The following is a press release from Property Council of New Zealand.
Auckland house prices are an abomination.
Auckland house prices will continue being outrageously high if Auckland Council doesn’t treat the housing supply shortage seriously in its rulebook.
Right now the Proposed Auckland Unitary Plan (PAUP), which is in front of an Independent Hearings Panel, has a mile-long list of restrictions on development that majorly hamper density and intensification targets.
Property Council believes one of the main avenues of creating much needed supply is through rezoning large parts of the single house and mixed housing suburban zones to mixed housing urban.
Right before the PAUP was notified, the council made major changes to the form and application of the three residential zones, making it even harder to provide enough homes to meet future demand.
Property Council chief executive Connal Townsend says this was a huge mistake, and the longer officials dither around, the worst the housing crisis is going to get.
“We’ve got houses more expensive than LA and London. How is this possible? he said.
"A dump in Auckland’s Point Chevalier demands a million dollars, which gets you a mansion in Beverley Hills in the USA. We’ve reached the point of madness.”
It has now become starkly obvious that the PAUP fails miserably at considering the economic feasibility of projects, forcing developers to push costs on to the customer.
Add the housing shortage to the mix, and there will be a generation of kiwis who will never own or live in their own homes.
An example of the PAUP’s unrealistic rules is requiring developers to provide 6 star homestar and universally accessible homes and other strict urban design obligations and controls that bog development down.
With land prices sky rocketing, not only does the cumulative impact of this hinder higher density development and increasing housing supply, but it stifles efforts to provide affordable housing in the face of soaring demand.
Property Council has also submitted on the Productivity Commission’s inquiry into land supply, reiterating the importance of making land available for residential houses by upzoning residential areas.
It is time council officials and local politicians stopped ignoring these issues which lead to disproportionate and often conflicting requirements on developers, in turn making houses too expensive for the average kiwi family.
A legislative and culture change is desperately needed to address these historically problematic issues once and for all.
54 Comments
2 words sum up the PAUP .........."VESTED INTERESTS"
This issue should now be addressed by the Government, as it's a pathetic disgrace. If it was investigated in Wellington, much of the "local bias" and "nimbyism" coud be taken out of the equation .....it's the same old story, those who have a house and land in Auckland already just want to protect the "status quo" in its current format.
All it takes is a look across the ditch to Sydney, with it's mix of some houses and 2-4 storey apartments/townhouses etc. A city can expand without becoming Hong Kong !
Fair call dude ......however my point was IF the rest of the country's MPs who didn't have a "vested interest" in the Auckland property market, could override the madness, short sightedness and greed then some traction could be made ....but I am not holding my breath.
We own and live in a house on a full quarter acre that cannot be subdivided. We bought this some years back because it cannot be increased in density. We say "Hands off!" PAUP
By all means densify by measures like allowing even encouraging two or three extra floors above shops on bus routes and multi storey blocks associated with the shopping complexes. There is little need to interfere with the leafy suburbs.
The Government needs to treat the volume of immigrants seriously. It is not a racist comment to expect the volumes of those other than returning residents to be controlled both in number and where they are allowed to live until some point beyond when they acquire full residency. We already have an accumulation of excessive Auckland arrivals to be matched by adequate accommodation. It sure raises the hackles of prospective local buyers to be beaten out by not only local investors but the obvious bidders on phone from who-knows-where.
Time for both the Auckland Council and the Government to GET REAL QUICK SMART.
Completely agree.
The lack of action and care by both parties is criminal - I expect it of Auckland Council but I genuinely hoped for more action from National.
I believe that ultimately the various economic levers will reach an equilibrium (a terrible equilibrium) - in that not many people will want to migrate/return to a country where unemployment and public debt are increasing - shelter is unaffordable and jobs are sparse (on our current path I believe it is only a matter of time). What exactly is driving the NZ economy because it sure doesn't look like it is dairy or the Christchurch rebuild? Oil and gas?....nope strike that one off the list for now. Tourism?...beats me.
http://www.nzherald.co.nz/fran-osullivan-on-business/news/article.cfm?c_id=1502864&objectid=11387589
Fran O'Sullivan (bless her Tory knickers) makes the very valid point that by accepting the very large immigrant input without asking that our own mores be protected is not acceptable.
Quote:
New Zealand has embraced multiculturalism and diversity with little thought given to what may also be lost through rapid changes that have resulted from huge changes in our racial, cultural and religious mix.
Swamping Auckland with more and more alien beliefs without asking for a countering acceptance of our own way of life is abominable. Then again Key appears to prefer Hawaii to Parnell and only suffers Wellington for the platform it offers his ego.
I consider it a form of social engineering by the National Party - bringing in swathes of rich migrants who get land in perpetuity and residency visas on a platter will change the cultural mix of our country forever, for better or worse. National hopes that these people will thank them by way of vote and continue their tory governance.
