How can you tell you are in an asset bubble?
It's a question to occupy much finer minds than mine. Economists can draw up charts. Academics can study previous trends. Figures can be moved around.
I take a very simple approach that has never failed me so far. I think we are in an asset bubble when the aforementioned assets suddenly start commanding frothy appearances on prime time mainstream television.
The fact that the housing market and particularly its unruly Auckland big brother is now attracting such attention tells me that the rising house prices have already gone too far. This issue is already becoming too big to rein in without extreme difficulty and pain.
Last week's Real Estate Institute of New Zealand figures for May provided, in my view, the most compelling evidence yet that the housing market is becoming a runaway truck.
It wasn't the fact that the Auckland house price median reached a new record of NZ$565,000. The specific issue with Auckland and its perceived shortage of 30,000 houses is well known and canvassed. Demand versus a shortage of supply will equal rising prices.
The real telling statistics in the latest REINZ figures were, for me, substantial month-on-month surges in price in areas like Nelson, Central Otago Lakes and Hawkes Bay.
The Hawkes Bay median rose 2.9% between April in May. In Nelson the median shot up 8.5% (to a new record high of NZ$353,625) during the same period and the Central Otago Lakes median surged an amazing 10.1%.
Heated activity
The fact that such heated activity is occurring now outside of areas suffering from Auckland's supply problem tells you that the "buy now at all costs" mentality is now very much upon New Zealanders again - and is spreading.
It seems very clear that the house market fire needs a hose putting on it right now. The problem is there is no sign that is about to happen.
Auckland's housing shortage will not be resolved any time soon. Assuming the Government and the Auckland Council do resolve their differences and implement the recently negotiated Auckland Housing Accord (see here for articles on it) there will be considerable lag in the new houses under that plan coming onstream.
The Reserve Bank has been constrained from raising interest rates to act as a housing market dampener by the high value of the New Zealand dollar.
Talking up
It is now talking up the prospects of putting "speed limits" on the banks in respect of how many loans they can make to house buyers with only a 20% or less deposit. Trouble is, Prime Minister John Key has already put his oar in by saying he wants such limits to exclude first-time buyers, which is obviously a very politically-driven stance on his part.
Reserve Bank Governor Graeme Wheeler has already said that first-time buyers won't be exempt. But is he really prepared to go out on a limb against the Prime Minister on this one?
The chances must now be increasing by the minute that any limits on high LVR lending will be watered down. It's even possible that if the banks voluntarily reduce the proportion of such lending (it's currently about 30% across all of them though there are huge variations from bank-to-bank) that the limits won't be imposed at all for now.
In any case, I don't think the speed limits would make one jot of difference to the house market. They might have a positive impact in terms of saving the banks from themselves and any nasty shocks to the financial system if there is a sudden rapid downturn in house values.
Find the money
But the reality is that people will still find the money to buy houses if they really want to. The only problem is how they might find that money. If high LVR limits are imposed this is just likely to increase the risky behaviour on the part of first-time buyers. New financial intermediaries lending money at extortionate rates may appear, for example. The most vulnerable buyers are the ones who will put themselves most at risk.
The LVR limits appear absolutely ripe for a whole set of unpleasant unintended consequences. And they are not going to stop cashed-up buyers from continuing to drive up house prices.
Ultimately I think the RBNZ has little to lose from biting the bullet and actually throwing in an interest rate rise now. The shock value of a rise, when the "market" is not expecting the first one till March next year at the earliest, would offer the bank its best chance of having an impact.
Acting now would also give the RBNZ the best chance of getting full bang for its bucks because Kiwis are rapidly moving to fix their mortgage rates ( with fixed rates now up to about 50% of the total), albeit mostly for only about a year. But if the central bank does wait till next year to move on rates then the vast majority of people will probably be holding fixed mortgages and therefore won't be immediately affected by the rate hike.
Worth the risk
With the Kiwi dollar having fallen recently and now looking volatile an interest rate rise might just be worth the risk.
Whatever the RBNZ decides to do, however, I hope the Government gets behind it. Too much is being left to the central bank when the Government could be taking an active role in dampening the house market itself. And it certainly has not been helpful for the Prime Minister to seek to influence the RBNZ's intended move on LVRs.
Apart from being supportive of the RBNZ, what else could the Government do?
