By Bernard Hickey
This week's economic and political debate has been dominated by concerns about Auckland's surging house prices.
Reserve Bank Governor Graeme Wheeler warned a burst of high loan to value ratio (LVR) lending by banks was adding fuel to the tinder of record low and recently falling fixed mortgage rates.
Housing Minister Nick Smith railed against Auckland's Metropolitan Urban Limits on land supply on the fringes of Auckland and blamed it for a tripling of section prices in parts of Auckland.
BNZ's Tony Alexander released a survey he said refuted suggestions non-resident Chinese buyers were inflating prices.
There are plenty of reasons put forward to explain the 14% rise in Auckland prices in the last year, but few have put forward a package of solutions.
Here's eight kicking around at the moment:
1. Lock Len Brown and John Key in a room until they come out with an agreement to open up lots of greenfields and brownfields land to build at least 20,000 affordable dwellings a year for the next 10 years. That's 10 times more than was built in the last 10 years. That deal should include investment from both governments in the infrastructure needed to support those 200,000 dwellings, including transport.
2. Impose an Auckland land tax to help pay for it. That would immediately reduce land prices 15-20% and remove the incentive for land bankers to sit on land for tax-free capital gains.
3. Introduce macro-prudential controls to slow high LVR lending, including LVR limits, extra capital requirements for mortgage lending and making banks fund all their lending locally through term deposits. These are tools already introduced and used by Hong Kong, Singapore, Israel, Sweden and Norway.
4. Restrict or control migration so fewer migrants from offshore, returning expats and migrants from other parts of New Zealand are able to move to Auckland. That could include a regional development strategy.
5. Restrict non-resident investment in existing houses in Auckland, as Hong Kong and Australia have done through stamp duties or outright bans.
6. Encourage the development of or build one or two large scale pre-fabricated house manufacturers to drag down the cost of affordable house building.
7. Launch a massive apprenticeship training scheme in Auckland for trades staff to build the 400,000 dwellings needed over the next 30 years.
8. Increase the Official Cash Rate to 3% from 2.5% to cool the doubling of lending growth over the last year.
Politically, these will all damage the leveraged-up equity stakes of existing property owners.
But if they are not done, the economic and political damage will be felt for years to come.
The government's claims to restructure the economy to become more productive and less indebted are in tatters.
We are now spending more than we're earning again and the banks are starting to borrow overseas again to fund the lending growth, putting yet more pressure on the currency and our net foreign debt.
Our current account deficit is blowing out again and a generation of young families in Auckland are seeing their home ownership dreams dissolve in front of them, or even worse, made possible only with crushing and dangerous debt.
Our politicians face a choice. They can propose change to benefit the next generation and the poor.
Or they can cling to the status quo and risk the eventual wrath of the poor and the young.
------------------------------------------------------------------------
This article was first published in the Herald on Sunday. It is used here with permission.
78 Comments
9. Restrict building convenants.
The idea that I can buy land for $300k but then can't put a house smaller than 200sqm or with a value of less than $200,000 is ridiculous. It's also a step towards the ever-dangerous American norm of residential associations and a huge slap of in the face of our notion of property rights.
Number 1 is the most important and John Key and Bob Parker should also locked up until they solve Christchurch's housing bottlenecks. It is pathetic that over two years after the earthquakes, the Christchurch house building rate is just the national average and all the heavy lifting is being done by by the Waimakariri and Selwyn councils (Stats NZ monthly building permit figures).
New Zealand cannot afford to strangle its two biggest cities.
I agree with all of those. We are too focussed on the rights of non residents. We often hear how good (hungry, wanting a foot in the door) migrants are while our own people are useless and lazy. Ofcourse the migrants are motivated and (as I know quite a few) I feel sympathy (more so with the looser types seeking lifestyle.. not your own the block types), however human ability and attributes follow a bell shaped curve in all societies and all groups and it is the nations duty to put those people first (as in train the sh** out of them).
Got to remeber the dead certainty of a major (8+) earthquake on the apline fault in the near future and the effect on hydro generation, irrigation and need to repair roads and bridges etc
There are Hungarians fixing holes in the Tekapo/Pukaki canal as we speak... can't come cheap.
