It would be easy to dismiss some of the findings of the research the Reserve Bank has been conducting into the New Zealand housing market with a snort, and a curt: “Well we knew that.”
However, thinking something and knowing something are not the same. What the RBNZ has done by comparing us with 12 other developed nations over the past 20 or so years has given solid shape to ‘facts’ long assumed - and by doing so has actually established said ‘facts’ as being a rather more, even more, decisive factor in why our homes cost the earth, with the moon thrown in for good measure.
I could have told you before that we have expensive houses, we took too many migrants and our mortgage rates had dropped a lot, while we hadn’t been building enough new homes.
But consider for a moment, these key findings from the RBNZ research and analysis (bolding is mine):
• While several other economies have experienced increasing house prices in recent years, the rate of increase is the highest in New Zealand.
• Among the economies we consider, New Zealand has seen the steepest decline in mortgage rates since the Global Financial Crisis, and almost the strongest increase in population.
• Despite the rapid pace of residential construction in New Zealand over the last decade, the number of dwellings per inhabitant remains low and below the average for the OECD.
Okay, so that doesn’t say our mortgage rates went down a lot - it says they went down MORE than any of the other countries in the sample. I did not know that.
Also, it doesn’t say our population increased a lot, it said it was ALMOST THE STRONGEST among the sample. In fact Australia ‘beat’ us. And our across the Tasman cousins have been known to experience a bit of froth in their housing market as well. Maybe a pattern here, huh?
So, sometimes, stating what might appear to be the ‘obvious’ is useful when it is backed by 20 years worth of data, particularly if that data suggests that the situation was actually worse than some (certainly I) even thought.
I knew, yes, that our mortgage rates had dropped by plenty obviously. But I didn’t know that our mortgage rates actually dropped by so much more than other countries. And yes, I knew the population had grown a lot, but I didn’t realise perhaps how much it had grown by over a long period compared with other countries.
Add in the already well documented housing supply and planning constraint issues and you’ve got to say it would therefore be a shock if our house price rises HAD NOT been among the top in the world.
And I will now draw the conclusion that the RBNZ didn’t (and I suspect wouldn’t dare to politically) and say that we have grotesquely overblown house prices because we weren’t building enough houses at the same time as we were pumping thousand upon thousand of extra people into the country - and interest rates were falling. The latter bit of course enabled people to pay ‘too much’ for houses when competing against everybody else, using a tidal wave of borrowed money that’s now engulfing people as mortgage rates go up.
If you were going to set out a recipe to try to get yourself the most expensive houses on the planet, you would… well, do what NZ has done. You would do exactly what we’ve done. “Expensive houses? Look, just don’t build many, then flood migrants into the country and then drop interest rates loads so that everybody can just about afford to borrow a truckload to compete against everybody else and bid the prices of houses up, up and away.”
Voila. Welcome to New Zealand in 2022.
Okay, plenty of you will be saying again, ‘We knew this’.
Look we all THOUGHT it. But the point is, here it is in plain black and white. And it’s now unavoidable. We ignore this information at our peril.
I have said this till my face changes colour, but I will say it one more time, this country urgently needs a population strategy. Preferably signed in blood by all the major political parties. It’s the biggest priority.
There are those who might say migration policy is the biggest priority. No. It has to take second place in priority to population. We decide what size we want the population to be at any given time and the migration policy has to be worked out as a subset of that.
A population strategy. It’s urgent. Just do it.
What else?
We can’t let housing construction fall away again and get so out of kilter with requirements. It takes us a long time to get up a head of steam with residential construction (the detail of just WHY it takes us so long is something for looking at too).
At the moment we are consenting loads of dwellings to be built - over 50,000 in the past 12 months. But as somebody once said, you can’t live in a consent. And the evidence is mounting now of a very rapid slowdown coming in the residential construction sector. Any industry is likely to be cyclical, but the fact is we can’t have a situation in NZ where we keep going from boom to bust to boom and back.
How could this be controlled? Well, Kiwibuild was a bust, but it doesn’t mean governments should rule out in future large scale involvement in house building in order to keep consistency. It needs to be thought about. We need smooth housing supply.
