By David Hargreaves
In looking at the housing policies being offered by the major political parties, I have been reminded of the kind of thing groups of young boys do when they get together; with natural competitive instincts sometimes leading to a loutish contest involving bodily functions.
I would not be so vulgar in this forum as to give this 'contest' the name it usually has, but the Oxford Dictionary pithily explains it as: "A competition to see who can urinate the farthest or highest." The Urban Dictionary helpfully goes further in describing the term for this contest as also being used figuratively "to refer to a meaningless though nonetheless entertaining act in which people try to outdo one another in any way".
Pardon me if this appears negative, but in terms of the housing policies, is this all we are getting? The two major parties pitching against each other with virtually the same approach, just couched somewhat differently, and with different numbers?
The lack of imagination and vision is stunning.
I've constantly been reminded of two uncouth eight year olds trying to outdo each other because the one-dimensional nature of the major political parties' thinking is childlike. "They are building some houses, so we will build some houses and we'll let the public decide between two variants of the same thing."
Heaven forbid that someone might come up with a completely different approach to what is, particularly in Auckland, an incredibly complex problem.
I had thought coming into this year that National might come up with something rather more clever than it has. In reality, the proposals released this week look at best half-hearted.
This is a Government that's kept the growing housing problem in Auckland at arm's length for nine years while fiddling around with some market-led ideas through gimmicks such as 'special housing areas'. It's only marginally now getting its hands dirty and agreeing to actually get in a build some houses itself (with our financial help) because it realises it has to be seen to be doing something, because the focus groups and the opinion polls tell it people are getting a bit steamed up about housing shortages.
Completely lacking in conviction I would say, though others might even go as far to call it disingenuous.
Of course, by allowing migration to blow out the way it has, this Government has severely worsened an already bad situation in Auckland.
Particularly by allowing entry of wannabe migrants styling themselves as students and doing soft tertiary courses simply in order to get a foot in the door, the Government has cynically - in return for artificially pumping the economy and keeping wages low - put increasing pressure on infrastructure that hasn't been geared up to cope with an influx.
I note that Statistics New Zealand reported this week that Auckland's population grew through 'natural means' by 13,803 last year.
If you apply the rough rule of thumb that says about 60% of new migrants settle in Auckland, then this means net migration added around 42,000 people to the population last year. So, at a rough guesstimate, Auckland's population grew by around 56,000.
Now maybe there was some loss of population by Aucklanders moving to other parts of the country. But let's say for argument's sake the population grew by 53,000. If you take the Auckland average of about three people per house, this would mean Auckland needed over 17,000 new houses last year - just to house new people.
Stats NZ tells us that building consents were issued for around 10,000 new dwellings in Auckland last year.
Apparently, independent research suggests the actual number built was only around 7000, so, we are not even getting close.
I have been involved with interest.co.nz for about four years now. And I can distinctly recall as long ago as four years ago us having in the office discussions about how an obvious way to start addressing Auckland's housing problems was through usage of the often poorly placed and utilised Housing NZ portfolio. It wasn't rocket science.
But Auckland particularly needs so much more.
The key thing is that you can't just talk about housing in isolation. Building new houses just on their own - while at least a start - is only a slightly more refined way of throwing money at the problem. And throwing money at problems seldom works.
One obvious thing to look at with Auckland (and indeed the country as a whole) are population targets, overseen at central government level. We've never properly had that debate in this country. I suspect most people would say they don't want to see the population grow much more from now. Well, okay, if that's what you decide then that feeds into migration settings. It also feeds into infrastructure requirements. And, yes, housing requirements.
I'm still waiting to hear some over-arching, integrated policies that show the politicians have actually been thinking about the problems and are not just basing 'solutions' on whatever the other party says on a topic, or what opinion polls say.
Coming into this election year, I had hoped we would see some genuine thought going into population, urban development and housing.
What we are getting is: "Mine can go further than yours."
I fear that they will still be talking about 'Auckland's housing problem' in 100 years' time.
