By David Hargreaves
The political firestorm that has erupted over the New Zealand housing market is effectively a case of fiddling while Rome burns.
The various parties involved, both political and supposedly non-political such as the Reserve Bank, are effectively agreeing that there's a problem but arguing what to do about it.
Except it seems from where I'm watching there's not really any argument at all about the types of things that need to be done.
More it's a question of who's going to do it?
I'll make it easy. Step up John Key, Bill English and the rest. This one's yours. Get on with it.
It was beyond cute of the Prime Minister to stand on the sidelines last week saying, in effect: "Yes, come on Reserve Bank, do something!" Why you could have been tempted to believe from the PM's response that he has suddenly developed an inability to pass laws, make regulations, change policies. He's only the head of the Government after all.
To refresh everybody's memory here: The Reserve Bank is charged with preserving financial stability. That means, to grossly simplify, its job is to stop the banks getting into the cactus and producing a financial crisis that would see our country turn into a banana republic. The central bank ain't there to ride shotgun on the housing market per se.
The housing market just happens to be what our banks have something like 55% their lending tied up in. If the housing market crashes and burns in a very meaningful way we are all in a bit of trouble. Hence the Reserve Bank interest.
Already, however, with measures such as the 'speed limits' on high loan to value ratio lending, the RBNZ has overseen an improvement in the banks' ability to withstand a housing market shock. That fact won't stop the RBNZ worrying about such an eventuality, but nor should it. It is supposed to worry about financial stability.
If there is ultimately a nasty accident in particularly the Auckland housing market it won't be the RBNZ's fault.
Trying not to dirty its hands
It will be the fault of a Government that has been desperate to not get its hands dirty in making policies that both go against the grain of National's 'capitalism is good' creed and that it would construe as unpopular with its voter support.
The trouble for National is that with New Zealand now talking itself into a 'housing crisis' the 'do nothing' option is starting to look increasingly ballot box-toxic as well.
I think the Government is going to have to come kicking and screaming to the party eventually.
My concern is it leaves it so late that by the time some real measures that will bite are introduced they'll be biting on a market that's so overvalued it REALLY takes a fall.
What should the Government do? Three things come very easily off the top of the head, and I'm sure readers would have other thoughts. Just as a starting gambit I would increase the period caught by the recently introduced 'bright line' test from two years to five years. I would kill off tax deductibility of losses from rental properties. I would introduce a tax on undeveloped land held as an investment. I would stress that the point of such measures should not be seen as raising revenue through tax - but simply to even the investment playing field.
This country is going to keep risking boom and bust cycles if we continue to strongly favour one asset class through the tax system over other kinds of investment.
Immigration cuts
And yes, I would do something about immigration, but this one's more complicated. How badly hit financially would tertiary education institutions be if the numbers of international students were limited? Quite badly, I suspect. Clearly some students coming into the country are doing so with the intent of getting jobs - not necessarily particularly skilled ones - and staying on. This relatively recent practice needs to be examined closely.
Probably an easier place to start with immigration is to cut back on the number of work visas issued. Nearly 39,000 people came into the country via this way in the 12 months to May and from what can be seen of some of the official figures, a fair few of the jobs these people are taking could be done by locally trained people.
Look, the point is, the Government needs to stop jawboning and making out the housing market is somebody else's problem that can and should be solved by somebody else.
Time to just get on with it.
The longer the Government leaves it the bigger the potential mess. I'm sure in their heart of hearts John Key and friends know that.
There comes a time when inactivity actually becomes reckless. We have reached that point.
149 Comments
Our bare section costs are much higher than normal, Council planning has caused us to be short supplied land by about 50% around Auckland and consequently much less building occurs in Auckland.
The same Council planning has ensured we are over supplied with land by 500% around Warkworth and so a lot more building is taking place there.
Certianly the land exists in abundance as does the funding for adequate infrastructure. We merely need permission to build on the land and have a council that appreciates the value of urban growth.
Touches forelock, bows in direction of those geniuses at Auckland Council, shudders.
Yes another worthy exercise would be to find out and do something about the amount of empty homes created by the Non-resident investors who are just sitting on property waiting for the prices to increase before flipping them.
We could do something about taxing empty homes as well.
And other commenters seem to agree with you, but I'd take that more seriously if I had seen more evidence that anybody on this site understands what New Zealand's immigration settings actually are.
Perhaps you could help us by setting out more fully what it is about the settings that you consider unhelpful, and why.
Anyone who hasn't been to Auckland in 15 years, could travel there now and tell you.
Solve some of the problem (without an Immigration debate) by only allowing NZ citizens to buy real estate.
Have a separate Immigration debate about why we are not producing and retaining the skilled (or otherwise) people we need. Maybe its just that we want more people so that we grow or to keep wages down. No debate though, so when people are stuck in motorway congestion or A&E or can't afford housing, they do start to wonder what the plan is.
That hasn't answered my question at all.
Only allow NZ citizens to buy real estate - will be enormously helpful to New Zealanders who do not own a house and want to buy one, but disastrous to those who already own one, and also to employers who need to employ skills from overseas that they cannot get here. You'd solve one problem, and create a far bigger one. Not a great outcome.
From my experience the "Skills" that seem to be in demand are more employer driven (i.e. lies) than actual shortages of the right people.
E.g. 1. (Money)
What the employer says: We need a doctor and can't get a local one.
What they really mean: We need a doctor to work 60+ hours for a wage that is half of what they should be entitled to.
E.g 2. (Mates)
What the employer says: We need an engineer with "X" type of experience and can't get a local one.
What they really mean: Out job ad specifies they must be an expert in an as yet unknown field of our creation, this is to ensure we can get our mate over that we met while in Dubai.
