoods is over. Next time you are stuck in rush hour gridlock, just be thankful that you have a home to get to, and that you won’t be spending the night in your car. Auckland desperately needs more housing.
The current version of the unitary plan does not go as far as the version that was voted down in February. But it still allows for big increases in urban density. The Auckland Council will decide on whether to go ahead with the current version of the plan next month. The time has come for the Council to do what is right.
Dr Ryan Greenaway-McGrevy is a senior lecturer in economics at the University of Auckland Business School
74 Comments
A little shaky on a couple of fronts.
Firstly, house prices can realistically halve - the way they have for other countries by the bubble bursting. The point that gets missed is that the replacement cost of a house is about $180,000 - that is for a new three bedroom house - lots of housing companies that will deliver a 120sqm house on a truck for that price. And before people get to critical of the supply of these houses - they are going to be double glazed, earthquake compliant and insulated - unlike so many of the villas in ponsonby. The cost of the infrastructure is probably only about $75,000 - so a new house is possibly $250,000. However, because of restrictive land zoning and a limit of building capacity we aren't getting a supply of houses at this price. It is only a matter of time before supply catches up and we see a decline in house prices in real and nominal terms.
What tends to also be forgotten in this equation is - much of the industry in Auckland is based on a $18 an hour labour rate, which implies a maximium rental of say $500 per week. If we take capital gains out of the equation then either: landlords accept very low returns on their investment; or rentals go up and industry has to leave Auckland; or house prices decline.
What is a real shame is that I suspect a lot of ma and pa investors will get burnt when the current bubble collapses.
House price hyper-inflation may have only just begun... Quantitative Easing to the power of Fractional Reserve Banking means that there are a lot of numbers out there stored digitally somewhere in the cloud.
As 'money' continues to be worth (and trusted) less and less, the race to exchange it for tangible assets (land somewhere politically stable at top of list) will accelerate, and the Rt Hon JK will be at the airport greeting all the wealthy of the world to the new Switzerland of the Pacific.
It can't happen... economic fundamentals... it's unfair... etc.
It is just starting, and it is intentional. That's the thing people are not addressing. It is intentional
And our politicians are behaving like the alien in the movie 'Mars Attacks' that figures out it just needs to keep repeating 'We come in Peace' while shooting everyone.
Yes agree - its intentional. The central banks are hoping pumping more and more funds into the international housing ponzi scheme will stimulate demand and keep producers of any sort viable ... especially Oil producers, or the whole ship goes down.
Either way, the collapse of faith in money is well underway. Then chaos.
Like your style Sceptical, even though your "QE to the power of FRB" is not really directly applicable to NZ, but it is from a global POV. It's quite possible that our Dear Leaders understand that without this housing hyperinflation, the economy would be dead in the water. Also, it's important to note that their careers are based on the benefits of the "trickle down effect", which is more bogus by the day.
While a halving in house prices might not be 'fair' to those who have used housing as a vehicle for savings it is probably not far off. Given Auckland prices have increased 30%+ in the past two years, that wouldn't be an unreasonable fall in house prices. If the speculators lose out, too bad, that's the risk a speculator takes on. If a FHB has decided to commit to a mortgage in those conditions well so be it - they'll still have the property to live in even if it's paper value falls.
As for a recession - yes probably, but that's only an issue because the economy has been build around property speculation and mortgage lending.
As for unwinding the bubble through increased intensification - that is fanciful as Australia is finding out right now. Why? Because if there is a plentiful supply of affordable apartments selling for say $400k (inner suburbs), a stand alone house with similar utility will not sell for $900k+ (even in an outer suburb). There is a limit to how far these markets can diverge and they are most definitely connected. Don't believe me, take a look at current dynamics in the Australian market.
It's nice to think that there could be a fair and orderly unwind of the bubble but I don't think it's possible. Show me a property bubble that was unwound in an orderly fashion and without a recession?
David Chaston is right that speculation is a symptom of under supply. The only credible way to increase supply is by opening up the fringe -removing the UGB. But once that is done holding land/houses within the existing urban footprint for speculative reasons becomes pointless. This releases a lot of building up supply as those homeowners with an investment inclination only option for increasing their investment returns is by actually building something.
Auckland should allow significant more upzoning -as it will benefit existing and future buyers as Ryan says -as part of a wider housing policy reform package. The Independent Hearing Panel plan which will be released soon will be interesting in relation to this.