Surely the country is now well past the point at which it can avoid any longer the impost of capital gains tax, or at least stamp duty on investment properties (IE NOT the family home). The point of such a tax would not be to generate extra revenue for the Government - because it wouldn't. The point would be to attempt to modify the behaviour of Kiwis so that they would at least consider investments in other types of assets. Very few Kiwis look beyond property investments.
Imperative
The other reason why a capital gains tax or stamp duty is now become imperative is the fact that the more other jurisdictions - and places like Singapore and Hong Kong come to mind - actively seek to dampen property speculation with tax hikes, then the more New Zealand with its easy access becomes attractive.
Which leads nicely to the other thing the Government has to consider now; banning overseas-based buyers of existing properties. They have already done this in Australia.
There is no cast-iron quality information available on just how many people buying houses here are based overseas and don't intend to live here. The numbers are probably not high as over-heated gossip would have it. But the problem is, such numbers will only increase unless New Zealand more closely aligns its investment regimes with those of offshore countries.
A capital gains tax and a ban on offshore housing investment, if signalled now, might take some heat out of the current housing market.
Sadly, the Government is probably not incentivised to do the right thing. It knows that if house prices continue to go up in the short term then everybody (who owns a house) will feel good about life, will spend money, and the economy will tick along. In such circumstances most people are not going to be thinking about voting for a new Government.
So, at some stage - and it is likely to take two or three years at least - this will probably end badly again.
65 Comments
when you still have a lot of people bearish on nz property, when you still hear a lot of people thinking prices are too high to be sustained, then you know we are NOT in a bubble.
If there was general consensus then I'd be worried.. and house prices would be going up 30% pa, then crash as bubble pops. There is too much rational thought still in the market, which means still people yet to be 'turned' into buyers.. another 3 years. Buy in the provinces or wellington, these will be going up next
No point in asking a academic or economist when a bubble is starting, bubbles are by their very nature irrational, your best to consider mass psychology. Warren Buffett has said "you know there's a bubble when your hairdresser tells you to buy a investment property". Best thing to do to pick bubbles is to listen to the man on the street, the unsophisticated investor, if they are talking about property investment you know a bubble is starting. Academics, career investors and the like will always apply plently of logic, stats and analysis to any investment decision and will generally not create asset bubbles. It's the average Jo that piles into a asset class at any cost without any, logic, stats and analysis, that creates bubbles.
We're only just starting to see mainstream media programs on Auckland property prices, the unsophisticated investors are only just starting to plan investment purchases. The bubble is just beginning, 3 - 4 more years yet.
Lack of action to address the house price problem with macro tools coming too late won't matter now as in approx 7 months time rates will be going up anyhow and will act as a drag on the house price appreciation. We need to learn to tame bubbles earlier rather than letting them run and now we face our housing market against against the backdrop of potentially lethal rising rates.
DH's Imperatives
New Zealand with its easy access becomes attractive.
Easy you say ..
Attractive you say ..
more like el-Dorado
Banning overseas-based buyers of existing properties.
They have already done it in Australia
Now why do you think they did that? .. and how long ago? .. are nz wallah's slow learners?
What you didnt mention is NZ's anti-money-laundering laws which ONLY come into effect end of this month whereas AU did it 10 years ago .. all the dirty money is getting in now before the door closes.
are nz wallah's slow learners?
Not at all - I know many New Zealand European's who have benefitted hugely from current policy settings - and are in fact currently enjoying spending the proceeds in the Northern Hemisphere summer, while the hired help attends to matters at home.
Good comment iconoclast ....... NZ is really controlled by a very small group of people and it has been to their advantage to let this "funny munny" flow in until now and NOT to restrict foriegn buyers ....as this will upset their existing property portfolio strategies....and we can't have that !!
BUT... the construction boom has not started yet.... the strong employment growth that should result from that has not started yet.... the massive surge in GDP growth is only just about to start.... Maybe rents will skyrocket..??
All the things Tony Alexander spoke about....
This is beyond the reach of the Reserve Bank... don't ya think..??
If the rest of the world should start showing GDP growth..... then NZ could go gangbusters..
Maybe ...at some point in the future we might see what a real property crash .. with really banking stability problems.....looks like...
With the way things are setup... and with the lack of real forward thinking leadership... why can't NZ real estate prices go crazy like they have in China and Hong Kong etc..???
David might be a little early to be saying.... "Bubble".