75 Comments
They call it the housing market. Like any market if you increase the supply and/or reduce the demand the prices will fall. Not much can be done to interfere with the reality of that despite all the mealy mouthed hissing in the wind from what ever political policy is on offer.
No one has a workable solution to the housing crisis , and we only have ourselves to blame .
1,000 NEW ARRIVALS EVERY 5 days ! ( they all have to live somewhere )
400 NEW CARS REGISTERED IN AUCKLAND each and every MONTH THIS YEAR SO FAR !
What the Hell did we expect ?
That new houses and roads would magically appear ?
Its simply insane to carry on like this
Just STOP
The Govt Figures for Immigrants and where they choose to live was 33,000 went to live in Auckland.
The Balance Hamilton/Waikato, Wellington and Christchurch/Canterbury.
Its SIMPLE --you can't keep putting the equivalent of the Population of Nelson into Auckland EVERY YEAR!!
For the Government --the short fix is Cut Immigration --at least to Half or what it is now.
Build More Houses --- the Government doing the whole Job. Plus the Private sector as well.
Then the Polys should have a good look at the Rules Already in Place in Australia -- for Immigrants and Housing Legislation-- and copy what the Aussies have done with the same teeth !!!!
Every business and farming organisation that has the ear of the government bleats about reducing New Zealand's cost base and expanding local business activity. Immigration is the chosen response - indeed it is the single largest policy choice the government has made. The larger social consequences of vast immigration - particularly the housing crisis - are of no interest to these politically engaged businesses, except that they reduce human costs and create further business opportunity. The government itself is incapable of understanding or responding to these chaotic social implications. It has simply seen itself as doing what its noisiest supporters want. The result is that the housing crisis, as an implication of the cost-reducing and growth strategy, is simply too large an issue for Wellington's admission, let alone action.
And of those business entities with the ear of policy makers, many larger groups are run out of Australia. NZ aside from PNG and say East Timor is the only place that has allowed itself to be commercially colonized by the Australians. The Australians do not have a great record as commercial or any other type of colonizers for that matter.
CER aside. It feels like we have lost the hearts and minds of the Ozzies. Their dept PM is on record being openly spiteful toward Fonterra (so guess what happens closed door). And Canberra is stripping long held privileges from our citizens as fast as they can.
The Ozzie banks do with us what they wish. Many examples,
See how they treat their own - in the bush and check out the family of the ATO guy, ripping it big time
http://www.abc.net.au/news/2017-05-18/how-the-afp-investigation-into-at…
The great thing is that we (collectively) get to choose whats best for us. Thats a job for life!
Anyone can see that all major parties are going to play on the heartstrings of the average person and those topics in hot dispute. To believe anything promised or said prior to elections is just dumb! Once the country has chosen it will be business as usual....nothing!
Will be a big election issues for sure. Its turning into the battle of the Cheap Workers (farmer labour and low wage businesses) vs. keeping youth in NZ by nuking stupid house prices (immigration, tax treatment, overseas ownership).
Clear alternatives to vote for.
There is, in fact, very little that any NZ government could do to significantly reduce the demand or increase the supply of housing. Their hands are tied.
A government can tinker at the margins but the reality is that the housing affordability crisis is not about to disappear - as unfortunate as that may seem.
I'd be particularly cautious of any political party that campaigns for a capital gains tax. The theory sounds compelling but the reality is that any such tax would be extraordinarily difficult to introduce and sustain over time. CGT is simply not a goer.
That's actually nonsense. Increasing supply is difficult, but reducing demand could be done easily (albeit after the horse has bolted).
Some possibilities: cut immigration, stamp duty on foreign buyers, restrict foreign buyers to new builds, remove negative gearing, comprehensive CGT, DTI lending restrictions.
Agree.
