By Ewen McCann*
Supply and demand analysis is the most powerful tool that economists have but it works best from a position of market equilibrium.
The housing market is not in equilibrium so an increase in supply need not lower the rate of increase in house prices. This is why the Government’s supply side policy is naïve.
This article considers some of the disequilibrium economic forces operating in the housing market. The forces are not related to each other, other than being a part of the price equilibrating process. They will be treated in turn and not every disequilibrium force will be investigated. Together they determine the disequilibrium path of house prices as they approach their equilibrium value in the housing markets.
Rising house prices are, nonetheless, largely the wrong issue to complain of. Only where the price path is in part the result of wrong-headed policy or of the outcome of monopoly power is there room for complaint. Then the complaint should be about the daft policy or the monopoly. Price rises otherwise are the result of other economic forces.
Wealth accumulation
The increase in the price of housing, I argue, is the result of attempts to accumulate wealth. The dynamics of wealth accumulation can take generations to work themselves through. This is partly because houses are such long lived assets but also because new shocks are probable over the long period of adjustment in house prices. Picketty writing Capital in the Twenty-First Century has demonstrated these effects and their durability.
A well enough known feature of the New Zealand housing market is the high multiple that average and median house prices are of average and median incomes compared with other countries. This seems not to have explained and an explanation for is offered here that links wealth accumulation to the high trajectory of house prices.
Housing is probably the largest part of household wealth in NZ. In our case the shocks to planned wealth accumulation, especially in housing, over the past two generations have been:
(1) the appearance in the housing market of double income families.
(2) A long period of inflation-induced flight from liquid assets.
(3) The entry of one set of parents into the market in partnership with their children.
(4) The next shock will be the entry and impact of a second set of parents helping fund their children’s demand for houses.
(5) Longer working lives.
(6) Children staying longer at home keeping older people from selling the family home.
(7) Tax loopholes.
(8) The inwards and outwards migration of people and the natural increase.
(9) Foreign buyers entering the market.
The time path that housing prices are taking are the outcome of target wealth levels, income and the nine factors listed. As any of these factors vary, the housing market sets off on a different, largely rising, time path towards a new equilibrium value that it takes a long time to reach.
All of the nine effects are real, meaning that they are, in principle, measurable and not a matter of the claimed psychology of the market which is unmeasurable and thus practically meaningless. This psychology is said to induce bubbles which are identifiable only after the event and not amenable to policy prescription. It is these eight real effects, most of which have a long response time, which makes the supply side response naïve. Those effects would still operate on house prices were new house construction to expand.
Tax loopholes
We first examine the effect on the price path of the tax loopholes in the housing market. These tax loopholes are real features of local capital markets which contribute to the upward motion of NZ house prices. The first loophole is the tax concession available to foreign borrowing when it is undertaken by way of debentures. This is available to NZ corporations, but not to individuals. In itself, this is distortionary because one legal entity should not be economically preferred to another.
Companies which borrow abroad through debentures in effect receive a tax advantage over and above the tax deduction available when they borrow locally. New Zealand banks doubtless exploit this tax advantage. It makes foreign borrowing cheaper for them than borrowing from locals. In other words, NZ individual lenders are being done in the eye. This tax concession thereby increases the foreign borrowing by banks which is fed into the NZ property market.
Without explaining how it happens, this tax privilege artificially lowers NZ interest rates and increases the level of borrowing. That inevitably contributes to the rising level of house prices. The whole practice severely distorts NZ capital markets. It also appreciates the currency.
Closing the tax loophole on foreign debenture capital would raise interest rates which would be beneficial because capital would then be used more productively. For example, at higher interest rates each borrower would borrow less so a total of $10m would build more, though smaller, houses and that amount of capital would house more families. More families in houses for $10m is an improvement in the productivity of capital. Similar effects would apply in businesses.
Foreign borrowing by banks, destined for the local housing market helps raise house prices. Capital gains are income which is clearly being earned in the housing market. One of the other deficiencies in the tax system is that capital gains to household real estate are not, on the whole, subject to income tax. This income could be readily taxed at normal rates of income tax by using the annual differences in local body property valuations as a proxy for the increase in the market price of houses. The whole housing and other stocks of real estate would be income taxed on the annual incremental increases in rateable values at normal rates of income tax. This would steady the rises in house prices.