Mortgage interest rates. This is a, sorry, interesting one. You can’t control interest rates (despite what some tried previously), as these inevitably will reflect what goes on in the global economy. But you can have some control on how much people borrow. Mortgages are just too big now. Unless we return to a low interest environment again some people are in for some years of struggle.
I would suggest the Reserve Bank should move ahead and introduce debt to income limits as soon as able.
But what about something broader too? What about looking at limiting the proportion of lending banks can put into houses? It would be difficult and would cause ructions, but definitely now is the time we really need to think about this. Our banks have become life support mechanisms for the housing market monster.
And then migration. I know I said a population strategy has to come first. But I’m nothing if not a realist. Until such time as we get one (and let’s be hopeful and optimistic) we need to seriously look at migration.
The borders are open again. Politically it would be too easy to just open the floodgates again. We can’t do it. Not unless there’s an immediate housing and infrastructure response - and let’s face it you know there would not be.
I thank the RBNZ for this research. Stating the obvious maybe. But in a very good way. It’s clear. There’s no arguments.
The things we’ve done in this country in the past 20 years have been a one-way ticket to ludicrous house prices.
It’s up to us to take these lessons on board. We can’t turn back the clock. And I fear the die is cast (as I’ve said before) for New Zealand always now having ‘expensive’ houses.
But we know very clearly how we can stop making matters worse. It’s up to us.
194 Comments
Realistically, there's now way around immigration.
We simply can't train and pay enough nurses, surgeons, teachers, professsors, IT people, builders etc.
We would need to do a massive transformation in the education sector, e.g. free tertiary education plus incentives for people to actually take it up instead of slaving away in their less qualified jobs. At the end of the day, living human beings need to support their lifestyles and many people are just too busy to get by.
Most likely an universal basic income would free people to pursuit these opportunities but then again we'll lack wage slaves that do the simple jobs and an UBI would need a major tax reform to finance it. For this we would need to move away from taxing labour and start taxing capital, big corporates and the wealthy more.
Immigration is inevitable but it does not mean a free for all. We need a good immigration framework that makes it easy for qualified people to come here but also takes into consideration things like infrastructure etc.
What it sounds like you're implying is we would need to adjust policy so that far more people choose to enter these necessary jobs because it makes good economic and lifestyle sense. I.e. being a nurse, teacher, surgeon, builder etc. works and allows the building of a viable life for a family here in New Zealand.
And that to do so would mean addressing the massive tax imbalance that has pushed asset values ridiculously high through speculation supported by policy, with the result houses would relate far more realistically to incomes.
Immigration is a sticking plaster over the entitlement mentality driven refusal to govern for more generations of New Zealanders.
Great comment. I absolutely believe the current system cannot train, or retrain, enough local workers in maths and sciences when 43% of our working-age population is functionally illiterate to participate in an advanced economy, provided we can still call ourselves that.
Then you also have the vested interest in media, academia and right-leaning political factions to maintain status quo on unbridled low-wage migration.
OK I love maths and science; did so as a kid at school and then studied them at Uni, remained interested while I earned a living as a computer programmer/analyst and still study them for fun now I'm well retired. But don't overstate their value. The best computer programmer I ever met hated maths. My wife is an accountant - she just uses the minimal maths required for her work. Maths and science are merely tools. So great nurses need modest arithmetic but not maths; they need good English and an understanding of NZ culture more than they need maths. With modern computers carrying the computational load we need less maths than we did in the past.
You should remind your mate the computer programmer that programming is a subset of maths.
Functional programming is just lambda calculus. Type systems are category theory. And so on...
Anyway, Woke-tearoa seems to be far more interested in learning stone age superstitions and customs than anything actually useful in the modern world.
Brock, mate, you're sounding like a talkback caller in that last sentence. Stop watching the Sky News channel over there, it's making you angry :D Calling everything woke is one of the signs of the downward spiral.
Plenty of folk are inadvertently doing maths without appreciating maths deeply. Much as we here are all creating beautiful English literature in the comments section, whilst probably not having enjoyed it as a favourite subject at school.
While i understand your view, I think that needs to be challenged. The reasons behind it it are fairly obvious - limited positions, poor pay (not for surgeons - the medical council is the problem there), have to go to the major centres for the best opportunities. But at the end of the day we should be moving away from immigration and finding ways to train the people we need. That means the Government putting in policy, getting away from our blinkered low wage economy and taking the steps to develop what is needed.