It's fun to play the rewrite history game. In my alternative version of the last 8 years the government:
1. Didn't amalgamate Auckland
2. Did force all the AKL councils into a room along with relevant government agencies to hammer out a strategic plan for how Auckland would grow
3. Budgeted for all the actions they had to take instead of obsessing over the budget surplus
4. Rewrote the RMA so that only the first 20,000 words of a district plan had any force in law
5. Took the lead if necessary by building more state housing
You can quibble all you like about the details but the point is that, if central and local government had a plausible plan to grow Auckland then speculating in housing would have been a riskier proposition than it has been. The endless blather has simply been a recipe for guaranteed capital gains on housing. And the inevitable result has been this crazy bubble.
Donald
I was writing articles and making submissions on the plans of the various legacy councils back in 2006-2008 for liberalisation of planning rules. Most of the planners didn't get it, and the councillors were scared stiff of the politics of intensification. They chickened out.
Just like Auckland Council did with the original Unitary Plan.
If they had reformed their plans 10 years ago then I'm confident the we wouldn't be facing this crisis today.
PS. Love your number 4!
I think it was Winston Churchill who quipped that a short speech took way longer to write than a long one.
I don't think the framers of the RMA had any idea how much district plans would become the vehicle for any pet idea at all whether or not they promoted the aims of the RMA legislation. Maybe we should ask Marie Kondo to do some professional development for our planners.
All of NZ's esteeming of 'Planners' looks all the more unwarranted when one considers the dual failures of a) housing affordability, and b) monstrosities such as West Gate and North West allowed under their watch.
Really, we endure all these shenanigans only to get results such as those?
I have been waiting a week for MBIE to advise me how many 'Post study graduate work visas' were issued to foreign nationals over the past year. Still waiting. It almost feels like they don't want anyone to know... Or is it yet more evidence of lousy government data collection?
What seems to be missing is a commitment to really fix the problem. They can bulldoze over anything if they really want to. Did Michael Savage sit around with endless meetings and bureaucracy when he tackled the housing crisis. The reality is that National give no evidence that they really believe that there is a problem (all their statements until relatively recently deny there is) and their words are simply window dressing before the election. If they win don't expect anything real to come from the rhetoric as per the previous 9 years.
Yes we do need to stop pretty much all immigration immediately because at the rate we are building houses, a lot of the accommodation for new residences must come by turfing our present citizens onto the streets.
As for all the blather about us needing to bring immigrants in to build the houses. Rubbish, its just a matter of priorities. We can just shift labour from over abundance of do nothing service employment and bureaucracy, to something more useful and important.
But 'at the end of the day' National MP's are just self-licking ice cream cones. To them, it doesn't really matter if there is a housing crisis or not. As long as they remain elected, witha portfolio, they're happy.
And I"m pretty sure the housing issues we have made no difference to John Key at all - because 'in reality' he only cared about becoming PM and seeing out a childhood dream, pretty much at any cost. So I think you've got to be quite careful about who you decide to back as your preferred party/PM. John Key was very good at pretending he had NZ's interests at heart, when in fact the opposite was most likely closer to the truth.
The new houses National are promising to build will go the same way as the 10 bridges National promised before the Northland by election, into thin air!!
After 9 years of inaction does anyone believe National cares about any housing shortage.
The only way to fix the problem is cut the demand, ie cut immigration to the bone.
If we knew how many empty houses theat are owned by speculators choosing not to get involved with renters and IRD tax issues (and the obvious attention of the authorities), we'd know how easiy this problem could be resolved.
I have a feeling the numbers are significant. I'll take a CONSERVATIVE punt at 10%, with no proof to back it up. If I'm even remotely correct, our problem can easy have a HUGE dent put in it, which would result in bringing house prices and rents back to FAIR & REASONABLE levels.
But as I and many others have said, National DO NOT WANT TO FIX THIS PROBLEM, they only want to look like they're trying (and typically only at election time).
Change the Government.
"over-arching, integrated policies"
As evidenced by many posts on this very web site, very few voters have any interest in hearing any problems are complex - let alone about integrated policies. They favour conspiracy theories, personal blame games and simple sound bites, like; "easily fixed", "vote changel" and "John Keys fault".