Income in kind
The accommodation services flowing from an owner occupied house constitute income in kind, i.e. non-cash income. Mortgage interest is one of the cash costs of earning this imputed income. Neither of these amounts enter the tax system and their net value is an un-taxed benefit to home owners. Other assets do not enjoy such a tax privilege. This tax preference to the housing sector distorts households’ investment choices in favour of housing and adds to the long run equilibrium price of housing.
The increased commercialisation of attitudes in NZ over the past generation will have caused NZers to seize upon theses tax loopholes and make them invest more heavily in housing than previously. It is another driver of the house price trajectory. Closing the imputed rental loophole would result in a sell off of baches.
The taxation of the imputed rent with a tax deduction for mortgage interest, and perhaps the other costs of home ownership, would lower the long run price of housing and lower its disequilibrium price path. Some readers may sob in their soup over this. The sobbers will be the ones enjoying their free ride on other tax payers.
The extra tax revenue from all foregoing proposals could be directed to a reduction in income tax rates. Each income tax bracket could receive a tax rate reduction that is proportional to the amount of total tax revenue that it contributes.
Households’ accumulation of wealth is directed towards the most profitable risk adjusted investment opportunities. The tax advantages of housing over other investments make housing the best risk adjusted alternative for households. These tax features of the housing market contribute strongly to that high and rising price path of houses. It will be a mighty contributor to the high multiple that housing values bear to average and median incomes compared with other countries.
Three serious tax distortions
The Inland Revenue Department, the Treasury, the Prime Minister’s Department, the Reserve Bank and ultimately the Government should clean out the three serious tax distortions in NZ capital markets. The three distortions are
(1) the tax concession to foreign debenture capital and
(2) the absence of a capital gains tax.
(3) the non-taxation of net imputed rentals.
That would go a fair distance towards reducing the long run equilibrium value of house prices. It would lower the long run target level of wealth and thus the ratio of average house price to average income. This is because a smaller fraction of wealth would be held as housing, absent the tax distortions.
Despite shocks (1) – (9) above, one can still think conceptually of movements towards an equilibrium relation between wealth and income over the long haul. Because NZ is a poor country, houses are a major part of household’s wealth and financial assets are a relatively unimportant part of their wealth. This is why house prices are such a high multiple of incomes in NZ. In short, one views the history of house prices in NZ as the outcome of the adjustments between income and desired wealth levels.
Leveling the playing field
The wrong issue is being raised in New Zealand about the housing market.
The tizzy is about the rising price of houses. This complaint usually comes from one side of the market, the buyers’ side. Sellers seldom complain about rising prices. Holders of houses are seldom upset by an increase in their values. At root, far and away more people are content with the increase in house prices than are upset by it.
Part of the complaints about rising house prices will be coming from the DINKS (Double Income No Kids) and their parents who want a government policy to ease the path to first home ownership. A possible policy would be to restrict the contribution of parents to their children’s housing deposits. Were it feasible, such a policy would lower house prices, rewarding to some extent the DINKs who refrained from taking their OE and saved instead.
A workable way of restricting parents’ contributions of capital to their children’s houses would be to re-instate gift duties and extend to them to disbursements from trusts. The interest differential on low interest rate loans would also be dutiable in a special way. The whole differential would be taxed away. This would bring the interest rate that the children paid up to the market rate and so reduce the amount of financial capital borrowed for housing.
There would be no valid transfer of title where associated gift duties are unpaid and there would be tax penalties for evasion. The lender on first mortgage would responsible for ensuring that all duties are paid and, if they are not, the lender would lose first mortgage priority. This policing would involve fees that would further reduce the demand for housing finance. Investment in the housing market would be less attractive to banks.
Objections to foreigners trading in the local housing market are misplaced because the economic value of NZ resources needs must reflect their international values. If the economy is to be competitive with the rest of the world its prices must be aligned with prices in the world economy. This is the lesson of the Nash-Muldoon epoch when distortionary pricing policies made the country virtually incapable of efficient international trade.
The economic issue is not that house prices are too high. The economic issue is: What is the appropriate policy if house prices fall? House prices fell dramatically in the USA, Ireland, Greece and in other countries after the Great Financial Crisis. What, one may ask, should the Reserve Bank do if that happened here? Is the Reserve Bank even thinking about this issue?