E.g 3. (Family)
What the employer says: We need a trained chef in an ethnic cuisine and can't get a local one.
What they really mean is: We want to hire our brother from the home country and this is the easiest option to get him here.
Skills shortages should see higher rates of pay in those areas, which then encourages locals to train and thus the shortage is resolved. So why in NZ are the same skills in continual shortage?
The only criers would be the ones that actually go into a negative equity. The long haulers paper value drops but in reality they lose nothing.
The reality is there will be blood, there is no way long term to prop up a grossly overpriced Asset.
https://en.wikipedia.org/wiki/Tulip_mania
The worst case scenario for long haulers is we continue to not build, they lose money relative to long haulers in Tauranga, Brisbane or Melbourne.
Auckland has decided on a set of planning policies that mean really slow building rates. Auckland has directed property investment into creating a surge in land prices.
Meanwhile all the other cities around Auckland are building much faster and turning the same sort of investment flows into construction.
This means that over time Auckland becomes a relatively smaller city, that is less attractive to new population and the value of property falls.
Great article!. The PM needs to show leadership and part of that starts with accepting its not just a supply issue. Increased demand from speculators and investors from NZ and overseas is a key driver.
Your suggestions in this article will begin to dampen their enthusiasm. For too long the PM and government have been spectators watching an out of control housing market that benefits some, while marginalising many more. We will all pay the price for that in coming years unless it is addressed urgently.
John Key and friends are the people to sort out the housing market - and they should stop making excuses and hiding behind the Reserve Bank
David Perfect article and time that everyone gets up and expose government to force them to take responsibility.
I would like to add that more than housing bubble it is governments denial, lie and cover up which is annoying to people in large.
I think now it will be hard for national party to hide behind other and excuses. You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.
No, they wouldn't implement such a thing. Because in the rest of the world rising house prices mean more construction, which lifts wages and reduces homelessness and deflates rents and attracts new business. In the rest of the world it is great to have a property boom because it opens up so many more opportunities for high growth and low unemployment. In the rest of the world they build stuff.
In Auckland the Council prevents stuff from being built by enforcing ludicrous land restrictions which increase the cost of construction faster than the value of housing. Only in Auckland is a property boom synonymous with rising homelessness and suppressed wages.
Calling me a 'socialist' makes for interesting reading! Your view and you are entitled to it. But I would rather plead guilty to being a 'liberal' (social & economic). I want to see competitive markets, working transparently. Markets captured by any participant or 'side' are dangerous, and that danger needs correcting. Being a fan of free open markets functioning properly can only make me a capitalist, I would have thought.
It might not have been me who has changed, or become more 'biased' ... Money and the perception of the 'right' to gains made in the past becomes a powerful and distortionary twister of how you see life.
Fair enough DC, and i do hide behind a pseudonym when you are out there in the open...i think what has happened in AKL is that it has finally caught up to 'fair value' (a bit like WLN is now) and a lot of commentators here have missed the boat...NZ is a very free / transparent economy and then you have people like GM writing about German housing being flat and it being the model for NZ, since i have been here Germany over 5 years, house prices have gone up 30-40%...also people should also understand that Germany has a blue collar / white collar school system, and you will do what your told....especially by your neighbors and people in the street!!! bit of a drift, but please don't think the grass is greener cause it aint....
If by "socialist" you only mean caring for other people less fortunate or wanting others to have the same fair crack as many others did then yeah, they probably are guilty and worthy of a god damn medal! We need more places like this that are NOT overly moderated to freely speak about these issues. I for one greatly appreciate this site for that alone
Excellent article David. With respect to this issue the Government is running out of cheerleaders.
Key's done a "Boris" on us. He's like an adolescent who advertises a party on Facebook while his parents are away for the weekend. When the place gets trashed he says 'What mess?", leaves the parents to clean-up and blames the guests.
Perhaps we should repeal the 1989 Reserve Bank Act and put the control of money back where it belongs - in the hands of the people so that no Government can hide behind it any longer. New Zealand started the rot with that Act and the World followed. All Reserve Banks have had their day with the World being run by non elected representatives.
Key is a master of the non-answer when interviewed, and an expert mumbler, in fact he is getting to be unintelligible. It is time journalists worked him a lot harder and demand clearly spoken and unequivocal answers instead of repeated mumbling and non-answers.
Good points David. I can't help thinking there is too much credit available in the market. We are suffering a type of hyperinflation of assets due to the mis-pricing and over-availability of capital compounded by the supply/demand imbalance. This is not a problem NZ can solve on its own unfortunately, with NIRP madness fast spreading globally.
Brash's numbers are - as you would expect - pretty much spot on. Buuuuuuut! 3% annual growth in household incomes for everyone is quite an assumption in the current environment. At a more realistic 2% compounded growth in household incomes then it will take 75 years for Auckland to return to affordable housing prices.
And remember that when the Demographia report came out last year our Dear Leader's preference was to follow this exact strategy. Of course nominal house prices have soared since he said that :-)
The title "Government has run out of excuses" is laughable. I suspect they have plenty left.
While these measures seem sensible, they are unlikely to make any difference to the problem with the housing market that people are angry about... house price inflation. Why?
People who are not citizens can buy NZ land. With the tsunami of refugees that the world is facing the isolation of NZ is going to make it seem like the last life raft to the wealthy of the world, which makes prices relative to 'our' wages irrelevant....
But wait, they are only a small % of the market...
They only need to be... Mr & Mrs Foreigner want to move here from wherever, and have money. They pay way above market rate for a lovely house to get on the residency path. All their new neighbours run to the bank to borrow against the new value of their house, then go on a buying spree of investment houses. Unless the laws that make this possible are changed, things are only going to accelerate.