So we are stuck with what the electorate can digest, "Yeah but my dad can build more than your dad."
John Lennon had it sussed all those years ago -
"I'm sick and tired of hearing things from
Uptight short sided narrow minded hypocritics
All I want is the truth, just give me some truth
I've had enough of reading things
By neurotic psychotic pigheaded politicians
All I want is the truth, just give me some truth"
Labour/Green are the only ones talking about the demand side of the equation. Jacinda Arden specifically mentioned foreign speculators pushing up house prices on an interview conducted on interest.co.nz. Seeing as National are orchestrating the wave of immigration, and encouraging foreign speculators then it’s implausible that they’d change tac if re-elected.
Can we trust Labour?
I trusted John Key, voting for him in his first term (but not again). He said publicly and to me personally that he was going to 'sort housing out'....
I detest politicians and don't trust them, whether they are red or blue. Funny enough, although I won't be voting for them, I think Bill English is one of the best members.
I will probably vote green, at least they seem to have some integrity
Politicians can and do "do" things. See here.
(Buy to Let is the UK term for Investor).
http://www.telegraph.co.uk/news/2017/05/18/stamp-duty-tax-raid-prompts-…
The numbers suggest that retired workers who previously would have invested in a second property with the rent then used to fund their retirement are now looking elsewhere to invest their cash.
Begs the question of ours (politicians) "why".?!
Why do they do the things they do? - that deliver these policy outcomes we see before us.
It is a political problem,
Too much immigration,
Too many barriers to build,
Poor taxation, that makes profiting on the housing crisis very lucrative.
More work or saving will only push up prices further in this broken market.
The housing crisis will have to be solved with political change.
Yes I saw that on One news last night. Stating population was going to increase by 1 million mainly Chinese and Indian people in 20 years, as though it was a done deal and there was no way of stopping it. Surely there should be some sort of referendum before there is massive population growth and the whole culture of a country is changed.
Oh well election coming up.
I was gonna vote with my feet,
But the cheesy smell is permeating the whole of Government, so I decided to put a sock in it.
The whiff of self preservation is coming across quite markedly. It could be termed corruption of the state of affairs that has seeped into our perception of voter and taxpayer responsibility.
Being "Sucker Punched" has damaged the nostrils of both.
It is time we cleared the air...on both counts....User Pays...some don't.
About time a fair regime was extended to one and all. Or the smell will only turn worse.
Cos something stinks in LA LA LAND.....or is that Landlord Land...I forget.
Perhaps we need to explain to our politicians that the crisis of the housing market in NZ , and most particularly in Auckland , is the sum of a series of small multiplications ...
... everyone knows the law of compounded returns ... how , if you take a small number , such as " 2 " , and multiply it by itself , pretty soon you end up with a seriously large sum : 4 , 8 , 16 ..... 128 , 256 , 512 , 1024 etc ....
That , it seems to me , is the situation in our housing market ... a long series of seemingly smallish reasons compound up into a very large nightmarish shemozzle ....
... excessive immigration X easy credit X restricted land supply X duopoly of building materials providers X RMA restrictions X non-resident buyers X negative gearing effect X tax-free capital gains X early access to Kiwsaver funds for house purchases X onerous consenting processes X nimbyism X minimal or very old infrastructure X land-banking X .... yadda yadda .... it all muliplies up ... into $ Million as the standard house price in Auckland , a medium wage economy ...
Excellent insight there. It is an geometric progression, not an arithmetic one. So you get a power law or exponential type graph, not a straight line one.
Things go from slightly stupid, to really quite stupid, to unbelieveably stupid, to even more extremely and unbelievably stupid, to so historically extremely stupid that it has to be reclassified as the the new normal and not stupid at all; just before something breaks and the pile of crap collapses.
In the absence of a gentler remedy, the cure for high prices is high prices.
GBH... yes... We have different things compounding at different rates.. AND it is only after along time that the disparate rates of growth have a HUGE impact.