I hope you are all watching what is happening in Cyprus this week end:
http://www.bbc.co.uk/news/world-europe-21814325
Effectively 10% of depositors money is being stolen by the state to help bail out both banks (and the government, via the intercession of an EU emergency loan) both of which overloaned and overspent. EU states are meant to have depositor guarantees in place but this measure is being circumvented. It is the first time I can recall this happening in a modern 'democracy' in recent times.
Now your average Kiwi wont have a clue but a) bank depositors in this country stopped being guaranteed several years ago and b) according to the new RBNZ Open bank Resolution Policy stand to wear something similar in the event of a NZ bank getting into trouble.
The NZ housing market and debt bubble is already vastly over-inflated. Keep this up and see where it ends.
Cyprus is a straw in the wind.
John Ward had an article on it this morning, looks an incedibly stupid thing to do, someone wasn't thinking.
http://hat4uk.wordpress.com/2013/03/16/eunatics-eunuchs-cyprus-a-suitab…
Alan March 16, 2013 at 7:51 pm
Here on Crete, a lot of the locals are seriously worried – I suspect there will be queues at the banks on Tuesday morning. The Cyprus haircut has taken up 45 mins of the hour’s news on TV – they just moved on to “450 medicines are now unavailable….”
Carnival and “Καθαρή Δευτέρα” tomorrow and Monday, let’s see what Tuesday brings.
Interesting....
Coming to a NZ bank near you....what p*sses me off is the banks have been doing more and more risky lending to get their profits, bonuses and dividends up yet its the depositors who will pay when the property bubble pops.
I seem to recall in 1400? someone removing a banker's head...I wonder with such high feelings in the EU at present whether is wont re-occur.
regards
I was thinking about all my friends selling capital stock and getting $25 for their lambs in the store. NZ is going to be in big trouble, it wont hurt for a bit as the stock being killed is putting money in the bank and export reciepts on the table. However give it 6 months and the story will be very different, withholding stock to replace capital stock killed, and others unable to afford replacements. Next springs kill will be way back, if the dry goes on, next year is going to be a catastrophe one for exports. So how will the rest of you pay your interest, goverment debt?
I have posted my view for some time now that the wealth stripping going on will keep spreading to where it can be easily stolen. So for Cyprus it is the bank deposits, where is all the wealth sitting in NZ? PI's will one day find they are not so smart afterall, including farmers that have played that game.
I actually don't see a solution, I only see pain ahead. These things should have been seen coming a long time ago, some people like PDK did. Guilty that I didn't until I questioned what happened in 2008. Now that I have questioned my knowledge so far doesn't see a solution. We are probably well past sustainable and money is just numbers swimming around getting increasingly disconnected from the physical world.
Having no debt is my primary recommendation and I am pleased to say one of my brothers only has a month or so left until being mortgage free. He seems to be resisting the temptation to make additions or renovate :-) I try to make a difference in my own way. But a very good question, what does he now do with his surplus, I am sure his wife will have some solid views on that.
Scarfie - so what do you suggest? Should everyone sit on their hands and do nothing?
Wealth stripping is done by Governments and they are generally incompetent at most things they undertake. People and business that have a debt are actually better protected than any cash depositors any day.
If you have cash hanging around you have to find a home for it - you have to invest it. Cash sitting in a bank is not an investment. People are going backwards with bank deposits.
Yet lamb is $25 to $40 a kilo! So what happens in between a farmer getting $25 a lamb and me (actually I dont buy lamb) buying it?
We'll pay it as per normal, churn....
Seriously, kind of what I have been saying for a while, much of GDP is make believe and churn, real GDP is when something is made. So if we dont make anything I dont understand how that can stay up...
Same with oil Andrew...or indeed any mineral and especially one time use like oil/coal.
regards
You are being ripped off. Here in Nelson its regularly been $10/kilo on special recently. The most expensive I have seen it in recent times is $18/kg. I would think a mean non-special price is about $14-15 in the past year. God only knows where you are finding it at $40/kg.
hey, Andyh, do you think what is happening in Cyprus is how our OBR would work. If it is, who the hell would keep deposits in an NZ bank.
>>>
The Eurozone powers-that-be (mainly, Germany) insisted that the depositors in Cyprus's banks pay part of the tab.
Not the bondholders.