Correction - they did it 24 years ago in 1989 not 10 years ago .. howzat for slow
I told you back in September 2010 here
http://www.interest.co.nz/news/50660/90-seconds-9am-bnz-earthquake-legislation-new-basel-rules-hanover-allied-farmers-legal-challenge#comment-577138
AUSTRAC - Australia's anti-money laundering and counter-terrorism financing regulator http://www.austrac.gov.au/
Property purchases can be used to launder money and get around the regulations
The AUSTRAC website reveals that Real Estate Agents are exempt from AUSTRAC reporting which means on execution of the purchase agreement the 10 percent deposit together with the final settlement can be transferred directly to the Real Estate Agents Trust account, electronically, from anywhere in the world, all under the radar. AUSTRAC centre is an Australian government agency, established in 1989 under the Financial Transaction Reports Act 1988.
Property purchases can be used to launder money and get around the regulations
The AUSTRAC website reveals that Real Estate Agents are exempt from AUSTRAC reporting which means on execution of the purchase agreement the 10 percent deposit together with the final settlement can be transferred directly to the Real Estate Agents Trust account, electronically, from anywhere in the world, all under the radar. AUSTRAC centre is an Australian government agency, established in 1989 under the Financial Transaction Reports Act 1988.
Recently read somewhere, probably ZH, the same applies in the US.
Of course tax increases will lower house prices!!!!
yeah right...
Considering current replacement cost of an existing home is so far above the "market" value of existing homes and rising fast, then we would need to see house prices in many areas rise 30 to 50% for the market to decide existing home prices were too expensive.
Artificial interference in the market which does not affect the supply side will only kick the can down the road.
For long term investors, most of the return is from the investment income not the capital gain, so capital gains tax is not going to discourage anyone but speculators, and of course it will limit the supply as investors will simply never sell. So after an initial adjustment, it's back to business as usual. (Just like reintroducing income related state house rents was meant to lower market rents! Yeah right...).
Roeloff, Simon and Happy123 have made some very valid points above.
A good definition of an Asset bubble is:
Rapidly rising prices at such a sustained rate that they exceed valuations justified by fundamentals.
Has the rising price of houses exceeded valuations? I am not talking CVs here either.
You have to look at the fundamentals to get the answer to the above. Apparently housing in NZ is 60% overvalued to rent income. And apparently 25 to 30% overvalued using household income to debt.
However the fundamentals have been distorted by the housing shortage which as to date has not been addressed as we are not building thousands of houses across the country per annum.
Fundamental analysis is not going to work at this time when there is a large market shortage and I'm surprised that people can't grasp this.
A CGT will not build extra houses.
An LVR of 80/20 will not build extra houses.
A land tax will not build extra houses.
Stamp Duty will not build more houses.
I think the problems that are causing the housing shortage have been more than discussed on this site. Get houses built in Auckland and Christchurch as fast as you can, open up the land supply, reduce the local Council bureaucracy and leave the market to do what the market does best.
Councils and Government are far too slow to recognise where the problems are and then to take the right course of action. 2002/3 was when the housing supply should have been addressed.
Some people have been able to take advantage of the errors of Government and Councils of the past.
Hmmm, this could be interesting - lots of foreign owners could mean cheaper rents. House prices go up, then China has banking/finance implosion (it's going to happen, could be next week, could next year, who knows). In a world finance problem (they happen every few years) then the people in the countries most affected have to liquidate their good assets to pay their debts, so they all sell their NZ houses back to us at a nice discount. If there is a world finance wobble the NZD goes down and dear Governor Wheeler will have to put interest rates up so we can afford our petrol ration. Should be interesting, but:
"The cure for high prices is ... high prices."
Meanwhile, people and their families still need HOMES they can afford to live in while they are waiting for this magic to happen.
We have totally lost track of what housing actually is, it's where people LIVE, one of the first necessities of life. It makes me sick watching it become more and more commoditized all the time
Raegun - there is not a person who writes on this site who does not recognise the facts you started above "People and their families still need homes they can afford to live in".
This housing shortage issue has not happened over night. The effects of the housing shortage are being felt more severely now than previously. This issue has built up over several years and Politicians and bureaucrats have failed miserably in recognising one of people;s most basis necessities.
Everyone should learn a lesson from this and should be ensuring that Politicians and bureaucrats behave appropriately in the future.