There is a second article to follow dealing with the policy response to a fall in house prices, which is the right question to be asking about the housing market instead of the one that is being asked. If house prices continue to rise due to the equilibration process, there is no policy problem to address – other than the mal-distribution of wealth and the tax distortions. Why, after all, are rising house prices more important than the welfare of poor children whose families will never own a home anyway? A drastic fall in NZ house prices, however, entails a policy problem - as other countries’ experiences have shown. It would have grave consequences for rich and poor alike.
The second article will show how New Zealand may cushion the effects of a future decline in house prices, if it occurs. It will show that it should not follow the policies that other countries adopted after the Great Financial Crisis. It will be argued that NZ is in a strong position to adopt a policy to partly counter the effects of a house price induced recession.
Ewen McCann was formerly Head of the Department of Economics, University of Canterbury and latterly Principal Economist at the Inland Revenue Department.
64 Comments
Providing here some insight into the costs of competing against investors including both overseas and locals and also the taxation distortions that our Government is incapable of addressing.
While not suggesting that demand is the major problem, most of the nine points made are demand side distortions.
Far to complicated for Key and English to understand.
Forget the Supply side and get on with fixing the Demand side.
Is that just too much for their tiny brains to get to grips with?
JK & BE are incredibly smart men and understand the housing market much better than you ever will. That said they just don't wish to implement any rash measures which will see them voted out...so will try to restrict growth rather then destroy hard working kiwi's property wealth
making silly comments saying that JK and BH are stupid (name calling) is kind of where we are at with this website...just because you might have a PHD in such and such still in my eyes makes you a keyboard jockey until you enlighten me with some better arguments than just calling people stupid...
I disagree Penguin. No bank will give an ordinary person a large mortgage to invest in the stock market. Real estate investing utilises leverage (among other major advantages) and therefore an average real estate investment it is much more profitable then an average stock market investment in my experience. As we all know- a 10k deposit invested in a 100k house means that if the house goes up 10% then you gain an extra 10 k which is 100% on your investment. In a stock market if you invest 10k and the market goes up 10% then you only made 1k. 1k vs 10k? no comparison.
Weird article. There is no regard in the article for people who just want to live in a house, and for it to be affordable. Apparently the issues are not about people, like, you know, real economics isn't.
Further, people who wish to be naughty and help their children must be taxed. Cheeky parents, tax them I say, they must be stopped from creating economic distortions !!!
Isn't the article about rising house prices though? I don't really get this "a house should be a home not an investment!" argument. This is not the world we live in.
I was speaking to the Indian neighbour of a rental property I am getting ready for new tenants today and he was telling me how he owned another property nearby and that I should let him know if i am thinking of selling. I reckon almost every immigrant family (arrived in the last 20 years) has more than one property. It's like it is part of their culture in a new land. So if it is not part of our culture then we are going to be disadvantaged. Same with tutoring for the kids and helping the kids with education and housing. It's like we have given them the infrastructure and tools and they have taken off running with it. They don't possess the list of unwritten rules that the majority of Kiwis may have been infused with since birth. It's like, why wouldn't you take advantage of everything on offer? Many cannot understand the complacency and inertia of native Kiwis.
"don't really get this "a house should be a home not an investment!" argument. This is not the world we live in." Well we are going to have to turn that ship right around then, aren't we, because making home in, is first and foremost what a house absolutely must be.
It is only a constructed reality and if laws and regulations are changed so that the "investment" side of it, in terms of a few holding ownership of the housing stock, while the rest languish, having to rent, especially in the precarious way we allow it in NZ, then a different reality will apply.
Really? Thought I would find an article a few weeks back on this site about falling ownership rates so put "home ownership numbers" into this sites search box and up came what looked like an unlimited number of articles about falling home ownership rates. Pretty easy to see where things are heading and what needs doing to prevent it. Most particularly alarming is falling home ownership rates among Maori and Pasifika and the younger.
Its a no brainer that immigrants will be aggressive in their pursuit to purchase properties and accumulate wealth.
They come from countries with high population pressure where life is very competitive, Easy going NZ lifestyle is to their advantage, they see huge opportunity and form family consortium's to purchase as much property as possible by combining resources.
They work hard and dedicate their lives to knowledge and wealth. They love cash businesses where taxation is avoided where possible.
They are model citizens other than they don't give back to the country that has given them so much. This is of coarse a generalization, But why do us easy going NZ'ers want this competition?
No, not weird. Just a good academic explanation of the problem. The answers too are academic as far as our Government(s) are concerned so do not expect any response.