Government is not doing anything and will not do anything on that front as does not want their overseas bosses to be upset. Why do you think the denial and lie and cover up from national - picking arguments and fights with everyone including RBNZ.
So come what may government will do nothing to disturb their overseas bosses. Wait for the next data to be released, which again if not manipulated or faulty like last time, will show a different result and national government as usual will find excuse not to act as the basic reason for them to be in new Zealand parliament is to protect the interest of their friends than kiwis who voted them.
Stop blaming the government for the council's stuff ups.
We should build more houses like they manage to do in the rest of the country, the bits not governed by Auckland Council, and indeed the rest of the world. Have property boom, build stuff - is a simple process that lifts wages and lets people not be homeless. The only reason it doesn't happen here is Auckland Council.
Your solutions are pointless. Have property boom, have council prevent house building, blame government, get government to stop property boom, blame government for lack of houses, repeat. We'd have low house prices, high rents, low wage growth and high homeless figures. Of course the government isn't in favour of those outcomes.
Yeah, its his greatest legacy. And has a serious upside for him, the Super City is so incredibly incompetent and retarded it makes the National Party look awesome by comparison.
Auckland Council has transformed a property boom into a homelessness crisis. Epic fail.
when you have the government fling open the doors, change rules on investment, allow buying by all, of course the council is not going to keep up unless they are given the money and resources from the government.
we are heading for a sad time in NZ and all those cheerleaders that let them get away with these policies in ten or twenty years will be sitting there scratching there heads asking how it happened
The kind of free flowing, massive investment that has poured into Vancouver, Sydney, Brisbane and Melbourne has transformed those cities into construction boom towns.
The same wave of investment hits Auckland, we get a homeless crisis.
If Auckland Council had been able to achieve even base line competence we would have had 10,000 additional apartments and 10,000 additional houses built by now. No homeless crisis, real wage growth and a dynamic city economy.
Tauranga constructs apartments faster per capita than Auckland.
Well the rising housing market isn't a Auckland only scenario it is happening on a global scale. Go look at Sydney, Melbourne,Shanghai,Hong Kong, London,Toronto,Vancouver.
Sydney prices are crazy watching (Sky News real estate) seeing a house being sold for over $1.2 million & the new owners of the property looked like locals.
I don't think Immigration is the problem but how it is organized sought of is. Much more should be done to encourage migrants to move to other places in New Zealand outside of Auckland.
Property investors & Land banking are in my opinion a major part of the problem. Property investors bought 41% of Auckland homes in June 2015.
The RBNZ estimated that in Auckland investors accounted for around 40% of all residential purchases in 2015.
Newshub reported that more than 2500 Housing NZ houses are currently sitting empty. Housing NZ sold a Auckland apartment block that is likely to sit empty for years now as it needs a $22 million renovation.
Much more should be done to encourage more people to spread out across the entire country.
sydney have the same problem, most settle along the coastall cities, there one advantage is they have more than one big city to chose from i.e sydney melbourne or brisbane and to a lesser extent perth.
there are calls also over there to cut the numbers but like here i guess most of there politicians are deaf and will allow those parties against it to grow over time
http://www.bloomberg.com/news/articles/2016-07-10/-swamped-by-muslims-p…
National have had way too many chances so anything they do now would only appear as unwilling pandering to opinion. Let's just get these traitors out asap and never again allow them back in. Jonny and Billy gone, Stevo and Bridges to no where gone, Bennett and Collins gone, Smithy, Adams and Parata gone.
Over the years that this site has been running I was full of admiration for its content and its contributors.
But now with some sadness the site is steadily becoming a Government bashing site showing total bias, one sideness with a stream of stories designed to attract the Government haters and screamers. I cannot recall an article that criticised the opposition parties with the same vehemence as I'd deals out to the current regime.
It may be oppotune to recall the polls which show that the majority of people still want the present regime and reject those on the left.
By all means criticise where criticism is warranted but a little objectivity would be a welcome relief.
You are running very close to becoming a left wing news site where sensible debate is swamped by the haters
and the "rent a demo" mob.
All the best.
BigDaddy
Fair enough observations BD, but ask ...why is this happening?
It is also not unique to this site. I also view the NBR from time to time...and wth respect to Key and co, the tone over there is also vastly different from 6 months ago - hardly a good word to be said.
yes i saw that yesterday, a lot of negative comments towards this governments policies, but like BD says the polls still favour national.
could the polls be wrong? as has happened in brexit where people went against them
or is it that people that are as mike H would say right thinking, starting to waver and say enough is enough we may need to teach national a short sharp lesson to get them back on track, a lot even on right wing blogs are now saying they will vote WP
It will depend ST as to how many Labour supporters own rentals or are part of the speculation or who have an issue with the amount immigration we have to a degree. Labour sometimes forget the make up of their voter base and their own self interests they wish to protect.
National is no more right wing than Labour used to be. The left of National are now further left.
Most markets are hardly free and without controls, so adding more or changing them is just more of the same.
Write a guest article for the positive facts of the situation. The cost of housing and value of immigration.
Sounds like you need a hug BigDaddy! Perhaps you could go and ask your tennents for a bit of TLC....I'm sure they'll be willing to tell you to keep up the good fight!! If not, I'm sure ZS will be willing to hold your hand for a bit when he finds time from pampering the prime minister and reading the property press looking for next rental in the DGZ.
So sorry you feel this way, it's so unexpected that society would ever stand up against unjust, rigged, greedy, unsustainable policy. Who would have thought?!
BigDaddy
Rather than shallow rhetoric about how this site is 'left leaning', how about facing the facts.