Housing should be treated as a business it is the most expensive purchase most people will ever make. To not treat it as a business is to not take your earnings seriously or respect yourself and what you do. I don't care how basic a purchased item is, it should still return something back to me.
Some people buy old shit box houses and pay through the nose for them. To me it is like paying hogget prices for annual draft ewes.
You have to get the supply restrictions removed. Once that is sorted we won't look so attractive to offshore and some local investors as they wont be getting the capital increases on their investments. The market will return to more normal activity.
Thanks for that. My comment was more personal musings about how this might all pan out, not a policy prescription. Basically, politicians and bureaucrats can generally be relied upon to be very slow to do anything useful. Incidentally, one of my all time favourite bubble indicators is a government subsidy along the lines of the first home buyers grant in Aussie - a sure sign things are well and truely FUBAR.
It is presumably possible to have a bubble in some areas and not in others?
You say Auckland is 30,000 houses short which doesn't seem to indicate a bubble whereas provincial areas presumably aren't short so might be? Having one reaction to control prices over a whole country which may have price increases caused by completely different things seems shortsighted.
Housing bubbles always seem to be associated with stackloads of development and new housing trying to cash in on it (irrespective of population)and afterwards end up with empty suburbs of new houses or sections no one particualry wants (Florida, China, colonial Melbourne).
We need to protect the average man who wants to stay in NZ and work/pay tax.
1)Land tax of 10-15% per year on all overseas owners not living/ paying all their global tax here. Easy target as Aussies/Chinese/Pom’s don’t vote here. The Russian Billionaire, Shania Twain, James Cameron, Rich Chinese etc etc can afford it.
2) Kill off debt based income tax offset. Make rentals about yield, not tax minimisation. So investors will wring hands about no motivation to house the great unwashed. News flash – there only squatting on existing stock, not expanding it. Those in Debt to your eyeballs to minimise your tax position are just hurting average kiwis, so to quote the evil emperor “wipe them out…all of them”. If that nails a few external banks…so sorry
3) You must declare your house of residence, any other property you own (wide definition) and then sell attracts the full tax rate, no ifs, no buts, no maybes. Current dodge of "I brought without the intention of not selling for capital gain...honest" is just an embarrassing joke of avoidance. All property owned in a company/trust automatically attracts this tax rate on sale.
4) Death to the Industry of Dodge. Institute severe penalties on those using methods of dodge, and double the penalty and make that payable by their Legal and financial advisors.
5)Expand Auckland, long term hold should have some reward. Ensure all land bankers contribute your 30%!!
The lack of leadership and stalling on decisions in this sector is just sad. Shame on the last 12 years of Government.
I doubt its a bubble.... just yet ,but it needs to be slowed down , and that part is actually easy, the legistlation is simple and the core legislation is in place already.
It requires a few arms of Government to work in tandem as follows:
PARLIAMENT
1) Legislate thet only NZ Citizens , Permanent Residents and locally incorporated and controlled entities can purchase NZ property
TREASURY /RBNZ
2) First Home buyers : - 10% deposit IN CASH ( not inflated purchase prices to cover the deposit or other borrowed money , or Dads Bank gaurantee) . No second mortgages on the same property
3) Speculators and Investors : 25 % deposit in cash , not using the debt bearing capacity of other property(ies).No second Mortgages on the same property
LOCAL COUNCILS
4) Land Bankers need a wakeup call too, they are restricting supply and are part of the problem . To stop this undesirable practice , any individual section not developed within 5 years of approved subdivision should be subject to DOUBLE ANNUAL RATES , or more .
"Aussies snap up our homes"
"BNZ chief economist Tony Alexander has found Australians are the biggest single group of overseas buyers with 22 per cent of all property purchases by foreigners. Chinese are second at 20 per cent and British at 13 per cent."
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10891504
We need a capital gains tax and or a land tax. And If you haven't been a resident taxpayer for at least five years then not allowed to buy. No contribution, no benefit.....that's entirely fair.
But as it stands NZ's services and infrastructure are payed for by average New Zealanders but largely capitalised and siphoned off by foreigners or those most able to leverage property via our egregiously distorted tax system. The hardworking and productive suffer, along with our economy, while the parasitic speculators and rentier class leach unearned gains and contribute nothing.