Read more: http://www.businessinsider.com/cyprus-bailout-risks-europe-bank-runs-2013-3#ixzz2NlBKZI5E
http://www.businessinsider.com/cyprus-bailout-risks-europe-bank-runs-20…
http://www.zerohedge.com/news/2013-03-16/everyone-shocked-what-just-hap…
The OBR policy has been set up to specifically make it EASIER for us to replicate the Cyprus experience (via the offices of the good old RBNZ). Its all there, written in letters ten feet tall yet I doubt 1 in 100 is aware of it. Good old NZ, the only OECD country without any form of depositor guarantee, arming itself with a scheme that guarantees depositors a mighty share of a bank collapse. And as a consequence once the first sniff of meaningfull stress appears anywhere in the NZ banking system there will be an entirely justified rush for the exits and runs on ALL the banks (which will be an entirely rationale response). If you are a NZ deposit holder and you havent opened a Australian bank account (to take advantage of their A$250,000 per account depositor guarantee) you are a berk.
Making the whole thing much, much worse of course is the way that the NZ banks have now been allowed (by the good old RBNZ) to raise extra loans via the covered bond route - pledging their very best assets as collateral to overseas investors and lifting them out of the pool of assets which would be made available to all to cover the losses caused by a bank collapse (and so magnifying the burden to be carried by the humble depositor).
Really, you couldn't make this stuff up. The RBNZ has been captured and one of these days the man on the street is going to feel the full force of what that entails.
The other bleeding obvious consequence of the OBR (which its originators seem to have ignored - who thought this idiocy up?) is what happens subsequently. Supposidly 2 days after the bank hits trouble it magically re-opens and depositors have full access to that portion of their money which has not been frozen to pay creditors. Now what would any sane person do in such a circumstance? They would pull all of their available money out of that bank on the basis of once bitten, twice scared, and hey presto, the bank would stay open perhaps for a half a day before this bank run collapsed it again.
Yep, Cyprus will be a sight to behold from Tuesday onwards - or will sanity prevail and the TPTB call a halt to this nonsense - but letting individual homeowners borrow at plus 80% LVR is a significant undelying cause of the resultant nonsense. Nonsense piled upon nonsense generally has consequences - but who pays first?
Is this not discussing what I elude to above? Who would be in property?
http://www.zerohedge.com/news/2013-03-16/everyone-shocked-what-just-hap…
Probably right in the end game - but our 4 Australian owned banks have been exporting NZD to Australia for years off the back off it (property), while NZers pretend they are richer.
I guess Bill English's prognostication of more drought related income cuts will test the patience and resolve of all parties.
Well considering this tax is on depositors, very much the ones who have not taken stupid risks with their money then this just re-inforces property investment IMHO.
Thats just it really those depositors have cash that can be taken with little consquence, impose a 10% tax on property and many ppl couldnt pay it.
Its a huge worry that no Pollie wanted to head off this problem a decade ago and now is happy to screw the easy patsy...
regards
The Pollies won't have a choice in this matter, we owe the debt as a country and will have to hand over the assets if we can't pay the debt. Can you really see our politicians telling our creditors to get stuffed? What happens to the oil supply then? Nope, just like Cyprus the time will come when any and all wealth will be targeted. That is what this all is, a search for assets of descending quality to back the debt. For New Zealand most of our assets are tied up in property, so that is where we will be targeted. Eventually the cupboard will be found to be bare, but not before the average Joe is stripped naked and left in servitude. We do lagg the rest of the world though, so a little time on our hands.
But the real point is that because property is illiquid it is an even better target. So if they hit us with a 10% one off property tax, what are you going to do? Vote for someone else next time? Like that will help.
This is why I think they will have to back down, thia and some pissed Russians.
Have Money in a Spanish Bank? Take It Out Now!
Read more at http://globaleconomicanalysis.blogspot.com/2013/03/contagion-begging-actions-expect-bank.html#sKFCZgyTt72o45AP.99
Russians bite back?
http://chasvoice.blogspot.com/2013/03/over-20-tons-of-heroin-seized-in…
Jim Sinclair told King World News we have just witnessed one of the most important events in history and it will have a major impact on the gold market. Sinclair, who’s father was business partners with legendary trader Jesse Livermore, had this to say in this extraordinary and exclusive KWN interview:
“The wire reports on the Cyprus situation are working overtime to try to make the case that 80% of the deposits belong to the people of Cyprus, and only 20% of the deposits belong to the Russians. That’s absolutely false. After 1985, when the ‘Robber Barrons’ of Russia took over the general economics of Russia, that was the transformation from the KGB to private business. The primary place for exported Russian funds was Cyprus.