However one serious issue is that much of the money coming out of China is questionable in terms of how it's been sourced. Letting in migrants with dubious values and dodgy money is not a recipe for success:
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11370877
The initial proposed auckland unitary plan, as proposed in its entirety-may me with minor twicking only to correct any spelling or zoning mistakes, should have been implemented by now. This would have been the saviour of all housing problems relating to the current sky rocketing and uncontrollable prices. In fact it (auplan) probably has not got far enough. How about looking at cities like Sydney and Brisbane and ask ouselves are they stupid or are they clever. Cities are where people live in apartments or small houses at least want a viable option to do so. If the nibmys want heaps of unbuildable space around them and do not want to move to country side, let them buy all the land around them.
As fixed mortgage interest rates slump through 2015, cost of living decreases, net migration into NZ soars and the Unitary Plan is still 2 or 3 years away from activation, house prices will only increase further. Politicians and councillors are property owners, many own more than one so they don't really have any interest in increasing supply or making the process of building a house any easier. In fact government with their ramped up Housing NZ building program are swallowing up a large proportion of the limited construction labour force which will only lead to increased labour rates!
I am SO TIRED of this "Housing Problem" in Auckland. We have been "debating", "discussing", "political action" etc etc for the past 4 to 5 years, and yet nothing seems to be happening with property prices except upwards.
But it has finally dawned to me (rather late) that an ever rising property price is GOOD FOR EVERYBODY......
Politicians benefit (property owners happier so vote for status quo ala politicians)
House owners benefit (seem richer by the day)
People that sell stuff benefit (House owner seem richer spend money they seem to have)
Banks profit (lend more money for same stuff and earn more income via interest)
Property Agents benefits (earn more commission)
People whose parents own houses benefit (they wait for their parents to die and inherit a fortune then start the cycle again for next generation)
Even people who don't won houses benefit (the pay rent that is lower than economically viable to house owners who unknowingly subsidise them)
All this until GODOT arrives and the Property Nirvana ends.....
Politicians benefit
Existing home investors benefit
Sellers benefit (through increasing debt)
Banks benefit
Property agents benefit
you're dreaming about the inheritance ones,
And the people who don't own houses definately don't benefit.
In short all those who already have money benefit,
those who struggle financial are ...f...far less helped.
Honestly having to rent a $400/wk house with most of the trimming is a cold comfort when struggling to put food on the table, fix the car, train for a better job, cover for a redundant loved one, or deal with an ill family member. Far better is a very modest but safe roof over your head for a cheap price.
Auckland housing reality: homeless, crowded, insecure. Source: Statistics New Zealand.
- More people in Auckland are living in ‘other private’ (temporary) dwellings
In 2013, there were 3,882 people living in ‘other private dwellings’ in Auckland, which was a 24.1 percent increase from 3,129 people in 2006. This includes dwellings that are mobile, in motor camps, or improvised
- In the last 30 years the home ownership rate in Auckland has dropped from 73.9% to 61.5%
-
Around half of crowded households in New Zealand are now in Auckland
-
Over 200,000 people in Auckland live in a crowded households
Nope - can't say that overpriced housing benefits everyone
The Auckland council is a disaster rrun by an incomptent executive Mayor who , if he were in the Private Sector woudl have long since been dismissed for his indiscretions and incompetence .
The Council has become a modern day dictatorship and law unto itself .
Watercare , a council subsidiary , is a monopoly that has increase new water connections by nearly 80 % in 3 6 months , when inflation has been around 1 to 2% .
It now casts $12,500 to have water brought to your boundary .
The cost to watercare is about $600 .
Its little wonder the head of Watercare earns more than both the Prime Minister and the Governer of the Reserve Bank
So easy for the Property Council to blame everything on Auckland Council. Property prices doubled nationally between 2002 and 2007 and it was not due solely to any constraint on supply. Unless I'm mistaken New Zealand's population did not double over the same period suggesting many other factors are at play other than just a simple supply and demand equation as the national government suggests. Key factors were speculation in the property market for capital gain, easy access to credit with little or no deposit, and a tax regime that encourages investment in unproductive assets such as houses. Is the National government doing anything about those matters? Yeah right.
Putting aside some of the minor contributing factors its just one thing: how much a developer has to pay for bare farmland on the edge of town. Currently the developer has to pay for what the land will be not what it is.
I wish I could flog off my van for its future value as an antique but I can't. Yet if my local council signalled ten years in advance (as they do) that the only place in our district that you could build a new house was my property I could make out like a bandit. I could play off all the developers against each other to extort a price way beyond its value as a chunk of rural land.
When that fringe land gets bid up it automatically ratchets up the prices in more desirable areas of town. Remuera is always going to be Papatoetoe * 5 (or whatever).