Can you believe the SPIN - they're wheeling out the heavies - just a case of waiting
In the NZ Herald article Peter Thompson, Barfoot & Thompson managing director, said only a small proportion of auction bidders at his firm's Shortland St rooms were Asian
Whereas, on the Sunday program on TVNZ last sunday Peter Thompson, Barfoot & Thompson managing director, said 40% of auction bidders at his auctions were Asian
Big difference between small and 40% in the space of 3 days. The heavy hitters are into him.
Meanwhile
David Whitburn, president of the Auckland Property Investors Association lobby group, agreed foreigners should be discouraged from buying here - not by being banned, but by being charged more. "Foreign purchasers are only a minor reason for the strongly rising Auckland market"
Mr Whitburn does not understand that housing stock in any one area is priced at the margin
ya gotta read the words more carefully there kimy, if you look a little closer you will see he said "bidders" He chose his words very carefully and did not say "buyers" his 40% bidders could easily be the same 80% buyers and the cAWKasians are simply there to make up the spectator numbers
there you go - It's true - today Gareth Morgan tells us so
Asians are 40 per cent of buyers in Auckland with ALL buying three or more houses.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10891660
40% multiplied by 3 or 4 takes it close to 100% of all houses being bought
We cannot risk offending our major trading partners, so whatever moves are made cannot be too drastic
Can one draw a conclusion when the US State Department is critical of NZ's human trafficking prosecution record over the last seven years? Read more
New Zealand's failure to prosecute human trafficking offences for the past seven years has been criticised by the United States State Department.
For the second time running, New Zealand has been criticised over the treatment of low-wage, mainly Asian crews in the fishing industry.
The department's latest report on human trafficking, released by US Secretary of State John Kerry in Washington today, downgraded the ratings of China, Russia and Uzbekistan.
So we have a major shortage that is superheating the market and asians are the culprits?
Try another tack here. ownership by occupiers in Auckland hass fallen from near 80% to 57% reportedly. Many first time buyers are shut out by investor competition. So the real problem may still be Asians Australians, whatever. The various problems may well contribute but be less than competing investors shutting out owner occupiers because of a skewed tax system.
I think we should legislate to ban foreign home ownership....simple, effective. Kiwi homes for kiwis, want one well become a kiwi, live here and pay tax in NZ, addon a Landatx and a CGT, 2 tier 0.05% for NZer, 0.5% for a non-NZer....
Its not rocket science, just look at similar problems in say London, hot money is running into expensive property as well, raising the OCR wont effect these cash buyers in fact it might make it worse. Adding a land tax and a CGT will catch ppl overseas somewhat, roll on a Green/labour govn...
regards
Yes, well, 50+% voted for him twice from his handouts, cant see the signs that many will swap out come voting time, not that it needs many, a few %.
Trouble is once Labour and the Green's are in just look out for the tsunami of pork barrel payouts...that will occur, with no way to pay them...so tax the middle harder yet or can kick...
2 bad choices IMHO.
regards
2 aspects, risk and impact. The risk is sending our economy into (impact) a recession and even a depression if its too much and too long. Or making a recesion and depression worse as other factors kick them off...
Playing with fire comes to mind....
So the only option is to target. you can do that via a CGT and a Landtax without impacting businesses (even lower the OCR to compensate them if needbe) The other way is stop foreigners buying houses, even if its a few % cashed up its a huge impact...
regards
Steven - you fail to understand risk or impact.
Not all risk is negative and not all impacts are negative.
I would suggest you are extremely naive and unskilled in business structures, systems and taxation.
Do you want affordable housing for NZ'ers?
How would affordable housing be created introducing you CGT and land tax options above.
The OCR is a tool to control inflation within certain parameters yet you would suggest that it should be used for tinkering to assist business. Are you perhaps suggesting a two-tiered OCR, One for business and one for non-business activity?
No, I understand risk and impact very well. and you are skilled in such areas? yeah right. Even if you were your libertarian political blinkers would prevent any sound policies I'd suspect...
"risk
/risk/ Noun A situation involving exposure to danger: "flouting the law was too much of a risk". Verb Expose (someone or something valued) to danger, harm, or loss: "he risked his life to save his dog".Risk is almost invariably negative, ie of a loss, opportunity is positive ie a gain. Impact would generally in this context at least be negative.
A lack of a CGT means ppl buy with the aim of cashing up eventually and pay no tax on the gain, even structuring "costs" inbetween to avoid or minimalise annual taxes, hence a CGT reduces that behaviour.