The biggest one for me is Money supply growth vs av. wage growth.. (eg. money supply growth is 7%/yr and wage growth is 3% )
( Increasing Money supply is one of the most effective, yet hidden, ways to transfer wealth.... in my view )
Here is a great video explaining the exponential function https://www.youtube.com/watch?v=LqcHG7QUK9k
The big mistake was to allow foreign ownership. When we did that we sold our right to home ownership, combined with record low global interest rates, the problem is not solvable. Cashed up foreigners are buying here and do not require a return. We will get more empty houses, unused farmland. NZ is getting smaller.
Gummy Bear. Here we go:
- Our government know we have a bubble on our hands. They know if it bursts they'll be ousted. So what they're doing is pumping up demand to keep the air in the bubble through mass immigration policies. They're desperate so they'll let that demand come from anywhere. They know the moment they turn the tap off that there will be no further growth and we'll actually have to start facing facts.(recession?)
- Current owner occupiers and the darklords (my new name for landlords) like the fact that they are paper millionaires. They know that foreigners have pushed house prices up so for now they have no issue with mass immigration - even though in Auckland it means infrastructure etc are getting pushed to their limits.
- Current government know that their voter base are happy with the way things are - don't touch it, don't change the settings. It's making us 'rich'...
- Being 'rich' in the short term is more important to the current darklords and National-Denial party leaders than having a sustainable plan..
... ha ha ... nice try ... but no Gummy Bears for you !
You've given an excellent list of reasons why particular individuals benefit from foreign money buying up our housing stock ... certain people get re-elected into parliament , others get rich quick ...
... but , the question was , how do we as a nation benefit from having our houses bought out from under us ?
Nice try , but !
Exactly....at a fundamental level, there is no benefit in terms of the overall future prospects of the country as a whole. But the problem we have, is those in power (and those voting for them) aren't thinking in terms of the whole, they're thinking in terms of themselves, here, now.
I claim the $10 (twice).
https://www.interest.co.nz/property/76953/pm-john-key-says-non-auckland…
Prime Minister John Key has told a talkback audience in Auckland that non-Aucklanders have told him they would like to have more Chinese buyers in their regions to push up their house prices and wealth.
Key told Leighton Smith on NewstalkZB that Aucklanders liked their house prices going up because it made them richer, but they and the Government preferred that they did not go up quite so fast.
and
Rt Hon JOHN KEY (Prime Minister): Yes, I stand by my full statement, which was: “We do not support a ban on foreign buyers. We think that’s neither justified nor likely to be terribly effective. For the most part, countries don’t have bans but where they have had them we don’t think they’ve worked very well.”
https://www.parliament.nz/en/document/51HansQ_20150728_00000001
- We suggest that the China ban on foreigners buying land works pretty well, pretty well!
Q&A: The Gummy Benefit: A National Govt. Too True Blue!!
GBH – Somewhat cynically, this is what I think the neoliberals think. Foreign money contributes to aggregate demand irrespective of where it goes. Although some kiwis will lose out not owning a home, without a mortgage generation rent will spend all their money into the economy further stimulating aggregate demand rather than chasing assets and indebting themselves to Australian banks. This has another added benefit of reducing our private debt : GDP ratio at the same time asset prices are being pumped up, the ultimate win win! The benefit to the many outweighs the consequences to the few.
GBH has been around a lot longer than you Boatman. He just went quiet for a while due to being busy in Russia trying to find the Holy Grail (he hasn't figured out yet that it is right here in New Zealand, held down in a funny round building in Wellington). But he comes on every so often to poke a bit of fund and take the piss out of everyone, and Steven, so is missed when he isn't here. But in absence of finding the Holy Grail, he seems to have been chosen by god to receive the indominatable wisdom regarding the ponzi housing scheme, so is now conducting a Holy crusade against it.
It is Friday...no names, no pack drill....as my old Father used to say. Ex Army...to the core.
In a strange land not far from here....the Friday story goes...