This site and other media hammered Labour, at times, when they were in power. That's what comes with being in power, and being asleep at the wheel, disingenuous or even worse - deceiving.
Perhaps you are too stupid to understand that, or it's just your vested interests coming to the fore (I suspect the latter).
I sense there are quite a few like me on this website. Basically centrists, who look to sound policy, political management and leadership rather than political ideology.
The reality is that the government's pathetic management of the housing issue is coming home to roost. Just like Labour's flaws later in their last stint in government, this government has become arrogant and believed in its own hype and ideology. In this case, that the market would magically solve the housing issue.
If you think growing homelessness, semi-homelessness, people being shoved into motels, and a large proportion of a whole generation being shut out of home ownership is good for this country, then that's fine and your right. But many of us don't, and many of us think that these outcomes could have been avoided if the government had done what it needed to do.
Some, like you, may be happy for NZ to move away from its egalitarian roots, for us to one day become a mini America - a place of great disparity and inequality, and fear. However many of us cannot and will not tolerate that kind of future.
I'm not leaving!! I'm staying right here to watch the lunatic fringe twist themselves into knots.
In fact in some ways it's fun to see the left wing wishing destruction on the country without realising that they will be the first to go down while the rest of us, the more sane, fair minded and logical group will be happy to enjoy life and see all glasses half way full.
Not so simple Big Daddy. I see myself as right wing and I have turned away from the Nats. One example. As a believer in free enterprise it see it being throttled by big business/corporates/overseas big business. Which process the Nats support.
I feel sorry for somebody who has an innovative food product (might even be healthy) which they can produce locally and effectively. See how they go in the face of supermarket chains.
(and I own a reasonable amount of property, and have a bunch of employees, and I have slaved to make it all work, and very effectively. In your eyes, a classic lefty)
Exactly the same here KH, funny these people who label anyone that disagrees with the nats a lefty.
Is that how their narrow minds work? your either a righty or lefty, and there's no debate about anything in between, why even come to a website where these types of things are debated, if you consider anyone that doesn't support everything your government does as a lefty.
I also used to votes nats, but it will be a very long time before I make that mistake again.
Haw haw haw BigDaddy ...that's the spirit ol' boy ! ...it is soo soo much of a deelite to watch the "pleb" working classes just become more and more "disenfranchised" and so much more separate of the 'elite' of our superior ilk ol' boy ...our plans are functioning so well my good man..... we must keep increasing the price of housing, so the little beggars will be screwed to the eye balls in debt ...haw haw !! .... bring in the "funny munny" I say, who cares where it comes from !! say what ol' boy .....income to loan ratios who cares !! ..... interest rates does not matter one iota ! ....just keep increasing the cost of the current stock !! ...for Pete's sake ol' man can those developments here in Aucks .... just keep the price pumping up, like my 2016 Rolls Royce "Dawn" resplendent in sapphire blue ol' boy, driven on the leafy tree lined streets of Remmers, on my way to the Northern Club for a $200 glass of Single Malt ....house prices ... phhhfff ...who cares ! .... haw haw toodle pip for now ..... plebs
Social welfare, ah there is a lefty concept for you now, I wonder how much welfare you receive from the public purse in the way of accommodation top ups, could it possibly be far, far more than any one person on an actual benefit might? Don't be so quick to diss the left and/or socialism.
Study your history guys!
Historian Robert Paxton observes that on the European continent the provisions of the welfare state were originally enacted by conservatives in the late nineteenth century and by fascists in the twentieth in order to distract workers from unions and socialism, and were opposed by leftists and radicals. He recalls that the German welfare state was set up in the 1880s by Chancellor Bismarck, who had just closed 45 newspapers and passed laws banning the German Socialist Party and other meetings by trade unionists and socialists. A similar version was set up by Count Eduard von Taaffe in the Austro-Hungarian Empire a few years later. "All the modern twentieth-century European dictatorships of the right, both fascist and authoritarian, were welfare states.
It was a response to PocketAces who wrote, "Social welfare, ah there is a lefty concept for you" pointing out that Social welfare is a righty concept designed as a humane way to neutralise socialist revolution.
Most Western democratic countries weren't all that into social welfare until after WW2. Returning soldiers and their families received an extraordinary amount of welfare. Ideas like Welfare States, along with concepts like animal rights and healthy workplaces, were pioneered by the Germans.
I think you might be confusing left with authoritarian, a common mistake among the closed minds, collectivism is left wing, all day, every day. You can and do find a combination of left and right economics (remember that is ALL left and right pertain to) all over the world, authority can be added to either, all the way up to fascism (where in Germany in Hitler's time was pretty meh, economically.
No you are confused.
Social welfare is not socialism or left. It springs from a desire to nurture and protect the people of the land while encouraging and building up enterprise. Social welfare is ideal for homogeneous societies and will break down if borders are open or society is fragmented into distinctly different groups. In the latter case more and more inequitable rules will be required to level the playing field to stop some groups dominating economically. Society deviates from the path to utopia and instead descends into dystopia by channelling resources to a growing underclass by robbing an ever shrinking middle class.
John Key and National are Inept, incapable of resolving the problem THEY created and DO NOT WANT to change...