A land tax taxes ppl owning land who are not in NZ or otherwise not paying PAYE or other taxes. Now in return Id expect PAYE or business tax to be reduced. The idea is to catch ppl who pay little or no tax such that the ppl who do pay less, ie fairness
Are you not into fairness?
No Im not suggesting a 2 tier OCR. As per discusions elsewhere Im discusing tools that can focus on areas needing "fixing" without impacting areas that do not, or even need support.
Affordable housing, sure but really I see no sensible and workable ideas except the above tools to disuade speculation. We are in a bubble and it will pop and housing will be affordable again, after its dropped a long way, though those with the resulting huge neg equity will face many years of misery....
regards
We are in a bubble and it will pop and housing will be affordable again, after its dropped a long way, though those with the resulting huge neg equity will face many years of misery....
steven, you must get with the program !! The above will NEVER happen in the world of SK, Happy123 et al.......in Auckland they want everyone to be a renter and there are backed up by the current gummint and their banker buddies. Can't you see they are all in it together....these groups are all PERSONALLY heavily invested in residential property, so having anything that is going to upset their apple cart ie CGT, land tax, LVR limits, restrictions on foreign buyers pushing up prices etc etc is all going to fall on deaf ears !!
The way I deal with it is I just watch the prices keep rising and rising :) and will them on.......higher and higher .....coz the higher they go, the harder they fall .........
And if someone comes back to me saying we'll just make mortgages intergenerational, so these prices can be attained ...I just have one thing to say ....they did this in Ireland and look where they are today......
Actually evidence abounds that they ignore impacts to their long term business. Strategically oil and AGW are but 2 examples. On a more immediate level ive worked in industry long enough to see corners being cut and issues ignored. Gambling in effect that it wont happen before the owner/manager has moved on.
Or alternatively the real nasty pieces of work aim to ignore it but are ready to blame someone else when it blows....hence personally Ive learned to put most things of such a nature in writing and have copies.
regards
CGT, Land tax, stamp duty, etc. Don’t add more houses. Banning foreign investors, Ok it might help but they are only contributing small percentage of the buyers and send the wrong signal for other type of investments
What needed is ways to make easier to build houses, free up BSA stranglehold of rules and regulations, monopoly on building products and get more young people into training. As example; I can't see why double/triple glazing windows imported from Europe isn't allowed to be used in new houses, are they inferior to those we can get in NZ?? I doubt it...
You would be a good reference point there chairman. Explain it for the un-initiated here. Give them an approximate idea how much it was. How did it feel when you got the bill for the "stamp duty" on the purchase of your house in Brisbane? Did you know about it before you bought? Did it slow you down? Did it influence what you were prepared to pay for the house?. Did it make you hesitate before buying, or did you not know about it until after you had bought, and just copped it sweet?
Nope stamp duty didn't deter me from buying. It was18K on top of the purchase price - I had to budget for it. Most people I know built this amount into their mortgage. As for CGT,i wouldn't stop me from buying and selling at some stage in the future.
As I stated before, get the building cost down.. I am starting my renovation in 2 weeks. the complaince cost so far is roughly 1/5 of what it would cost me in Auckland. permit took exactly 6 days. 100m down the road, neigbour is building a new house.. from start to finish is 16 weeks (try that in Auckland)
We have lots of NZers speculating in housing even at crazy prices driven by cheap endless credit. So now foreigners are jumping in knowing they can take it back out tax free. I agree I cant see much point in stamp duty myself....its at the wrong end of the deal. taxing in the middle (ownership) and at the end (its sale) yes there seems to be a case for these 2.
Where does it say EU double glazing cant be used btw? its news to me...I wasnt aware there are such restrictions, got URLs?
regards
Steven, when you build new house or new extension. Some picky inspectors will pick up on non BSA certified fixtures and won't issue CCC. A friend built their home in Wellington and had this issue. And I think another poster had mentioned this non-BSA compliance in the past, or could be at another forum? Dunno can't remember.
Yah, exactly. Pure buffonnery. Leetle story.
Neighbour builds a lean-to master bedroom as extension, tucked into corner between main house and existing attached garage. We use plywood engineered beams as main spans.
First consent issue: please detail the brackets to be used to secure purlins to beams....include specifications for nails and/or screws to be used.....
Second inspction issue: I see you are building against the wall of a braced garage that has been there 15 yearrs and not fallen down yet. Please 12mm ply the entire wall to ensure proper bracing.....