The Leader of the Political Party called his off-sider into the office one day and said, "Mate I have a great idea!
We are going to go all out to win over the country voters."...It ain't all about Awkland. and Houses you know.
"Good idea Leader, how will we go about it?" he said. "Well," said The Leader, "we'll get ourselves one of those wet weather coats, some rugged boots, a walking stick and a wide brimmed hat, oh yes, and a Border Collie dog. Then we'll really look the part.
We'll go to a typical old country pub, and show we really enjoy the bush." and ain't all about Houses.
"Right ," said The Off-sider.
Days later, all kitted out and with the requisite Collie dog, they set off into the interior farmland down Hawkes Bay way. Oops....scrub that.....It could have been anywhere.
Eventually they arrived at just the place they were looking for and found a typical country pub. They walked in with the dog, and up to the bar.
"G'day mate," said The Leader (in a typically deep voice, not wanting to be recognised yet), to the bartender,
"two pints of your best beer."
"Good afternoon Dear Leader," said the bartender, "two pints of our best coming up". The Leader was dumb founded at being recognised so quickly ,so he and his Off-sider stood leaning on the bar drinking their beer and chatting, nodding now and again to those who came into the bar for a drink.
The dog lay quietly at their feet.
All of a sudden, the door from the adjacent bar opened and in came a really old grizzled stockman, complete with stockwhip.
He walked up to the Border Collie, lifted its tail with the whip and looked underneath, shrugged his shoulders and walked back to the other bar.
A few moments later in came another old stockman with his whip. He also walked up to the dog, lifted its tail, looked underneath, scratched his head and went back to the other bar.
Over the course of the next hour or so, another four or five farmers came in, lifted the dog's tail and went away looking puzzled. Eventually, The Leader and his Off-sider could stand it no longer and called the Barman over.
"Tell me," said The Leader, "why did all those old men come in and look under the dog's tail like that? Is it a normal farming custom, I am a bit out of touch with things..
"Strewth no!" said the barman. "It's just that someone went 'n told 'em there was a Collie dog in this bar with two arseholes...............!"
It is all about Public Houses...and being recognised ...this Friday.....and just about Any Politician would fit the Occasion.
No names, no packdrill.
Sorry David and all those other people who are not suppliers of homes to people. You have got it wrong. Firstly providing lots more almost free HNZ homes will not stop people wanting the free handouts. Providing free houses will convince all these people that the houses are worthless. That is why HNZ homes get abused.
We all want jobs but no one is seriously suggesting that the Government provide all the jobs like they used to.
Who can remember when the government used to provide all the telephone connections. There was a terrible waiting list, the service was poor and the cost high.
Just let us private landlords get on with the job and give us back the same tax depreciation that telephone companies and any other provider of services expects.
For a start the use of the term 'affordable' which is bandied around regarding Queenstown and other areas houses could be subjected to a judicial review.
This would independently clarify if the wool is being pulled over anyone eyes regarding misrepresentation! Washdoesn'twash
Question for the older/experienced folk on this site - is the housing market supervised/regulated by the Commerce Commission?
If it is, how do we explain the current market in terms of fair trading, pricing and competition?
If it's not, then my question is why not, given that we now view houses as an item that is traded like a consumable?
All market operators are.
Real Estate agencies are subject to anti-trust (As we saw earlier this year with the collusion case).
Fletchers are too. For a lot of their subdivisions, you could argue that they are abusing market power given the constraints and locations of new supply. However, it isn't illegal to be a monopoly, only partake in anti trust behaviour.
Likewise with the regional councils - monopolies, but not naughties.
I can't see why private vendors would be, though. There is no real market power among sellers/landlords unless they control a substantial amount of supply. Sure, it is theoretically possible for 10,000 of them to get together and collude, but not feasible.
The current market sets a fair price based on supply and demand. It's not efficient due to the supply constraints, but I can't imagine how it is unfair between the primary agents.
Who considers houses/property (existing) to be a consumable?
How is it consumed by the end user over a reasonable time period?
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