I don't believe in a UBI. I think that fundamentally people need to understand that if they want to live they need to work. We don't teach kids that now. Indeed many of the kids i talk to seem to believe work is optional. There are some serious gaps in their basic attitudes. Referring back to a comment i made a few days ago, if society is on the slide towards final collapse many of today's kids would really struggle to survive because they don't have a work ethic or even and understanding of how to help themselves. they will however be able to steal it from someone else...
In fairness, compared to earlier generations the welfare state is less generous than it was - with the exception of the universal pension that has not been cut while many others were.
people need to understand that if they want to live they need to work.
And people need to understand that if they want these critical workers they need to enable them to build a life. That means we can't have low wages and an automatic entitlement to free wealth from having earlier owned land.
The idea that young people aren't working hard and saving hard is out of date and out of touch with reality. But why would someone choose to train for a low-wage job in a critical area - and stay here in NZ doing it - when tax and housing policy penalises them for doing so and sees them funding the lifestyles of others more wealthy?
"Free wealth from having owned land" is a false perception. The wealth only comes when one speculated on property. Someone who owned land before the market went stupid, retained it through the period and still has it with no intention of selling is not "wealthy". They likely borrowed to the hilt, having saved for more than a few years, to get the property.
Land value is not wealth unless that value returns a real income (in actual dollars).
No your bank will recognise it as an 'asset'. But that asset may have a bunch of debt loaded against it. Besides assets are liabilities in that they generate costs, and you have to have the income to meet those costs. Owning an asset doesn't make you wealthy as in having lots of money, but it gives you the potential to convert it to money.
Consider this; the banks generally love you when you borrow from them and you have good, unencumbered assets to secure the loan. Why? Because they can get their claws into the paper value of that asset without the liabilities. Their loan documents ensure you carry all the risk.
Wealth only comes when you use the assets to generate real income. This is only achieved by making the asset work (e.g. farming), selling (actual value), or borrowing against some 'market value' of the asset (agreed value for a mortgage).
My bank recognises my net wealth effectively as assets minus liabilities, which FYI is a pretty normal accounting approach. Money is only one form of net wealth, and this is also represented commonly on balance sheets alongside other assets, which can be various. Wealth is not equal to income (your last sentences).
I didn't say wealth is equal to income. What I said was wealth only comes when an asset is used to generate income. A lot of people in auckland were sitting in properties they owned for decades that had a 'paper value' of $million +, but they were not wealthy because they did not have the income to reflect the value of that asset , and they did nothing to convert that wealth into something tradeable. people often confuse assets and wealth. Banks pool them because assets are convertible.
That's where you're confusing asset wealth with the absence of wealth. Someone who owns a $5 million piece of land is not lacking for wealth, though they may be cashflow poor at a point in time. The fact that assets are not yet converted into liquid funds doesn't mean a person is not wealthy or has not received increases to their net wealth. It's making the mistake of thinking the only thing that matters is cash - when that itself can change in value.
Do you mean this? "That means we can't have low wages and an automatic entitlement to free wealth from having earlier owned land." So you're saying that people should be taxed on the value of assets they hold? That is such utter BS and rank stupidity. to be able to tax an asset based on a theoretical value can never work, and if applied to land would put many on the street. it is nothing more than a jealousy tax. You have indicated that you own land ("But neither I nor the bank agree that land wealth is not part of one's net wealth."+"My bank recognises my net wealth effectively as assets minus liabilities") So then you are suggesting that because the market changed and the theoretical value changed, then you are happy and capable of paying tax on that change in value? Or alternatively as your share of the ownership changes from the bank to you as you pay off your mortgage, and your asset value increases then you should be taxed on that? Taxing asset values are is essentially unworkable and would be unfair to the majority who sacrificed hugely to get their own home.
As to your comment "low wages and an automatic entitlement to free wealth" you are conflating two separate issues that are unrelated at the level you apply it. I think I agree with a deeper point you are trying to make that the Government has failed dismally in properly regulating the property and credit markets which has allowed the economy become significantly unbalanced and vulnerable. But more than that there seems to be a cultural attitude from the politicians that NZ cannot afford real wages that are comparable to Aussie. I disagree with this attitude, but big business lobbies hard to undermine working conditions so I cannot see it changing anytime soon.