The present Government is incapable of facing reality except as it affects their polling. They are very capable of letting their electoral greed override any recommendations of Treasury, RBNZ or anyone else. They will use our money when it suits like paying Paula Rebstock twice the going rate for heading an enquiry which ends up with dubious results, because they know they will get what they want before it is done.
I think they will bail out. to a level ie first 10 k to 100k, second they will bailout kiwibank, and if national will take the opportunity to sell it with the phrase silly idea to own a bank.
the conditions are set by basel, government policy and RBNZ banking rules (capital to hold)
at the moment we have a perfect storm where there is low worldwide growth and everyone is trying to stimulate with debt in some form or other
Bankers don't need to understand risk, thus that was proven with massive global bailouts. Was it not people buying and selling houses to each other who REALLY failed to understand risk because academics told them all was grand! "Property never goes down", then came reality, a reality NZ has yet to learn. But we will
No - bankers thought they understood risk - but they didn't . The quants who created the software programs they used to assess risk understood the underlying assumptions and limitations - the bankers didn't. Bankers do have to understand risk because the financial instruments they created carry with them a risk that they will fail - that has to be priced as interest. The derivatives that the US banks created they thought was minimizing risk when if fact it was concentrating risk but they couldn't measure it. To blame the people is naive - they were sold loans that any sane banker would refuse but because of the way the loans were structured and belief that the financial instruments that they were using were reducing risk and they made loans they should not have to people who didn't have the means to pay for loans when they reset.
Which academics told them it was "grand".
Most people have no idea about risk - how to quantify or measure it and generally left it to someone else - in this case bankers.
Which academics told them it was "grand"?
I'lll give you just two off the top of my head. Alan Greenspan, Ben Bernanke...shall I continue?
And many people were to blame, being so niave that they actually thought with no job, no income, no assets, (Ninja loans) they could survive the ultimate reality that was written on the wall GLOBALLY from about 2003-2006.
I'm not defending Wall St crimes, or the SEC crimes of ignorance and blatant corruption, or the credit agencies like S& P or Moody's etc. They all played their part. But to have the audacity to excuse the stupidity of borrowers is just ignorant.
Are we planning of doing the same here if NZ's bubble tanks? (it will) Should we start blaming savers for not participating in this stupid debt binge frenzy?
Where are you drawing the line BR?
Who does the "too big too fail" policy apply too? And what is it's essential proclamation? I'll tell you. Banks need not from now on care about risk. That is the mandate they have been given since 2008 with government/s approval.
And yet academics like Robert Shiller, Nassem Taleb and John Gray ( the philosopher - not the other idiot) - all point out the problems with the economic policy pre GFC - but no one listened because it was "inconvenient". People don't want to listen to Treasury probably because it's inconvenient as well.
The "too big to fail policy" applies to no one - no bank, company or person. Do you have any evidence of this "mandate" or are you just making assumptions.
People have to take responsibly for themselves - there actions , inactions , whatever - stop seeking to blame other people for your ignorance.
"People have to take responsibly for themselves - there actions , inactions , whatever ???"
Yeah, I think I just reiterated that did I not?
The academics you are naming were not listened too simply because they have no positions of power. They like myself who was writing to Bollard back in 2003 were not listened too either. Hardly my ignorance BR
"Do you have any evidence of this "mandate" or are you just making assumptions.?"
Where have you been since 2008? TARP, Trillion dollar global Bail outs, QE, Artificially low interest rates, no banker or traders going to jail.. There's my evidence buddy. Jezz...blinkers on or what?
Kh true and brexit would not happen because it would be financial suicide yet it went ahead. people were worried about immigration not the share market in which they had no money invested. this houseing market will die at the next election as the opposition will offer to stop immigration. national will continue to tell us of its benefits all the way to a big defeat. measures to curb the foreign buyers and immigration will collapse it. As same time the world is waking up to the fact that the USA cant raise rates as like the auckland house market they cant pay higher rates on such large debt. At some point the insurance , pension funds and banks will start showing stress of $10 trillion on negative interest rates. What then? well the Amazon google AI robot loan manager will in form you that due to the fact you only have 4.6 years of productive work left and profile status its calling in your loan!
Supply is important but demand side cannot be ignored, specially speculation.
Government does not want to act but is trying to create a perception that it serious about housing crisis and knows very well that supply though important will take years as even if today they release land will be years before the result that also is IF.
Along with supply what is needed is measure like land tax, stamp duty on non residence, etc that hopefully will have some effect which is need of the day.