Giving the market the option to build up or out allows it to work better. Some buyers might want a new 2 bedroom terrace house 5km from the centre rather than a 4 bedroom home 30km away -with this sort of reform the market can respond.
There is a slideshow of how Houston is intensifying its inner suburbs in this way. Whole neighbourhoods are gradually replacing stand alone housing with 3 story terrace housing and townhouses. This type of housing is called the missing middle. Being the type of housing between high rise apartments which are expensive to construct on a per m2 basis (elevators, mechanical ventilation, more structural engineering requirements) and stand alone housing.
http://www.montgomeryplanning.org/events/rethink2011/documents/Makeover…
I suppose the government could engender a "reverse bubble" by stoking massive wage and CPI inflation and cutting us off from international trade, while at the same time hoping asset price inflation drops off - how they do that i have no idea, but it would have to involve some extremely pro-worker policies as well, and would probably screw the economy even more via impoverishment on an international scale.
Truth is that either set of cures are now scarier than the disease. The most palatable solution will be nationalisation of the banks if and when the balance sheet losses come due.
That would not be dissimilar to what has happened in Australia, except that all of the wage rises have been leveraged using foreign capital back into the housing market, leaving Australia with an uncompetitive cost base (i.e. the mining truck driver earning $160k)
Yes. They have built their own high cost-base economy, but still believe that their currency will save them when it eventually falls. I say that's a far fetched idea. Incidentally, if I had to pay $100 for a ski pass in Japan, I would take it over a $100 ski pass in Aussie. The conditions just don't compare.
An aspect I forgot to add is that intensification of land zoning will increase the land value of siteps. However, for most properties the capital value still exceeds the land value. Therefore, increasing the intensification of a neighbouring site may cause shade and noise which reduces the amenity value of the property. While this will increase the land value, it may reduce the capital value (ie reduce the value of improvements). This is why inner-city Aucklanders don't want intensification of leafy suburbs - it is enlightened self interest.
The forced-sale thing is interesting.. however I suspect that people will get around that (like putting a house in their kids names or lawyer/trust/exempt people) so i am not sure what effect that would have. We need disincentives for people owning multiple properties to combat this issue. One of my old landlords owned like 20 properties... ludicrous
No. Speculation is a symptom, not a cause. A properly functioning housing market would support few speculators.
Auckland desperately needs more houses / dwellings. We have underbuilt for more than a decade. Just dealing with that will go a long way towards addressing the stress. House prices need to halve in Auckland. Nothing but a supply balance can do anything. "Demand modification" is whistling. You can't do anything near enough on the demand side now to roll back a decade of underbuilding.
Catch 22. Once speculators see evidence of elastic supply response they will stop buying in the hope of 20% pa gains, then the price will stagnate and the ability to provide the supply response (scale infrastructure and building) will not longer be needed so will disappear! (The scale builders anyway no reason why policy can't be set to act a hell of a lot faster than we have seen recently, last boom should of taught lessons).
The problem with this article is that the premise is wrong. There is absolutely no need to "get serious" about housing affordability in Auckland. There are empty HNZ houses south of the Bombay Hills for the homeless. People who cannot afford to buy in Auckland can rent or buy elsewhere.
Houses are affordable in Auckland because houses in Auckland sell and sell quickly.
Places like Wanganui and Tokoroa are affordable but who wants to live there? Maybe if you make Auckland "affordable" no one will want to live there too.
Why is there "no need to "get serious" about housing affordability in Auckland". Just because there are houses south of the Bombay Hills that are empty doesn't mean there are jobs for people. Auckland has most of the jobs.
"Houses are affordable in Auckland because houses in Auckland sell and sell quickly." - WTF are you trying to say here - it doesn't make sense.
I think you are just scared that if houses do become affordable - your precious rentals will drop in value. Self interest all the way.
It scares me that people will do something stupid on the grounds that someone gave up a HNZ house in the South Island and decided to live in a car in Auckland.
Look you dingbats if houses are cheap the area is undesirable.
it doesn't make sense.
Duh, if you put something up for sale and it sells quickly it is affordable for someone. I have said for a long time that houses in Auckland are the most affordable in NZ. You buy it, you live in it, then you sell it for twice the price you paid for it. That's my kind of affordable.