They have followed the typical 4x stages of change which in itself suggests they had no plan to start with as they are REACTING vs being PROACTIVE about housing issues
Those stages are: Phase 1: Denial, Phase 2: Discomfort/ Resistance, Phase 3: Exploration & Discovery, Phase 4: Integration & Commitment
A) Phase 1 from National - They first of all DENIED there is a problem with housing despite massive statistical evidence to the contrary both from international and local sources (IMF, Ex RBNZ Governors, International Studies - price to income ratios etc) and instead tried to blame the Auckland council, RBNZ and everyone else
B) Increasingly more evidence came to light saying the claims are indeed correct from credible sources notably international studies showing the avg house to income in Auckland is now 10x avg. household earnings THE 5th LEAST AFFORDABLE city out of 360x developed world cities, and further discussions from current and former RBNZ governers, ex Finance ministers and international studies showing a house price of 3x Avg household income to be affordable
Naturally they are currently in Phase 2: DENIAL & DISCOMFORT
Clearly they have no plan and do not understand the impacts of their policies, they say it is a "supply" problem, but when you bring in twice as many people than the houses you are building are capable of housing what do you expect to happen??
National is more concerned about IMMIGRANTS, FOREIGN MONEY, DEVELOPERS, and existing home owners than the working class family who pay the highest % of their income in taxes who are trying to get a start in life and being scr3wed by bad policy makers
Something is broken when the government fails the majority of its people to benefit a wealthy few... I am voting to get rid of National next turn they have failed NZ families
You are 100% correct, and this is why I insist people be very wary of Labour's promises please. They are essentially National 'soft' and have been for quite some time. No matter what the colour these guys wear we MUST constantly be keeping them honest. Our media alone have been proven utter complicit failures in this regard. People must not just vote but get engaged and informed if we wish to stop the decline in standards
What housing crisis? We seem a bit stretched in Auckland and Queenstown due to population growth (yes it happens from time to time and because that's where most people want to live) but the rest of the country probably still has surplus houses and minimal house price inflation over the last decade.
Look, New Zealand currently has population growth, credit growth and economic growth - all things desperately being looked for by all other governments around the world. Most of you here seem to want someone to engineer a big correction in house prices, which would trigger a recession and then complain because you have lost your job.
Really, get a grip.. imbalances happen from time to time. In a few years time as supply has increased and the immigration wave turned, most of you will be changing your 'blame the government' placards for the weak state of the economy. The RBNZ doesn't want to force the issue with more aggressive macro tools because it knows a major correction in housing would probably kill our economy - at a time when consumer inflation is still not far off zero. Like all commodities, the best cure for high house prices is high house prices!
and so? that's how markets work.. what you and most others here are suggesting is that the local bank's have no idea how to assess credit risk and manage a loan portfolio. That's their job and how the capitalist system works. the RBNZ even agreed that under a sever stress test with 40-50% falls in house prices, the banks would cope fine.. so where is the issue again? If you stop idiots from harming the themselves, the population will eventually die out.. plenty of Darwin awards could go to the comments section on this site!
I think you just got nominated for one! We don't care about what "banks" think or what happens to their bottom line, Got it?
There is a greater need than that. Societies need ethics and a certain degree of equality or chance at to ultimately survive. It's not just financial black and white issues. Plutocracy is not the answer. You and others have had way too much sunshine. It's time we stuck some sunscreen on you, a hat and a shirt. The party is OVER!
@Elementary dear... - You're confusing Auckland with a normal city, governed by some sort of competent Council.
Auckland land is restricted by Council fiat, so land costs rise faster than house values. When costs rise faster than prices, the increase is not helping to solve the problem. It just makes the problem more visible.
Engineer a correction? Sorry, but the crisis has been enginnered due to poor policy settings, including council regs, taxation breaks and immigration settings (i guess you are a new reader of the site huh?) . Lets just unengineer the current mess and see how your engineered 'support the over- leveraged at all costs' bubble reacts.
Auckland homeowners account for just 18 percent of New Zealands total. In other words over 80 percent of New Zealands homeowners are outside this singular region . The incessant media blitz on rising Auckland house prices and indeed home shortages over the past five years has created a feedback loop so similar to a number of other cities where people have climbed over each other to get a golden ticket, and the FIRE groups profiting from each rise . Why New Zealand has succumbed to nothing more than a localised ponzi scheme , where real estate agents are glorified and their outlets adorn the backs of sporting teams et al , where banks give out ipads and food vouchers to lure an ever dwindling group to take on more debt than they can ever repay, and where financial engineering has allowed the same banks to dollop out mega loans under the guise of safety , because interest rates are currently at historic lows will in time come to scar the entire country. Auckland has simply grown upon an economic model that is simply not sustainable ,allowing further growth in Aucklands household debt will just add more grief when its over. The RBNZ should be allowed by this government to introduce harsh loan to income restrictions in Auckland , reducing credit will kill house prices immediately allowing time for any other needed issues . For the majority of New Zealanders it would be a preferable outcome, to what is likely to happen.
The incontravertable truth is that new volume in building will over a period, cause all house prices to fall.
Key may not like it.
Labour and the Greens may like to think it can be otherwise.
Ryman Healthcare and others certainly will find it much harder.
For those who wish to downsize the penalty is only relative.
That's not an "incontrovertible truth" at all. Depending on exactly how many new houses get built, and what happens on the demand side, prices may indeed actually fall - or they may stop rising, or they may rise a bit, or a lot, slower than they would have done otherwise.
Not sure why you would think that "Key wouldn't like it". Why would he be doing his darnedest to make it easier to build more houses - against the consistent opposition of Labour and the Greens - if he didn't want more houses to be built?
What is fascinating is the change in rhetoric, fantastic observations of human behaviour to be had. One of the best examples is Big Daddy, having changed his own rhetoric from perma bull on housing to calling it a bubble. I think he is a useful barometer. But now for him to start calling others out as they look for scapegoats, priceless.
As Iconoclast would say, look at the chatter. It tells you a lot. The markets ARE the chatter made manifest.
I can help thinking about what I read of Winston Churchill, and post Hitler politics in England. People there knew war was coming, including those who kept Churchill in the wings for when he would be needed. 5-6 years out they knew, but I would be interested to read the letters to the editor from those times to see when the masses really woke up to the fact that war was inevitable.