Now, there is one leader in the world that would be very dangerous to challenge, and that is Putin of Russia....
“What’s just happened is the IMF has backed up, lauded, supported, and publicized, as if it were a victory, the taking of 10% of what really turns out to be 80% of Russian ‘black money.’ Russian ‘black money’ is KGB money, now in business. The leader of Russia (Putin) was a former KGB official. Who’s money do you think they have taken? This is the biggest mistake the IMF could possibly have ever made.”
The way they reported it on 6 o'clock news ... "the ECB agreed to a x billlion dollar bailout but only if the Cypriot government contributes 10% of bank deposits ..."
That language so annoys me... "contributes" (yeah right) .. I think the word they were looking for was "steals".
..... as if we needed proof that the underlying truth of the European Union was that it is a socialist grab for power , and a denial of democratic rights to the citizens ......
Mark ( Tribeless ) Hubbard has banged on about this subject for some time ..... and he is correct ....
..... governments are not there to help you , they're there to help themselves .... to dip into your munny when they " need " it , to deprive you of free speech ( Julia Gillard / Helen Clark ) when it suits them , and to conscript you to fight a war against someone they think has weapons of mass destruction , or who looks a tadge too yellow , and not like us ...
Ah Gummy - the more cynical side of me thinks that people just don't care about the Socialist grab for power. Those that don't have much always want more from those that do have. If too many people fall into that first category then they will cast their democratic vote in favour of what they can get out of the system without any effort.
Once NZ'ers used to have a great can do attitude - a bit of pride that they could succeed by their own actions. The evil trio of crooks, thieves and Socialists out-number the good trio of honesty, integrity and liberal individuals.
BH himself desires to tell a human being where he/she can live and justifies that this position is in the best interests of the people and property prices in Auckland. Well, we all know what Hitler legalised and where he put the Jews. Man is endowed with reason and conscience the trouble is reason and conscience can be both positive and negative to the human race. It's a shame that...Thy shall not steal and they shall not covet......appear to have gone out of vogue.
andyh. Agreed, in little more than a couple of years we have gone from this fifth National government bailing out foreign wholesale investors in SCF under a "retail" deposit guarantee, to now covered bonds and the OBR, all the risk and cost of which fall on us Proles. Many here and elswhere have given warnings but the corruption in favour of Banksters like GS continues apace. Maybe this Cyprus event will cause the wider community here to wake up? Let's hope.
Ergophobia
Steven - personally the way I view it, if the banks are doing that its their problem, and their shareholdes loss. But if I'm the one dumb enough to borrow the money in the first place when the market is unsustainable, or when I really can't afford it, it hits me the hardest, and I'm the dumbest one involved. I tire of the "its someone else's fault that I was dumb menatlity" that pervades NZ, and that you're cultivating here.
Im not aware im cultivating that. What I am happy to cultivate is ppls lack of responsibility.
ie that their actions can and probably will cause losses to innocent 3rd parties. Im all for seeing shareholders lose and bank officers go to jail, trouble is it will be the ones who took the least risk that will pay the most.
I think Im comming around to being all for bringing back debtors prisons. Throw the property gamblers and bank officers in there until the debt is paid.
regards
Steven - if people who have borrowed have the ability to pay what they owe back then they are being responsible.
No-one wants third party losses via a bank collapse.
If your so worried about damage to third parties how about finding ways to ensure that savings are protected? Cash and savings as an asset has to be treated with the same respect as other asset classes. Very few people would own a home and not insure it. Yet with cash people throw it in the bank and hope it's safe and that is being responsible in your view.
Some people spend a lot of money each year learning how to invest and take care of themselves and their families needs. It is time and money usually well spent it is also being responsible.
If you are scared of losing your savings - damn well invest them in something that you have control over instead of passing the buck and blaming everyone else.
If you know somehing is not safe and you know something is unsecured then you are taking the risk.
but are they right now? I'd say no.
We get mortgagee sales here, in the USA way more so clearly there are ppl taking on more debt than they should.
No "Yet with cash people throw it in the bank and hope it's safe and that is being responsible in your view." that isnt my view.
Savings in a deposit account are actually an investment and no investemnt should be risk free, all else being equal. What happens though as is happening now when the bankers and borrowers are lending/borrowing un-wisely?