Third inspection issue (different inspector, naturally): I see that there walk-in wardrobe back wall (non structural) is unbraced. 12mm ply please everywhere.
#1 is nit picking. I was all for the purlin screws I source on TradeMe but....
#2 is sheer ignorance but at least neighbour now has a double-braced wall to bang his head against
#3 is bloody-mindedness: I was all for telling Inspector where to inspect next, but neighbour complied.
Extra time - realistically, not much. This was pre-earthquakes....
Extra cost - around $2K . Completely un-necessary. But there ya go....
Where's Schedule 1 when ya need it?
Waymad - been going on forever, that.
My Dad built one of the first modular (4ft x 8ft) houses in NZ, late 50's. Had 24ft span trusses. 1/2inch ply sandwched between 4x1's @ 3ft centres, 3ft6 KP height.
Inspector took one look - "you can't have them, they'll sag". I was 4 years old, vividly remember watching them (Brough's joinery in Kaikorai Valley, it was) put two parallel to each other, on bricks at the 4 ends, scrap x2 across it all, and drove a '36 ford V8 pickup onto the top. 1/8th inch deflection.
They're still doing the job. Saw them a couple of years ago, when we re-roofed and batted, first sighting in 50 years. Looked OK to me - and they face SW, cop 160 kph routinely. Only had one 4inch nail per purlin, though - I gave it another.... :)
The inspector didn't live as long as the house......
If the Ministry of Primary Industries keep failing in the biosecurity game Kimy, I think you will find a new floor in Auckland house prices. Finding a cloven hoof in the PKE just shows how useless they are, and is an omen, a bad one as omens are, on the biosecurity future for NZ. Which of course is inexorably linked to our wealth. At the rate we are going with MPI at the helm, housing will be cheapskates soon.
The RB doesn't set mortgage rates, the banks do. During a crisis when people are nervous about the banks, foreign and local depositors want a higher rate of interest to compensate for risk. The RB can slash the OCR but if foreign banks want 10, 15 or 20% to keep their money here, that's where the floating rate will go too. Blame hot money and the banks borrowing short term overseas.
You seem to be arguing for ever increasing amounts of cheap credit to keep everything from collapsing. That's a Ponzi scheme
Ah Kimy you were the one who said prices would fall if the "credit binge" (your words) wasn't allowed to continue. The binge is because of low rates and expectation of easy gains - a Ponzi scheme that collapses without fresh entrants and increasing cheap credit. High rates and less demand causes it to collapse.
The RB places no restriction on how much credit the banks can create as long as they have adequate capital. The bank's reserve requirements are zero. The only indirect and usually slow acting way the RB can restrict credit is making its cost more expensive via the OCR and its relationship to the floating rates. Didn't work when so many people were fixed. Banks love low rates because they can lend greater volume than when rates are high. They make the same margin regardless of whether rates are high or low. More volume, same margin, greater profits.
Most of your arguements seem to revolve around keeping credit cheap and prices high because otherwise there would be an economic disaster. That's just can kicking and ultimately futile, making the future mess even greater.
Kimy... I really don't understand your thinking about interest rates.. Now u want to limit the supply of credit ..but still have really low rates.????
At these low rates the demand for credit will still be high.... so with ur idea... who is going to play God... Who is going to "ration " the credit...???
This is like trying to defy gravity... in regards to the law of supply and demand
If you try and stop non residents from buying properly all they will do is incorporate a company to do so. But if you used tax as a way to stop individuals from buying second houses in Auckland and a tax reduction for companies that move from Auckland to the provinces to run their businesses then you might get somewhere in stopping the maniacal increase in Auckland house prices.
I think there is a rule in the IRD book that says if you structure your business or part of it purely to avoid paying tax, that is classed as tax avoidance and you get slapped. I cant see that such a problem couldnt be covered off on foreigners not owning. besides which my aim isnt to stop all (though ideal), just enough to take some of the silliness out.
I'd suggest second houses or more is fine, there is nothing wrong in landlords as a business, it provides an essential service, not all ppl want to or can afford a mortgage, so no I'd be very against that as an idea. Curbing the speculators, yes sure, professional long term landlords very much not.
Corps dont want to work in the provinces, they dont even want to be in Wellington let alone the middle of nowhere, they are I think also jumping to OZ...plus of course their own loss of synergy and efficiency...they work best in a big city with others.
regards
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