It's a nice rant, but all points have been countered in policy discussion and practice before, and LVT does indeed exist elsewhere and is completely workable (and surely you're aware Rates have a value component?). I would suggest engaging with wider content on it rather than just yelling about it, from Milton Friedman to here. And of course, recognising that LVT balanced with lower income taxes would make most folk better off - thus I'd have no complaint about a slightly different balance of taxes I pay.
The screech that it's a "jealousy tax" is silly and can be said of any tax: income tax is just a jealousy tax levied by those who lack the smarts to compete in today's economy but possess assets and want social services.
Exactly right, how many are working in different fields because pay and conditions are better. I refuse to sell my skills, qualifications, and experience at a discount and poor treatment. I have effectively down skilled massively into an industry that pays alot more, the student debt I paid off was an absolute waste of time and resources.
The salaries of Med Lab Techs are horrifying! NZ should be ashamed and embarrassed for paying qualified staff such pittance.
I suspect part of the problem is the way many Kiwis (those older managers and administrators in the DHBs come to mind) arrogantly look down on tertiary studies. Truth to be told, some (many?) of those older managers/administrators in the DHBs are (in my experience of having worked there for years) dumb as heck and unable to grasp how to do even basic management and tracking tasks in ubiquitous software such as Excel. But hey, they have many years' worth of experience, so you're supposed to respect the inefficient, idiotic ways they're doing the stuff they've apparently always done, even though they have obviously and regrettably not been able to master those tasks in all those years.
Good on you for finding something more rewarding. NZ's loss, though.
The hierarchical structures of these bureaucracies and political nature of them relies on the top suppressing the bottom… they’re not geared for long run nor strategic efficient driven thinking… what matters is how many are under me and how much cost can I limit to impress those above me.
Good article. It is strange that population growth has arguably the biggest impact on NZ lifestyles and yet it has never mentioned or debated, other than by NZF and TOP. It seems that the politicians are captured by big business who see population growth = GDP growth = leveraged profits is all that matters, whereas GDP per capita and median disposable income and even lifestyle (however measured), which are often contrary to large scale immigration policies, are what really counts to voters.
The Greens have been talking about an NZ population policy for a long time
2008
https://www.nzherald.co.nz/nz/politics/greens-family-policy-slammed/FCS…
2016
https://www.rnz.co.nz/news/political/315879/greens-would-cap-migration-…
This more recent article is a survey across parties. It seems the greens are once bitten twice shy, and want to focus on immigration before having a population debate, but they're signalling they're still interested in that
2021
https://i.stuff.co.nz/business/125043897/population-policy-debate-comes…
Please show where their policy is that "enforcing any immigration policy is racist".
Here's their 2020 immigration policy for your reference https://www.greens.org.nz/immigration_policy
Hmm, no mention of the wisdom of growing population in the first place? "Effects of population growth on the environment, economy, and infrastructure need to be actively managed and planned for." Seems the Greens have gone from a party that recognises the impact of human activity on the planet, to wanting to bulldoze the bush to make more room for human sprawl.
Green Party policies come from the bottom up rather than the top down. If you want them to refocus on the environment, join and exert an influence. Please.
Unfortunately the party is divided between the environmental side and the human-centred social side, and this obviously causes conflicts. Personally I am on the environment's side - humans seem to the be one of the few species left that isn't endangered.
Unfortunately the party is divided between the environmental side and the human-centred social side, and this obviously causes conflicts. Personally I am on the environment's side - humans seem to the be one of the few species left that isn't endangered.
well that’s not what the ‘other half’ of the Greens are telling us… climate change is endangering humans
I have engaged in the past, however I see little to work with now. Unless the party is willing to engage with the core issues of environmental collapse, ie depletion, consumerism, overpopulation etc, they have little reason to exist. Being just another growthist socialist party that believes incrementalist technophilia is anything more than BAU hopium, just doesn't cut it. Ditching plastic straws is nothing more than feel good propaganda. Being labelled an "ecofascist" by a party official, clarified the gap between my own thinking and that of the light green reds!
Not quite "enforcing any immigration policy is racist", but not far off it.