That is the problem, the intuitive ones can see the outcomes early but get ignored. Only when the problem is so gigantic that it is staring everyone in the face, and affecting their own lives, do they see it an act (if they can). On those late phases all sorts of insults get thrown about, insults the intuitive ones were the sole target of just a little earlier.
David C a socialist, that will keep me smiling all day. David I hope you keep good records of this site, and make it easily searchable one day. It would be really useful to psychologists :-)
Yes, very interesting. The cumulative chatter is like a big flock of birds, with each bird following the birds close to them, but with no clue that the whole flock is reacting to each other rather than to outside stimulus.
Oh, and scarfie, who do you think is most likely to chuck a wobbly and flounce when they meet with disagreement or a challenge to their worldview? The rigid idealogues (from both ends of the spectrum), or the moderate centre?
It probably depends on how much beer that have had, and whether their rugby side is winning or losing.
I think the problem is that the moderate centre probably don't have strong views to defend. Or their ideals are less grand, and related to smaller everyday issues rather than those of us that would change the world.
I think both extremes show the same inflexibility of views, driven in part by their being some truth in each of their ideologies. The wobbly comes from the inflexibility, the inflexibility derives from a lack of objectivity.
In MBTI typology I would say the Sensing vs Intuition is at the heart of the issue. I mean we are mostly thinkers on here anyway, so it is a Sensing+Thinking versus a Intuition+Thinking debate in a lot of instances. That is actually a temperament issue. Intuitive thinkers are Phlegmatic, or the Rationals, that are even tempered. The Sensing Thinkers are the Cholerics, those who are dominant and make good supervisors. Some of your answer is in those simple explanations.
The intuitive thinkers are a lot more open to reason. The Sensing are a lot more reactive when their do get understanding. Trouble is they are also reactive when there isn't understanding, but they believe there is(which is often the case).
Well, personally I think MBTI is a load of pseudo-scientific codswallop about as valid as astrology. You ever tried reading the profiles for the categories other than your own? They're not as obviously generic as zodiac descriptions, but pretty close. A lot of this comes down to pure magical thinking (as in applying just world fallacy, or thinking that if they agree with the conclusion, then the chain of evidence must be correct) and people's failure to check and compensate for their own bias.
You're an intelligent and reasonable person. How could you not agree with me???
(see what I did there?)
Lol to Zac. Well I did move to temperaments, observation of which is millennia old.
Don't forget MBTI is base on the work on Carl Jung, no slouch. I suspect the only reason MBTI has largely been ignored by academia, and studied further, is that it was commercialised before they could. I rate it highly because it tells how people will behave, and in fact have behaved. Always I will find people HAVE behaved to type in the decisions they have made through life. Given enough time, I will work anyone out. As in I tell them what they are before they do a test. If I have the ability to question them, the working out happens a lot faster.
A fantastic tool for careers guidance, if not so much to tell people what to do it will help eliminate that not to do.
You do allude to the "Forer Effect", which does have to be considered. It does not affect the relevance though. I had an interesting one a couple of months back where the subject was close to the line with the test. I got them to read a couple of profiles, and they agreed some of it matched. However I wasn't convinced that they were convinced. I kept questioning as it didn't feel correct. One the the conflicts was that this person was currently working as an accountant, but had done fashion design, quite opposite vocations. The key that this person was considering becoming a real estate salesperson (god help me). That tipped me and I gave a third profile to read. The subject became totally immersed in it, and even started laughing. It was describing them so accurately that they were totally unprepared for it.
A lot resist because they don't like being put in a box, but they are there regardless as their actions define them.
My closest mate resisted this stuff until I pointed out the stark difference between his twin boys.
Wait ... you showed them profiles until one matched? That sounds like something bordering on cold reading. If number 3 hadn't been a hit, where would you have gone from there? Keep showing profiles? Re-test? Conclude they don't have a personality or a human brain?
Yeah, it's a lot less arbitrary than astrology (what isn't) and at least has some personal input, but like IQ testing far too arbitrary and simplistic to measure what it purports to measure. Like trying to measure a complicated 3D thing with a wooden ruler. Marked in inches. Some value, but I'm very skeptical of the way it's applied.
But then, I would say that, wouldn't I. INTJ or INTP, depending on the day.
I've long suspected that we have a background in the same organisation, or training in the same discipline.
They did the test first. English is the second language, so the instructions weren't quite followed. And no, I knew what she was once we got a few things clear. There is logic behind my process, trust me :-) The test can't always be relied upon, so where you go from there is important. My Dad for instance gets a different result each time he does it, but as an ESFP he is a little aloof when it comes to instructions, or scientific theory.
The theory was most startling when I went to Architecture school. I was sitting in a room with 105 other INTP's (out of 110). Other professions are dominated by certain types. Pilots (and lower order machinery) are the ISTP. Dentists the ESTP. Engineers INTJ ( a few of those in the family). Accountant INTJ. Doctors would be a mix of ESFJ's, and INTJ's, the latter because they tend to be top students but less temperamentally suited to it.
Edit. PS. Yes we may have been in the same institution, I have been in few so the chances are good :-P
No, I will not just trust you when you say there's logic. You should know better than to ask. :-)
That story sounds much more reasonable now that I have the information about the test instructions perhaps being misunderstood, or not followed.
Anything that takes a continuum (or a collection of many intersecting continua) and divides it into discrete segments is to be treated with an appropriate level of skepticism.