But govt has successfuly managed to divert the nation attention to supply only and let the govt get away with not doing anything yo curb speculation. Instead govt is using housing crisis to give entry to their chinese friend to develop infractructure as if kiwis are not capable or anyone else excpet China.
So what ever the suggestion, national will do nothing as in their and their overseas friends interest.
Opposition should be alert as well as media othwise it is not far that we will be ruled by overseas friends of the government, out in open unlike now.
As you say a market only works best when it is operating about an equilibrium point. Prices move up, suppliers increase supply and customers reduce demand; and vice versa. We have ventured a long way from this state and are now on an upward trajectory, i.e.. motion in one direction only. When this mode changes, the return to the equilibrium point can only be catastrophic. There is no safe way of unwinding this situation now.
Further, a market can only work if the cost of the commodity is affordable to the prospective customers. We have a market for land and building materials in Auckland that is now so corrupted and has moved so far away from the stability that free and open competition gives, that it now cannot deliver houses at a price that the people who need them can afford. Accordingly we have well and truly departed from any sort of market equilibrium. As an example you you could fill a supermarket with hungry people, but if they do not have enough money to buy anything, they will starve, there is no market and the shop will sell little or nothing. This is very analogous to the Auckland market where we have obviously high need but totally inadequate supply of new houses, i.e. the people who need houses cannot afford to build them, there is a total disconnect between supply and demand and no real functioning market anywhere near equilibrium.
Reasons for rising house prices:
Immigration
Immigration
Immigration
Immigration (disguised as student visas)
Immigration (disguised as student visas)
Immigration (disguised as student visas)
Immigration (disguised as student visas)
Foreign buyers
Foreign buyers
Foreign buyers
Foreign buyers using local proxies
Foreign buyers using local proxies
Foreign buyers using local proxies
Yes that's why he loves a deregulated financial world, no rules, free market. Once you are in that mindset and it has rewarded you personally it would be very hard to break out of and form a worldview that relates to the hard working everyday Kiwi, yet he acts like he understands
Wow, this article was enough to excite everyone....
Yes, good academic explanation with solutions retrieved from the old Soviet Union books of Red social control .... what happened to Capitalism folks? Are we a communist Country? .... does anyone really believe that the OECD, IMF and every institute who have lended NZ money so far will agree to such taxation nonsense or any laws to that effect? ... Has the writer ever considered the revolt this may cause by at least 1/2 the population? ... So, instead of thinking smartly and working on all the factors affecting the issue including Supply, and Councils' Planning incompetence for years and immigration policies and foreign money etc, we jump to the easiest and sharpest tool we have ,, TAX the hell out of anyone related to a property other than his home, or even thinking about buying one ... drain the rental market so FHB can buy what they want and where they want it ....because they "should " not be renting, or commuting, or start from the bottom of the ladder like most people DID, just TAX the greedy landlords and get them to quit that "shameful" business of RENTING to other, or anyone that may think about owning a rental ...So is that the best that economists or others can come up with ???? . Good luck with the two thirds of current MPs who own more than one property to vote for such laws !
Folks, the reason why this didn't happen so far and it will possibly not happen, is because no sane government in power ( while in charge of the NZ Books and the well-being of the entire nation, let alone Foreign relationships etc) would dare taking such draconian and harsh half cooked decisions which not only have internal but also major external implications ... The property market is one of the Pillars of the economy and pulling that down is not a Joke because it affects currency, reputation, standard of living, residing capital, foreign investment and the whole economical circle ....
More than 1/2 of the businesses have borrowed money to be in business with their own property portfolio as collaterals or guarantees .... |This not as issue of a small neighbourhood problem being solved by the school trusties....And , NO NZ is not a poor country , it is a well balanced ( so far) with its pros and cons and has fewer problems than many "rich" countries have, and we rank very well on all scales in the world ... let's stop beating ourselves up .... envying those who have and trying to slash what they have worked for or where they want their kids to be, is not the smart answer ...
I am against covering the faults and shortcomings of the bureaucrats who have over lived their used by date, by taxing the hell out of hard working people... There is a huge issue with productivity in NZ and the suggestions in this article will drive it into the ground.
This is not the first article hammering its way towards radical CGT and other silly measures to take from the ones who have and give it to the ones who don't undeservedly!! the irony is that some is being written by Economists !!