He was also concerned about the prospect of international students losing working rights after their studies, and the roughly 16,000 overstayers in New Zealand. When we contextualise that many of the students and workers on low wages are from India and the Philippines, it kinda feels like we are creating a white-immigration policy - whether intentionally or otherwise.
Green Party Immigration spokesperson Ricardo Menéndez
Its nothing to do with their ethnicity they were here to educate not get residency through the backdoor & take jobs from NZdrs. If the overseas student education sector cant survive without promising residency "winkwink" then we don't need it & the unemployed educators can move to the jobs the students were taking.
Yeah, I remember the fuss Richardo made when he was trying to get his Mexican partner into NZ during Covid. https://www.rnz.co.nz/news/political/437180/green-mp-ricardo-menendez-m…
TBH I don't think it's a 'being captured by big business' issue, I think it's more a 'red and blue are both lazy and know we don't know any better' issue. If the population increases 3% you can then turn around and say look! GDP growth of (probably) higher than 3%! You expected 3% didn't you Joe Public? How good we must be at governing!
Both Labour and Key's Nats did this while GDP per capita floundered.
It certainly is not the source of all problems. You can turn it round and say wherever there is large scale immigration then there is a problem. So if most care home staff are sourced from overseas then NZ clearly has a problem with pay and training and especially focus in education. My three daughters work as admin/receptionist, social worker and logistics management - two with NZ degrees. They never dreamed of going into nursing or working in a care home. In their peer group being a nurse is low kudos not high. Surely Covid-19 should have taught us what jobs really matter.
What about a person who sees a problem in population growth? Seeing as the growth has come from deliberate importation of people, it's kind of an obvious target. Personally I like beating the population drum, because most are too stupid to understand the concept of "finite planet" and/or too weak kneed to do anything about stabilising population, even if they do understand. Are there other problems? Good question. I'll try to think of one that wouldn't improve with less humans weighing on it?
No one voted for it. It was never campaigned on by anyone to allow our population to grow by a million or more. A lot if recent immigrants don't want it to happen either. A certain political party lead by someone rhyming with "Ninnie", campaigned on stopping it. Then did nothing while they enjoyed the baubles of power. I got banned last time I brought this up. So if that happens again ...bye for now.
I arrived in NZ 1997 the population was 3.781 Million in 2021 it was 5.122 Million an increase of 35.46% in 25 Years. Stats NZ shows low productivity growth over this period no exact figures but about 1% PA of which the biggest contributor was primary industries which Labour/Greens/Maori Govt are trying to destroy. Solution - void all unecessary rules/legislation that add no value or simply delay progress and make redundant the bureacrats involved, new immigration only for actual vacancies that cannot be filled by locals and with conditions eg residence comes with requirement to remain in that industry and NZ for 10 years secured by bond.
Many on here have stated and been backed up by numerous links by Audaxes, bank lending sets the price of houses rather than interest rates. And banks need controls from above, they are simply not capable of doing it themselves. The result of controlling lending volumes on houses will result in lower profits. With $6b syphoned from the economy, majority from unproductive housing, this would be a great thing.
Population setting? Absolutely essential.
$6b a year to the banks, estimates of $20b for multi-national corporates in general, $16b non-means tested Super.
Angry fists in the air when a major road project encounters a $400m cost blowout. Or minimum wage goes up at a cost of $458m to the economy. Or the idea of free public transport at an estimated $320m per year (3 month half price = $40m cost).
So now that we know this, now that it's incontrovertible, time for the hard questions:
1) Do we engineer a soft-landing using a ZIRP or FLP programme specifically for refinancing owner-occupiers that can't be used to pump investment property gains.
2) Do we have a conversation about how prices got massively ahead of wage growth until the borders had to be slammed shut, and whether that influences future migration policies?
3) Do we accept that there is need for things like 'aligning tax brackets with inflation' and other such basics of tax admin, or else everyone goes silly looking for get-rich-quick shemes that the country is too politically coy to respond to in a timely fashion?
4) When can we expect resignations?
No, I'm capable of accepting that everyone on offer at the moment is weapons-grade garbage, I don't have any tribal affiliation and actually making NZ a better place to live is more important to me than running interference for political brands who don't actually care about me.