Own a home and not insure it, actually I think the chch Eq exposed that one...a noticable % had none.
I would say there are 2 sorts of debt, productive and un-productive...the former is something that a business person takes on in order to generate a good and with that profit pay off the debt and make a good living. The latter I'd suggest now dominates our economy and there isnt much hope of paying it back.
"If you are scared of losing your savings - damn well invest them in something that you have control over instead of passing the buck and blaming everyone else."
Thats just it actually, I dont believe that there is anywhere that is actually "safe". I think the sharks have been left free in the so called free market and have stiched it up....morally its corrupt IMHO, hence why I have cashed all my investments in and used them to clear debt while they had value.
regards
Would be interesting to do an analysis of the vested interests and the degree to which they sway policy and media coverage.
From The Landlord Says:
Meanwhile the National Party released its immigration policy. You may wonder what this means for the property market. It is clear from research that immigration is one of the key drivers of house price growth.
The logic is simple. If you import more people into the country, then you need more houses. Supply and demand means that prices are then pushed up, this is particularly so in Auckland.
While the latest immigration numbers show the number of people coming into New Zealand is starting to rise, the Nat’s policy looks like it wants to increase immigration levels even further. (Although it is unclear what sort of number they are targeting.)
This policy is, arguably, a plus for people who want house prices to rise. (But may be not so good for first home owners wanting to buy.)
My guess has always been that property investors lean heavily towards the right rather than the left. (*This was made clear in an email newsletter I saw from one developer this week*.)
*...self destructed perhaps???
.
Property researcher [and one man band] Hugh Pavletich has good reason to feel pleased with his lobbying of political and industry players about housing affordability.
Only four years after his first annual Demographia survey many of the basic premises have now become an accepted part of the lexicon used by political leaders, property players and researchers.
http://www.nbr.co.nz/home/column_article.asp?id=20225&cid=16&cname=Property
Bernard, I can't help but notice that the NZ land tax proposal you been advocating for some time has suddenly become an Auckland specific land tax just as you leave Auckland.
Auckland is the most unaffordable city but the problems are not isolated to just Auckland. Teachers, police, nurses etc living in Auckland with a mortgage already have less disposable income than their counterparts in the rest of the country. I don't see how slapping a land tax on them them only is in anyway reasonable or fair.
I think that is just one of those things. I also would be caught out as I own my own house but long term it will create a more benign situation. Aucklands growth might be seen as industry capital gains mining? Back when farmers recieved supplementary minimum prices for lambs it effected the price of land. When they were stopped I think 1/3rd of farmers went broke, but it had to be done.
Too bad the banks will be saying "over our dead bodies!"
Roads are made, streets are made, services are improved, electric light turns night
into day, water is brought from reservoirs a hundred miles off in the mountains —
and all the while the landlord sits still. Every one of those improvements is effected
by the labour and cost of other people and the taxpayers. To not one of those
improvements does the land monopolist, as a land monopolist, contribute, and yet by
every one of them the value of his land is enhanced. He renders no service to the
community, he contributes nothing to the general welfare, he contributes nothing to
the process from which his own enrichment is derived. (Winston Churchill, 1909,
quoted by Barker 2003, p. 116).
Teachers, police, nurses etc living in Auckland with a mortgage already have less disposable income than their counterparts in the rest of the country. I don't see how slapping a land tax on them them only is in anyway reasonable or fair.
A land tax is a tax on unused land - ie empty sections that could otherwise be built on.
The idea is to discourage speculative purchase/retention of empty land so it increases in value, without actually building anything on there.
I'm not sure how common 'land banking' actually is - certainly I see it a lot on Estate Agent advertisement where large tracts of land are being sold, that could later be subdivided.
Personally, I think it's not a bad idea in spite of the fact I've just brought land which is a bummer. But so it goes.
The problems involved are:
a) You need to make sure the infrastructure for house bulding can cope with increased demand - labour AND material cost. (I note Bernard has addressed these somewhat, and I agree strongly with kitset type house construction development if it is decently regulated to go with the encouragement (ie sufficent distinction in house designs, ability of clients to modify spec designs relatively cheaply in terms of external aesthetics).
b) National will never go for it because they're too apathetic frankly (afterall, their total failure to act on just about anything, and the MASSIVE failure of Christchurch rebuild management hasn't upset their poll numbers yet), and fear of irritating their donors who no-doubt own the sort of vast tracts of land that will wind up costing them dear.