Oh, a small note about immigrants buying houses in the last 20 years ....Yes, they do... because most came from Socially Controlled Countries where private wealth is considered a taboo...and only confined to the very elite. They come here, work hard, save and invest, they don't do OEs, or Ski, they only spend money where needed.
We are not a Banana Country guys , Not YET anyway!! .... take it easy
I can see the purely academic argument that imputed rent should be taxed on home owners. But seriously can anyone really see a government actually try and implement this? Further more should we then apply this to everything. Ie should a car owner be taxed imputed rent because by them owning a car they are not having to hire one.
No experts needed. The only reason that house prices are rising is for National party Government wants it that way and for that reason alone is in denial as do not want to take any action to control it.
If the government decides today though supply will take time but can put measures to control speculative demand easily. Quiet a few option but as do not want it to burst in denial mode.
Mr PM the blame lies only with national party.
Do not wait for election year to come but act now as have already done damage and little more will kill.
Good salemen but need a leader with vision and not a leader with business mindset. Money though is important but not everything.
You may become more rich but just ponder the type of legacy you will be leaving behind after being voted out next year.
So no argument and duscussion are useless till we have current arrogent thick skin govt. Even opposition is not too strong but one thing is definte that I, me, myself leader has to go. Till than happy debate.
Well said, we need good leader and not salesmen as ecenomy is one part but social welfare and justice is also a role of government. Otherwise all good businessmen would have been good leaders.
Leaders have to think not what is good for them and their so called friends but for the nation as a whole.
Just answre one question. Is housing crisis good for the country ecenomically (except speculators) and socially.
Is it too much asking national govet elected to work for Newzealanders instead................................
What gets me annoyed is the constant debate of whether this is a supply side or demand side issue, instead of actually DOING something.
Supply and demand go together. You can attack both sides; reduce demand, and increase supply. Why not do both? Demand can be changed by changing rules around investment purchasing of housing, and reducing immigration. Supply side can be increased by careful relaxing of urban development rules.
I belong to the younger generation. Some of us are putting our lives on hold as we cannot afford a house and to start a family. This will produce a group of New Zealanders that are alienated from the current political parties in power, and will hold a grudge for some time.
Correct justanotherguy. Demand supply both the issues should be addresed to on priority but what is vurrentlyhappenjng is govt looking n blaming supply only.
Supply is very important and no one is denying it but government is not doing to curb anything to curb demand specially speculation, which vould be tackled by firsf accepting the problem instead of denying and than tackling ut by putting measures in place to curb speculation.
Government as do not want to do anything but show to peopke tgat are concerned is only talking about supply side as they too knowthat even if supply us rekeased now will take couple of years to show result that is also IF.
And if nothing is done on demand side than a milion follsr house which as it is too expensive will be say 1.3 milion and if current supply result shows aftrr 3yesrs will come back to 1.2 or 1.1milion.
What is needed is to work on supply at the same time put tools/ measures in place to curb this bubble.
One very strong reason that the govt is not doing anything on demand side is that for some reason are under pressure to oblige their oversess friends otherwise why would theydeny the obvious which is known to world not only kiwi.
Now even Australia and Cabada accepts but not our Hon PM. Running away from fact or saying lie 100 time will not make it truth- this time
I had read a comment earlier and was so correct for anyone to understand so how can national party not understanding unless they do not want to understand. It was :
If illnes is detected (housing crisis) and waiting for surgery (supply) it does not mean that will not do anything and not treat (Demand) and give medecine to combat and control the disease, while waiting for surgery.
Hon PM time to treat to curb speculation demand as waiting for supply only to solve the crisi may kill many by that time.
Because this arrogent govt attitute of minister that have britex and rise of Donal Trump. This is just not restricted to uk or usa but will be a world phenomena.
Few time back no one had thought of britex or donal trump but today is reality, similary do not go by opinion poll in NZ Mr PM as is changing rapidly unless you act in favour of kiwi than outsiders.
Ewen does make some good points but the problem is he works for the Government and so does not get his hands dirty cleaning rental flats and other nasty things us investors spend our time on. Though out history such wise sages have spoken but few have taken notice of them even if they have some good points. His proposals take no account of society and its power to do unexpected uncontrollable things. The force of a whole population is powerful and scary. So I think his reasons for the problem go a long way to explain the problem but I would not like to be in his seat if he got into power. Just look how Don Brash managed. Good person, good ideas, failure when at the top.
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