You have a distorted sense of logic - it's not affordable to all but that logic coming from you doesn't surprise me. Just because an asset is expensive doesn't make the area you are in desirable. You are nothing but an arrogant snob who is only interested in himself - that is creepy.
Just control non residence / overseas buyer and see the difference - guranteed that this house price rise in multiple will stop and than the ecenomy will takes it own course and correct demand supply.
Does government have intention to stop crisis that is important
Did you hear JK on Morning Report this morning evita? Anyone hearing JK on Morning Report this morning would of picked up on him continuing to blow on about it "just being a supply issue" (Guyon let him away with it as the useless journo he can be at times) and he also reiterated that the government are not going to do anything that will bring existing house prices down. Thus, they will CONTINUE stalling supply and flooding our country with foreign demand while at the same time ignoring speculation.
So....my conclusion is this. A crash has been made our only eventual certain outcome due to political manipulation. So when it does crash in the near future...you will know who to blame and who to chase with a pitch fork.. OK.
Rent in Auckland is climbing vertically, our family has been hunting for a year for an 'affordable' house in Auckland under $600K to no avail, even run down basic homes in bad areas are asking for >$500k, when you look at other cities you see that the house prices are far better there and the lifestyle is too
This is not an issue of supply, this is an issue created through excess demand, cheap money, lax lending, tax rules that favour housing and immigration policies set by National - the impact of indirect foreign buyers on Auckland's property market is still unclear but I would suspect there is a large number of foreign buyers money laundering through housing through foggy trusts and other such corp entities
The end result is that NZer's and FHB's who want to buy a home in their own city are the losers while speculators play the casino up and up while increasing costs for everyone through rates and rising rents - something is broken in our policies to allow this to happen and trying to do something now is too late
10x household income is stupid, and 4th most expensive compared to 360x cities including the UK, US, Australia etc - how we got to this point is another question entirely
Gosh, worst article I've read for some time.
Has this person ever developed property? Or does he know anyone who has? Or researched the costs involved in building up vs out?
I bet the answer is NO. He's yet another academic with a view in a field unrelated to his own - the dismal science. And just in case you think I'm an uninformed dummy, I hold a masters degree in engineering.
And I've done a fair bit of property investment, and some development.
Building up is horrendously expensive. And what about all the infrastructure upgrades needed in these areas?
Look, all that needs to be done is for the council to allow developers to build up AND out. They simply need to get out of the way, process consents in a timely and cost effective manner and the situation would resolve itself.
As Bill English has said publicly a few times, the problem we have now is down to 20 years of failed planning by the various councils in Auckland.
THEY are the problem.
WE can be the solution.
> Has this person ever developed property? Or does he know anyone who has? Or researched the costs involved in building up vs out?
> I bet the answer is NO. He's yet another academic with a view in a field unrelated to his own - the dismal science.
Right - so housing markets have nothing to do with economics (aka the dismal science)?
Pro Tip: If you want to actually convince anyone else of your position, attack the opposing argument, not the person. Attacking the person just shows that you don't have a good response to their points.
But I suspect you didn't read the points at all. Or if you did, you didn't understand them. Here's why:
> Look, all that needs to be done is for the council to allow developers to build up AND out.
That is what he is calling for!!!! The building up part anyway.
Gosh, this is the worst comment I have read for some time...
Actually the economist who is talking the most sense these days, is Chris Parker, Akl Council Chief Economist. He has done some amazing on-the-job remedial self-education, and is putting his hand up on behalf of the entire economics profession to confess "we have been asleep on the job".
The realities of how development works and how developers and site owners make decisions one way or the other, is something that would have been really, really helpful for economists to take into account all along, so they weren't cruising along on false assumptions.
For example, Chris says that 18 months ago, he himself was saying in presentations that when you allow intensification, the site values get split over more saleable units. He has now discovered the literature that says "site values are elastic to allowed density" - which fits with what is actually happening in Auckland.
He has also come down strongly in agreement with Arthur Grimes' conclusion in a paper way back in 2010, that "profit potential is impounded in rising site values, limiting the incentive for actual construction". Again; this is what is happening in Auckland and has been happening in the UK ever since their 1947 Town and Country Planning Act. Such that housing being built now in the UK will have to last 2000 years, the rate of replacement of older structures is so slow. In fact that finding was in a 2002 paper by John Stewart and may be worse now.