Yeah the box thing again. But there is infinite variation available within each type. If you do the humanmetrics test it gives a percentage weighting for each attribute. It is common sense that a person can be mildly extroverted, or extremely extroverted for instance. The person that is mildly extroverted might be extreme in the Judging, and so will be significantly different to an extreme extrovert that is mildly Judging. They will still behave true type though. I have a good friend that is 100% extrovert, and he was difficult to type because of this. But in the end what he has done told the story, as an engineer he was a rational type. But not a classical engineer, an ENTP.
Lean the types and try to figure out what those closest to you are. You will find their past actions (behaviour) will help you a lot.
It takes a certain capacity to carry it all, but you are capable :-)
One aspect of this that I find interesting is your description of your dad getting a different result each time. Question: How many people would get this highly variable result if tested repeatedly, but are only tested once, so get chucked into the whatever box and are left there forevermore? Big area of don't know what we don't know, there.
Another question: how significant is the effect of living up to the categorisation after being given it? Humans are suggestible (to varying extents). When told they're whichever category, and given the profile to read, is there a degree of subtly altering behaviour to better fit the type? If so, how significant is it? How would it be measured?
Good questions. What I tell people is that ultimately only they will really know because this is a tool to help them, not hinder them. Only they really know how they think. This tells them the way they think is okay, particularly for those in minority types and was liberating to me because of this. It unleashed me you could say. Certain career choices I have made, i would never have done had I known my type before hand. So the answer to if this will influence your behaviour is likely yes, the question is more if this is harmful or beneficial. I had already thought of design school of some sort (I had already designed and built a unique half round, groin vault, timber/plywood home), but MBTI cemented the decision. I topped the first year, so was in the right place. In hindsight I was building innovative structures when I was 14, so spent 25 wasted years because no one identified the talent. That is economic....
Others will be so impulsive it won't affect them at all :-) I found it helpful, others less will find it less so because they are going to do what they are going to do.
Bring this all back to behaviour, which that people can be expected to behaviour a certain way in certain conditions depending on their type. Conditioning can make people behave different to type, mainly because of their expectations of how other people expect them to behave. Release them from expectations and they will behave to type.
I will take another turn in this for you. The great fiction writers intuitively know the different types, the diversity of characters is what makes their books interesting.
The book the making of the Atomic Bomb used different descriptions for the same types. The INTJ is the "experimentalist" (Rutherford), the INTP the "thinkers" (Szilard). The introverts doing the heavy lifting in the theory department. But it took another couple of rationals to bring the introverts together, Grove the ENTJ General, and Oppenheimer the ENTP inventor to bridge the gap between the theorists and the General. All Rationals. The knowledge of MBTI enhanced my understanding of this book, and does in general life.
But others will work intuitively to the same end. Think of the old Maori matriarch, who watches everyone and directs things from behind the scene. Doesn't work so well for our western culture.
Listen to the chatter
My sense of the chatter - There has been a distinct seachange
No single event can be attributed as to the cause, but, there has been a subconcious seachange of collective opinion. What the cause is I have no idea. But if I was a multi-property-owning investor I would have been lightening the load since January 2016. For those doubters, the utterances last week by the RBNZ and John Key should dispel any doubts. Time to get out and sit on the sidelines. The trader in me says you can't go broke taking a profit
Just my sense of what's happening
Why does the government not do what it can to encourage people to live and work out of Auckland. I have not heard anyone saying that there is a shortage of housing in New Zealand, it is just Auckland that has the problem. I would be happy for people to knock me back on this, but how many jobs that are currently done in Auckland's CBD, could not be done just as well in Hamilton, Whangarei or further afield? How many small scale manufacturing jobs could not be relocated to Huntly? Obviously any "encouragement" would be tipping the scales of the "free market", but those scales have never been level anyway.
Auckland Council is way ahead of you there. The majority of new land being opened up in the Super City is nowhere near Auckland. #Howwegotinthismess
Currently Auckland property owners are being encouraged to the tune of $500,000 each to leave town. And since Auckland is building so slow, on-going rent rises will soon have businesses fleeing the city.
again government policies going back twenty years, why do the main offices of government departments need to be in auckland, years ago they used to be in the regions.
why does fonterra need its main office in auckland when most of its manufacturing and shipping is done elsewhere.
even the industry i am in used to be spread throughout the country as as technology came along it was consolidated and moved to auckland closing down the region branches.
the weird thing is that same technology means we can work remotely so could be cheaper to operate elsewhere in satellite locations but its more of a mindset to have everyone under one expensive auckland location
I heard Paula Bennett on the radio interviewed by John Campbell. She is a disgrace. Started to get emotive and whined that JC needed to speak to Bill English. It was pathetically evasive.
And I think it is pathetic that the government is now looking to lease motels for the homeless.
I mean it is banana republic stuff. Pathetic!
normal from this government deny deny deny its not our fault blackflip
http://www.radionz.co.nz/national/programmes/checkpoint
the scary thing is due to not being proactive but reactive it is all going to cost us.
http://www.radionz.co.nz/national/programmes/checkpoint/audio/201807994…
Yep..John Campbell is a must watch. One of only a handful who have the ability to tackle the media - though I note there is also a female reported chipping in off screen also putting the heat on Bennett. Bennett looked like she wanted to give Campbell a smack around the ears.
Yep. Campbell on Radio New Zealand is a man reborn. Great journalism. Watch it on freeview for radio with frequent video format. It's weird but strangely works well.
As a confirmed hater of the civil service I have to say I have been converted by the whole crew of reporters. Unfashionable, competent and interesting with content over style.
DH this is a nonsense opinion piece which does nothing to increase supply.
The brightline test is actually slowing down supply so any increase in length of time to hold is going to have ramifications. You also fail to consider the number of people who move around the country for work.....