Although I guess they'll tell themselves some idealogical claptrap about 'not interfering in the market'.
This Government is probably the most incompetent NZ has ever had. Nothing will be done fo the people but it will allow those, NZ or foreigners, with money to prosper even further. I heard that in higher circles they are saying that within 4 parliamentary terms we will be a state of Australia because we can't manage our own economy. Roll on the revolution.
They've both been equally crap. Altough I guess Kiwisaver and Kiwibank made some effort.
Although I would find the ideological bickering over 2 teams that are virtually identicial in this regard kind of amusing, if it wasn't for the fact that it is so depressingly common.
I tend to agree Patricia. But I am no Labour apologist either. I think Labour did a lot of damage, in particular their lack of action set the base for this housing mess.
Putting that to one side, National's response over the past 4 years on the issue has quite simply been lethargic, intentional or otherwise (I'm thinking its intentional, despite their rhetoric on housing affordablity they are happy for themselves and their fat cat mates to see their property portfolio rise in value.)
Now, property investors may currently be rubbing their hands with glee. But this reignited Auckland housing boom is going to have negative consequences, either disastrous (ie. the boom pops) or 'merely' severely constraining (ie. the boom peters out but housing remains unaffordable, which severely limits economic growth potential and competitiveness)
Personally I think a crash is necessary to correct the imbalances. Will it happen? Don't know
I hate to say it, seeing as I just brought a piece of land, but I suspect a land tax would be a strong solution that is strongly targeted.
It would have to be written very carefully to make sure farmland is targeted correctly (although it would be incredibly easy for farmers to find loopholes insofar as what 'used land' would mean)
First though you would need see some stats as to how much land is actually being 'landbanked' in areas where building could otherwise take place. It may not be high enough to make a land tax less pain than it's worth.
Bernard, you get a pass grade on 3 4 5 and 8....otherwise try harder.
Leaving Auckland to throttle itself may well be the best answer. Otherwise the very same madness will repeat somewhere down the track.
And you have forgotten the golden rule of economic management of the NZ economy...politicians are into property!
If Australia's experience is anything to go by , compulsory superannuation is a great way to make fund managers exceedingly rich ...........
...... and it's never free from the meddling government of the day trying to get their sticky thieving pinkies onto your retirement nest egg !
Bernard, i agree with all except
1) John Key and Len Brown would never be seen again, they would die in that room as they are both clueless.
8) I disagree with putting up the OCR, other means are much better. For a start the government (god help us) should have more control over our money.
PS - re Cypris
I wonder if we will see bank runs throughout Europe next week.
I see Zimbabwe people are getting a vote on a constitution. Yet in this suposedly great democratic country we are not allowed to have one.
We are too stupid to have one that is why we have to let the government make all our decisions for us. We need to be told, by them, what is good for us.
Wikipedia says
The independence of New Zealand is a matter of continued academic and social debate. New Zealand has no fixed date of independence, instead independence came about as a result of New Zealand's evolving constitutional status. New Zealand evolved as one of the British Dominions, colonies within the British Empire which gradually established progressively greater degrees of self-rule. They were always anomalous in international terms, and the attempt to define a "date of independence" in the sense that one can be given for most ex-colonies is not really meaningful. In many ways it is an example of the Sorites Paradox. However, a consideration of possible dates can help understanding of the processes of change.
And
Sorites Paradox (from Wikipedia
The sorites paradox (sometimes translated as the paradox of the heap because in Ancient Greek: σωρίτης sōritēs means "heaped up") is a paradox that arises from vague predicates.A typical formulation involves a heap of sand, from which grains are individually removed. Under the assumption that removing a single grain does not turn a heap into a non-heap, the paradox is to consider what happens when the process is repeated enough times: is a single remaining grain still a heap? (Or are even no grains at all a heap?) If not, when did it change from a heap to a non-heap?
New Zealand as a democratic entity has a much longer history than most nations with constitutions. The constitutional monarchies seem to be longer lived than the republics too. Many countries are quite newly created from a constitutional point of view. Even France is onto their Fifth Republic....