I am afraid that this argument is wrong. When you have increased density as the sole or main means of housing supply, Ryan Greenaway-McGrevy correctly observes that site values will increase, benefiting existing property owners. However, he has not taken his observation (of global evidence) a step further: the fact is that as the average dwelling size shrinks, the average price rises. The correlation runs the opposite way to what we might assume. In fact the lowest density cities are the most affordable and the highest density cities are the least affordable - Atlanta and Hong Kong are like the extreme ends of the data set, and the correlation runs strongly in the same direction as this observation would suggest.
If you were to ration the overall supply of food on the assumption that smaller portions are better for society anyway (as we have an obesity epidemic), would it be economics 101 to assume that the result would be a lower spend per household, on food? Why not - they are consuming less of it, aren't they? Do markets with a supply quota scheme imposed on them, work this way?
Paul Cheshire and colleagues at the LSE suggest that the phenomenon of housing prices rising faster than size is sacrificed, is due to the bidding war for additional space, at the margins, by each income cohort. The more you reduce the average housing unit size, the more households are pushed into this bidding war. It seems that the sweet spot where house prices are relatively affordable, without anti-density regulations forcing too much consumption of land and choices generally being available for all types of housing, can be found with mixes like those in France and Germany - the majority is still suburban stand-alone; but there are no obstacles to the market providing significant proportions of row-houses and apartment blocks as well. The overall urban area density ends up around what Auckland is now (it is a lie that Auckland is low density and well below typical Western European mid-sized cities). Auckland needed to be allowed to continue to grow in roughly the same fashion as what supported median multiple 3 prices for decades, with a bit of reform to allow efficient intensification. As soon as you try to force "more than natural" density, the prices bubble.
It is the UK where urban areas have been forced to be unnaturally dense for decades already, and the average housing unit size is considerably smaller than France or Germany, and yet the prices are much higher - at least in the small-to-medium size cities that are the vast majority, and what we should be using as a benchmark. This is what led to Cheshire et al looking for an explanation.
Anyone hearing JK on Morning Report this morning would of picked up on him continuing to blow on about it "just being a supply issue" (Guyon let him away with it as the useless journo he can be at times) and he also reiterated that the government are not going to do anything that will bring existing house prices down. Thus, they will CONTINUE stalling supply and flooding our country with foreign demand while at the same time ignoring speculation.
So....my conclusion is this. A crash has been made our only eventual certain outcome due to political manipulation. So when it does crash in the near future...you will know who to blame and who to chase with a pitch fork.. OK.
JK will not talk about demand / speculation side of the problem for he knows the real problem and if he accepts will have to take action and upset his foreign friends.
National is totaly exposed and they too are uncomfortable as can be seen by thier body language when on camerà but are too thhck skin to accept what rest of NZ is shouting.
Question is how long can they be in denial and lie.
Blaming "speculators" for rising house prices is arrant nonsense.
Speculators make up a very small part of the market but are frequently muddled up with long term investors
in property.
Unfortunately many people cannot see the difference nor can they accept who the real "speculators" are.
By far and away the biggest speculators are ordinary home owners who buy and sell their own homes knowing full well that they never have to worry about tax or public humiliation.
Be honest . If you wanted to sell your own home would you take anything less than the maximum price offered?
When an investor buys a house and sells it, even years later, the media make a fuss about it.
But not a squeak is heard about home owners who make a killing from their position of advantage.
If you want to humiliate "speculators" then start with ordinary home owners and in particular yourselves.
Do we know when the next lot of figures are due to be releases on the proportion of house buyers for NZ? So we can finally pin down just how may Non-Resident Investors are out there?
And have they finally fixed that Buyers survey questionnaire yet so they can stop skewing the data?
Have doubts that if the agency is under govt.
They should have clear data of citizen , residence AND of short term visa holders like students, work visa, and any other who is not citizen n resident along with people who are based outside NZ - so called overseas buyer.
Even last time if the govt was serious could have got the correct data but as it suited them, ignored. This is our national govt whose entire policy of housing crisis is based on faulty data.
How will increased density help traffic congestion? AT say the CRL is planned to move 10,900 more commuters/day in 7 years time (at a cost of $230K per commuter) - while the pop increases about 150,000 in that period so that ain't going to help muc h.
Auckland is probably dense enough - perhaps the so called suburban NIMBY's have the right idea?