Honestly, for the millions of words expended on this topic that's all there is to it. As to why we have such a mad arrangement and what we can do about it, that is another story.
PP, Auckland Council and the government (National and Labour) share the blame equally.
Although it really is as simple as supply and demand the mechanisms by which that imbalance translates into the sustained over-pricing of housing throughout NZ are a bit complicated. I would be the first to admit that it has taken me a couple of years to get my head around it and I still have some pieces to fit together.
The factors you list are symptoms not causes of the housing bubble.
1. Unless they do something highly illegal speculators can't drive an asset price beyond where it was going anyway - they just make the price get there faster
2. Easy money will push prices higher than they would otherwise go but it can't start the bubble in the first place by itself
3. Yes, the NZ tax system means that some people, on a small scale can get a tax-free capital gain from property but only if the property market rises and they sell out before it retreats. In other words they aren't investing they are taking a casino punt.
What all three factors have in common is that they only come into play once a bubble is already inflating for other reasons. Then they make the bubble a bit more exciting.
Latest Demographia survey says Auckland prices at 8.2 price to income now among world highest according to NZ Herald this morning.
Lots of hand wringing on supply but absolutely none about immigration control or foreign investors apart from one Chinese promoter of a Chinese web site.
Labour Started it
Papademetriou (2000) captures well a prevailing view about international migration in the
contemporary world – a world in which population movement is assuming
increasing significance as a force for social transformation everywhere. He
echoes Castles and Miller (1998:1) who lay considerable emphasis on the
role of international migration in creating “novel forms of interdependence,
transnational society and bilateral and regional co-operation [ that ] are
rapidly transforming the lives of millions of people and inextricably weaving
together the fates of states and societies”. Castles and Miller (1998:1)
acknowledge that while the movements of people across borders have
shaped states and societies for centuries, “what is distinctive in recent years
is their global scope, their centrality to domestic and international politics
and their enormous economic and social consequences”
The immigration policy review in 1986 was part of a much larger
agenda for change in New Zealand (Bedford 1996). It was not essentially a
change in state policy with a primary focus on one region of the world, as
Parr (2000:329) suggests, although clearly through the 1980s and 1990s
immigration from countries in Asia was a highly topical issue for both
politicians and the public. The attitudes of New Zealanders in the mid-1990s
towards immigration may not have reflected the positive perspective on the
value of diversity in our society that is contained in the Review of
Immigration Policy August 1986. But this does not mean that the globalisation
of immigration to New Zealand was an “unintended consequence of policy
changes in 1986”. It was a deliberate strategy, based on a premise that the
“infusion of new elements to New Zealand life has been of immense value to
the development of this country to date and will, as a result of this
Government’s review of immigration policy, become even more important in
the future” (Burke 1986:330). The data on arrivals, departures, approvals,
refugee flows and net migration gains and losses reported in this paper
indicates that “the infusion of new elements” into New Zealand society is
proceeding apace. There is no suggestion in immigration policy in 2002 that
this will not “become even more important in the future”, as Burke (1986)
assumed in the mid-1980s.
The Globalisation of International Migration
in New Zealand: Contribution to a Debate
RICHARD BEDFORD *
CHARLOTTE BEDFORD
ELSIE HO
JACQUELINE LIDGARD
* heads Asia NZ Foundation
At a meeting in the Brake Street Hall (Upper Riccarton Christchurch), the CCC got residents together to discus increased density;
"the old urban plan was already out of date before the earthquake" "Central government has certain priorites; central government says we have to do this; central government says we have to do that"
Question time:
You said central government has certain priorities: is it true population increase is a priority of central government?"
Speaker (swallowing a worm): "oh well we have immigration, and you have to have poulation increase to increase the wealth, so I suppose it is a priority"
There were no councillors or politicians there (included amongst the absent Labour's Ilam candidate James Dann of Multicultural Aotearoa).
People need to keep cutting the tentacles?
The paper by Julie Fry that is quoted concludes that the increaase in wealth from recent 20 years of immigration has been MODEST. The question that arises is
"What price the changes (maybe even destruction) of a way of life that New Zealanders enjoyed previously?"
Is the price too high to allow it to continue?
Stiglitz to Piketty: its the land!
http://www.prosper.org.au/2014/12/19/stiglitz-to-piketty-its-the-land/
Whether they will is another matter entirely. Their interests and motivation may be completely different to that of the Property Council and dithering may further their objectives perfectly. If they wanted to address the housing availability and price issues meaningfully then presuamably that is waht they would have done. One can only judge them by their actions and their results. All the unitary plan seems to be generating is hot air and the appearrance that something is being done as a sop to the voter concerns (especially leading up to the last election).