Why are we waiting for someone else to fix our issues i.e. Len Brown and John Key they are not the dumb buyers going and pushing the market up? Been to another Auction today and now the Kiwis are been dumb and paying too much. Did they learn basic maths at school? If you pay $150000 too much for your property now, over the 20 year term of your morgage that is going to cost you $330000. Ever tried saving this amount? Buy right first. There is no shortage of property on Auckland’s North shore - there is 25years of building in orewa and 10 years at long bay. The problem is the bankers will not fund this new building reason below.
We only need one step to sort this out not 8.
This can all be sorted in 4 short weeks and one simple step. There is a very easy way for the buyers to take back control back of the market.
STOP BIDDING AND BUYING AT AUCTION.
Why as buyers are we allowing Real-estate clowns to dictate to the buyer how we purchase? Lets make them start doing their jobs and working for their money and show some sort of interest in purchasers.
Stop BIDDING AND BUYING by auction and the market will even out very quickly. This has already started happening. I’ve been to 90 auctions over the last 10 days and 50% of properties were passed in.
The bankers (w) these guys would have to be the slowest learners that have ever had breath put into them. It was only a short 5 years ago that they where on their knees when the global markets crashed all caused by greed and giving money out to people they should never have done. Now it is all happening again. They are fuelling the fire and not with your genuine kiwi who pays their mortgage on time every time. But with the internationals who come here with their underlying current of corruption and are doing no good for NZ or the people that care about this great country.
Mr Tony Alexander the money seller (I smell a rat here.) I understand your BNZ Chinese Banking division has gone from two staff members two years ago to 30 staff now and you are giving out 95% loans to the internationals and this division is running a muck. Its no wonder I was finding your bank too hard to deal with 12 months ago and down scaled. This is where the opportunity for all you Kiwis who want to get in the markets will come over the next 12 months. As this mess unravels and the internationals run home with bankers chasing.Good luck with getting your monery back
Keep your money in your back pocket and your hands in your front pockets and see what happens with the drought the wheels falling off the market at present you can make good decisions after this.
Some good ideas from B. A land tax on Auckland land is a great idea, considering how out of hand this has got. Also regulating the hourly rate on building work and material, epspecally in Christchurch were the cost of building is now 50% higher than elsewhere in NZ, making building too expensive. The cost of building in NZ is far too high. Also regualting land pricing for Chirstchurch, so developers can make huge profits from peoples misery. This is quite a desperate situation, so some desperate measures are needed, and the free market isn't working. They regulated the telco and mobile sector, so I can't see why they can't do so in the property and building sector too.
10. Start a recession, it's not hard to do. Once there is employment uncertainty, people will either deleverage or perhaps go bankrupt. Banks will be forced into mortgage sales and haircuts. Cheaper, more affordable housing and we can start again with less debt loading.
If you are a NZ deposit holder and you havent opened a Australian bank account (to take advantage of their A$250,000 per account depositor guarantee) you are a berk.
Does the guarantee apply to NZ residents as well holding money in an aussie bank account... or only Australian residents...??You should really do your own research on this (it is after all very important), but to help you along:
http://www.theaustralian.com.au/business/financial-services/australias-…
Note that this article points out the potential this has for causing an exit of funds from NZ to Aus when banking stress hits.
To invest in the property market right now would be about as smart as starting to smoke cigarettes.......all the evidence is out there and the history that this model is not sustainable. Short term you many enjoy the quick fix of quick rises, long term it will slowly erode your equity if you buy now......oh humans how we have an idol of home ownership, surrender the idol......its a house on a bit of soil.......cant take it with you!
Go rent a house on waiheke, the coffee smells better
LOL, problem is ppl have no experience of a huge property loss, or a Great Depression, not unless your are 90 and who listens to those old farts anyway....buy....buy....BUY!!!!
Add in that cheap energy has caused a dis-location of ppl v thier enviroment's output ie annual sun for 100 years. In that time what we have built especially stuff on debt cant be repaid as their wont be that much energy in the future....
Therefore this bubble will pop...of course the fallout will hit the careful coffee drinkers as badly as the gamblers...the latter will go bankrupt and the former solvent tax payers will have to pay.
PS "slowly erode' aka Japan, no I think its going to be a big fast pop some years like 3 to 6 and 75% down. The trigger will be a sizable fall in oil output (if other things like this financial mess dont do it first) before 2018 then we'll have a house of cards scenario and its going to be very ugly.
regards
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