Maybe consider how the 2.2 billion dollars of taxpayers money that goes into accommodation supplements and WFF is actually a subsidy.....when you tax people the tax gets spent and that causes distortions so advocating more taxes just creates more distortions and NO ONE ends up any better off!!!
Just tell me how or who is going to determine what is undeveloped land for your new tax proposal? If someone is e.g. farming that land why should they pay your new tax?
Immigration is needed.....there are not enough people to fill jobs now.......NZ has far too many people who are physically lazy preferring working a desk type job for some government agency rather than doing real productive work!!
This is a very left wing piece which is all noise and fails to address supply.
Ah yes the time honoured 'must be left wing because it lacks substance' argument.
Maybe this reference to the left is a throwback. The word 'left' being derived from "Old English lyft, left ‘weak’ (the left-hand side being regarded as the weaker side of the body), of West Germanic origin."
Where is the Evidence that current (Right Wing? Free Market?... Tui) policies are working.
Personally I wouldn't consider myself to be left wing. I'm happy to vote for parties with sensible policy, supported by evidence, that improves the lot of NZ and its Citizens.
Worst of all these people were elected to lead the country. Do we really deserve the obfuscation and spin?
Who would honestly say they are actually displaying leadership qualities?
The left is now about controlling business so as to extract as much as one can and allows those doing the thieving to BS that they know better how to spend it than anyone else....
This same left group cry they do not want business bailouts instead the preference is on bailing out their identified causes!! How about allowing real capitalism to operate and that means no one gets bailed out by any government or official and let voluntary donations/organisations assist the people who fall through the cracks!!
There is no free market the Tui add is on you!! Free markets are allowed to fail and to rise!! Free markets don't have interference at all by anyone......that means your Councils and Politicians keep their noses clean and well out of the way.......and this takes discipline of which there is currently none!!
Sensible policy gets to the root of the problems it does not subsidise it does not create further shortfalls by using stupid map boundaries and other pathetic legislation, regulation and the plethora of policies which are holding back a building boom in NZ!
Agree Zeds
NZ has always been non-ideological and the terms "left and right" were never part of the NZ lexicon
Voters weigh up the pros and cons of the policies of each party and vote accordingly, rarely based on strict party lines
Such terminology is IMPORTED prejudice
Exactly. Notice most of these so-called "business people" don't actually make a product. They mortgage themselves to buy existing and then flog them off for more to each other or just hoard older homes to keep off the hands of FHB's on interest only loans.
If they actually "produced" something like building more new homes & apartments then I might have a little more respect. But no, their mantra is just about being parasitic.
Our society has allowed, even encouraged it. There probably should have developed some sort of unwritten rules around owning too many houses much like we walk on the left, let ladies out of lifts first and don't sneeze loudly in public. With globalism and the consequent multi-culturalism unwritten rules are broken and people take advantage where they can and are ignorant of etiquette rules.
Are immigrants given lectures on the unwritten rules of a society? They are not even told to walk on the left by the looks of it. Would they listen and obey something that is unwritten?
Do diversifying societies need more a and more rules to spell out something that a more homogeneous society would just know? Probably.
Landlords have to pay & arrange: City Rates, Insurance, Maintenance, Water Rates, Mortgage Lending & Interest, Emergency Repairs, Letting Costs, Tenancy Interviews & Agreements, Regulation Upgrades (Fire Alarms, Insulation) & House Inspections - What part of that is not running a business and just sitting on your backside?
Excellent article David H.
Will also like to see one of the experts come out with an article about non resident/ overseas buyer which government is not ready to accept. Know from few real estate agency office that 80 to 90% buyers have been asian sounding name ( though many would be nz resident) but does it not signal something.
Not against anyone but would like the facts to be in public domain about non resident buyer.
Meet any estate agent and he will say that need only one or two serious asian buyer to get a good price for the vendor. Am sure you must be knowing many estate agent can do your research.
Definetly perception is that asian non resident money is adding fuel to fire and government is turing a blind eye to suit their motive - whatever it may be.
Fact is everyone is worried of being a racist if speak truth and government is taking advantage to suit them.
Australia and Canada has now admited and also have and are plaing to add measures to control it.
As it is a burning issue would prefer a investigative article to bring fact as government will never do anything on this front.
The problem I have with this article is that it has a whole raft of solutions that are mostly negative. No mention of increasing people's incomes or providing more alternatives for those entering the market through clever construction or releasing more land, easing rules etc. Instead we have more taxes, restricting this and that, making houses more difficult to sell etc.
It is typical leftist rhetoric that brings things down rather than lifts things up.
This is because national party is only talking about supply ( though very important) but witout putting measure on demand specially speculation by in it self will not serve the purpose.
I feel this is because national has a policy of come what may will not act against overseas buyer ( whatever their motive) hence will not accept that their is a housing crisis.
House rise is not bad but this price rise in multiple and fast may have bad effect on the ecenomy. It is this overseas money that may or not be offical legal money that is causing the problem as those buyer do not mind paying 20% , 30% or even 50% more to move their money from their home country and park it in safe heaven like NZ.
Conciquence is that one deal with 30% premium will harm as all property in that regeion will go up by 20% if not 30% and so on.So one does not need many but few absurd overseas buyer to do the damage.
Any news that you see where the house has been sold for rediculous amount will be bought most probably by one of this type of non resident buyer. Data will prove it only needs to be collected but as national party has decided before hand that come what may will not act on demand side, this problem will only go with exit of them.
Hence this article is important to highlight the government failure to tackle demand along with supply.
Next article and exposure should be on non resident buyer as is one of the major factor in this housing crisis and has become worse for national denial and inaction as must be havjng some reason and may be vested or would have come out inpublic domain.
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