You are spot on. In fact the voters in the many US cities with mandates for low density, have the best intuitions on the planet. Comparable cities to Auckland, such as Indianapolis and Nashville and Kansas City, literally have 3 to 5 times as much highway and arterial lane-miles per capita, with the result that their congestion delays are a fraction of Auckland's (see the TomTom Traffic Index data). Their population density is around 1/3. In spite of the large section sizes, due to mandates, the actual prices per section are a fraction of those of Auckland's pocket handkerchief ones. See my longer comment above about the correlation between average housing unit size and average housing unit cost "by city".
Another important source of data is the UN Habitat Program report "Streets as Public Spaces and Drivers of Urban Prosperity". Auckland is a global dismal outlier on the low side, for street space as a percentage of surface area - down below former Commie cities and third world ones. Amsterdam, which is not a lot denser than Auckland, has literally 3 times as much street space as a proportion. The grid connectivity is also outlier-low in Auckland. So much for the LIES that Auckland is the epitome of car-mad, sprawling low density and "over-investment in roads"!
Personally I never could understand why Joe Public's intuitions did not rebel against the lies and propaganda on which policy has been based. My intuitions certainly did, and the more data I find, the madder I get about this fraud against the true public interest.
I thought that the long term average price to income ratio was nearer 3.5, so they need to fall by 65%. Was it on Interest .co recently that I read a study of 40 odd bubbles over history revealed that every single one fell to the long term average. In Christchurch even the Government admits that an average three bedroom home can be built for $350,000. And that is with our hopelessly monopolistic building material suppliers. If a government really wanted to pull up it's sleeves and promote some real efficiency and competition I would not be surprised if this could be lowered at least another $100,000
One guy says they should drop 40%, another says 50%. Am waiting with bated breath for the next grand suggestion....60% maybe? Yes it is a given that urban density has to increase as it has in every successful city around the world. That does not drive prices down though, just gives cheaper pricing options.
Anyone who says prices should drop by 50% as if it is a given is being hysterical. Above David Chaston himself says, "House prices need to halve in Auckland". It is very unreasonable and arbitrary and reveals a lack of clear thinking . Consider if you had a house worth 100k and it increased in value by 50% that would make it worth 150k right?. If the house then lost 50% of its value (halved) it would be worth just 75k....no?
They say Auckland house prices are a risk to the economy because the so called bubble might burst and then they say they really want the bubble to burst and fling out there the arbitrary figure of 50% which you can see by the above calculation is pretty catastrophic. A 30% drop on current prices would be the suggestion of a sane, unbiased person as that would reduce that hypothetical 150k house to 105K which is quite close to its price before the inflation.
I suggest that those who fling out the figure of 50% are simply driven by jealousy rather than science.
Zac, speculating on mathematical economic conclusions is NOT a "science". As for your claim of "jealousy"?, you are quite wrong. There are sound mathematical equations that show perpetual house price inflation is flawed, impossible, and a detriment to our overall economies and society as a whole. Claims of envy are the last defense of those who know they haven't actually earned what they claim they own. Being nearer the peak on a pyramid scheme doesn't make one less of a complete mug!
It's just reality. You probably build your case only on the local factor of household income to house price ratio as if it is written in stone. It's not that relevant in the current scenario of low interest rates and growing numbers of wealthy people in the Asia/Pacific region.
Well we obviously need a world event to bring down house prices.
I see 3things on the horizon.
1) debt is too high worldwide
2) super funds will struggle to meet their future expected payouts because they cant get decent yeilds
3) demographics.
Just a matter of time.
We can't build up in Auckland, because land costs too much. Any property developer looking to build apartments can find greater profits in other places where the land is cost is lower. As a direct result of our land restrictions Auckland has an apartment build rate amongst the slowest in the world.
If a reduction in property prices is your sole concern wait for the global correction, its effects will be felt worldwide, but most acutely in places that do not build during the boom years. Sydney, Brisbane, Melbourne, Tauranga are all building much faster than us. Construction is slow in Auckland, compared to everywhere else, when this current boom ends Auckland will be a town with low growth and high rent.
Reminds me of my vist to the bank the other day. Got stuck in the que for like 10 minutes as there were tellers missing at their post. During this time I had THREE other staff come up to talk to me and ask "Can I help you ?" what a stupid question, how about manning one of the empty desks and there would be no que of people in the first place. My point is just like this forum, its all hot air and no one is interested in actually doing the hard work to fix the problem. Nothing is going to change in the housing market for the foreseeable future, get used to the staus quo.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.