The 'dithering', while an accurate description as seen from outside the tent, is in fact structural.
LG is a creature of statue, and 'consultation' is firmly entrenched in those statutes. Plus, there are three competing streams of playaz whose interactions create, extend, and perpetuate the dither:
- Central Gubmint, who can (dimly and fitfully) sense the macro-economic picture which emerges from the 70-odd LG layers whirling away beneath them. CG is purposefully designed to be movable only incrementally, so observing an unwanted, emergent effect (like the AKL hoosing bubble) has no timeline for the fix, even if the causes and cures are clear (which is rare...).
- LG pollies, like Len the Bruin, have particular positions to cleave to, and need to not offend enough electors, in order to get elected next time around. Pollies can only set Policy, not Manage, and particularly not micro-manage. So they rely on unelected staff to do the heavy lifting (in every sense, including intellectually) with regard to policy options for proposed changes, day-to-day implementation for existing policy, and reporting to and from on the results of or issues with, existing policy. Most LG pollies are to be frank cowed by the superior horsepower of staff, so tend to occupy an uncertain DMZ between staff and ratepayers. They are essentially cheerleaders for whatever the staff du jour have dreamed up, done, or screwed up.
- LG staff hold most of the cards except the money one. As a bureaucracy, they run by two immutable principles: Peter (rise inexorably to one click above their level of competence), and Preservation (defend turf, extend it where possible, never yield ground.) This guarantees three observable aspects of LG staff culture: a united front, a heap of dead wood, and a rigid observance of 'rules'. So staff will unblinkingly decline to use discretion (not in the rules), obfuscate (to divert attention away from their core incompetence), and back each other up regardless of the merits of the event, action, or emergent effect. As they are not elected, they regard Councillors as a passing parade of buffoons, sitting at a distant table, and having only minimal effect on their own closed world. As staff are employed by the CEO, who is in turn the Council's only 'employee', no cultural change will occur without a change of CEO.
Dithering, as should be clear, is structural.....the only real handles the Councils have are the $ (rates, fees and charges) setting, and the choice of CEO.
For our morning walk we have just passed through some of the less opulent areas of our leafy suburb. Property after property (up to 70% of them) show signs of unkempt verges, once tidy hedges now growing wildly and uncut lawns strewn often with junk. Add the deteriorating exterior paintwork etc.
Some years ago these were owner-occupied proud suburban houses, well maintained. Now they are a mess.
If this and previous governments had kept control and emphasised home ownership, none of this would have come about.
I ask whether the Auckland shortage of housing is much more a rental v. owner-occupier imbalance only recently aggravated by immigration.
A friend who installs alarms spends a lot of his time driving to call-outs where the security system has malfunctioned as the batteries haven't been replaced/needs a service. What he finds is empty homes - actually empty.
He gets several call-outs a week to empty homes across Auckland, but mainly in the eastern suburbs.
"Without the government paying into a savings fund, the boomers are pushing the load of paying for their retirement onto Generation X and the generations following. Carried by their parents in childhood, they now expect to be carried by their children in their dotage (which thanks to that school milk, will probably be long).
Once again, the boomers are pulling up the drawbridge behind them. They hit pension age in the next two years, with Super still intact and Key promising to resign rather than engage in the debate about whether the entitlement rate should be raised or means-testing introduced. Over the next 15 or so years the entire generation will pass the 65 mark, and it's unlikely that any government will dare take them on."
http://pundit.co.nz/content/baby-boomers-hold-new-zealand-hostage-again
Gordon..any chance of a answer to my question?
You might be suprised just how many boomers there are out there who are not ready for retirment frazz. Many will have their house paid off although I know some who still have sizeable loans to get rid off before they retire so they won't achieve that without a lotto win. Generally they have very little in the bank and not much in their kiwisaver accounts. I still do not know what you mean they have the power as generally the average boomer I meet is pretty modest when you look at their overall financial position. We are paying for not having compulsory superannuation.
That question is irrelevant frazz as your mayor is a lame duck who no one respects. Young people do not vote and do not read the newspapers. Generally they do not give a stuff about anything or anyone but themselves. This is the way it has always been. That is why older people dominate politics and alike.
Today, because people are living longer, baby boomers are a much more powerful political force than 55- to 65-year-olds have ever been before. And they are exercising their political muscle on their own behalf. Any government that fails to give the baby boomers what they want, even at the expense of younger generations, is in for severe punishment at the ballot box, according to research from the thinktank Demos.
X and Y should think about others rather just themselves and get on organisations where you don't get paid to be there or get paid a pittance and have some say in their lives. Quite frankly it has always been like this Frazz.the younger generations are always more self absorbed and leave the oldies to keep society going.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=113…
We could save more.
http://www.oecd-ilibrary.org/economics/household-saving-rates-forecasts…
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