You are just gonna shit your pants when you find out who the actual government is, and has been, for close to five years now.
Klaus Schwab and the WEF? I know people are sick and tired of the conspiracy stuff, but I'm still confused as to how Ardern is one of the poster children for the WEF when it's clear she know very little about economics or shows little interest in it.
Economics reflects how people react to stimulus and situations which is why economists and politicians make so many mistakes by not interacting with their electors and listening with a view to creating policies that electors actually desire or at least the results.
If Jacinda knew anything about economics they would refuse to have her as their posterchild, and she would refuse to be their posterchild. All the WEF's posterchildren throughout the world have shown their disinterest and lack of understanding of economics. The whole point of the WEF is to have these kinds of people "in charge."
Lesson: John Key and Bill English, the supposed financial wizards whose stupid financial policies have cost the NZ superannuation fund $32.2 billion dollars and counting: https://www.nzsuperfund.nz/about-the-guardians/purpose-and-mandate/cont… have totally screwed this country.
And this is yet more evidence of their immigration policy - that they did not campaign on - has left us with a legacy of expensive housing.
Couple that with Gerry Brownlee ruling out requiring newly built houses in Christchurch following the quakes - when 90% of the money was coming from insurance - from being minimum homestar 6 and you can see that National's short term policies have resulted in yet more crap and expensive housing that will need upgrading this century to reduce our energy consumption in an energy constrained future.
The evidence is clear - National is the party you vote for if you are only interested in short term gains and don't care about the future.
Don't vote National.
You're on the money.
We either pick the blue lot that doesn't even regonise there is a problem or the red lot that pretends to fix it all but fails at delivery and actually achieves the opposite outcomes.
One massive problem along the way is the resistance of Kiwis (or humans in general) to profound changes.
Labour had the opportunity of a century to improve the country thanks to a very strong election result AND a once in a lifetime pandemic.
Unfortunately, they were too busy firefighting rather than enacting true transformative change.
So what's next? Kiwis will continue to chose between the red and blue pill again and nothing will change. It's based on bad habits and insanity (doing the same thing over again but expecting different outcomes).
What we need is a player with progressive ideas (like TOP) and an interest in winning the election (unlike TOP).
So perhaps a new party?
Perhaps not a new party but a change in generations - the 4th Turning provides a pretty good model proposing why we are dealing crisis after crisis after crisis at present. If the Strauss-Howe theory is true, many of the problems we are facing will be resolved later this decade as the boomer generation head happily off into retirement and the millennial generation become the driving force of modern society.
The interim years could get messy at boomers (like Putin) try to leave a legacy and use the milleneal generation as their cannon fodder to achieve their own selfish endeavours. Just as the parents of the greatest generation did to them in them resulting in the chaos of the 1929 - 1945 period (asset bubble, depression, war - with 2008 being the current equivalent to 1929 and a resulting depression (this time around) for those who don't own assets).
Labour might be a steaming pile of horse****, but 7-house Luxon and open-borders Seymour are campaigning on getting NOM up quick smart, re-instating interest deductibility for residential investors and repealing the Brightline extension.
Since I think over-priced housing is our biggest problem and the cause of many of our poverty and inequality problems, those policies mean they won't get my vote.
And yet the biggest house price spiral no doubt occurred under Labours watch.
I do not have exact figures, but, Labour politicians own plenty of houses.. Clarke has house investments as well.
Fair assumption to make is that majority of all our politicians of any hue, are financially incentivised to keep the market from correcting.
I vaguely recall it was over three houses per National MP (perhaps 3.4), a bit over 1 per Labour MP. Perhaps 1.5. Clearly different.
No argument prices have gone up terribly over the last five years, and they bear blame for their ascribing to the idea that prices should only ever go up. Aside from that, they seemed to actually make starts on policies to address the tax privilege that property speculation has had.Then of course, COVID and huge central bank welfarism for asset speculators occurred...
But your last sentence - absolutely right for most. Few seem genuinely interested in bringing house prices down. TOP, a few Greens perhaps?
Uhh......By 2015 insurers had forked out roughly 65% of the estimated total rebuild cost........
The Reserve Bank currently estimates the total construction cost of the rebuild to be about $40 billion (in 2015 dollars), comprised of slightly more than $16 billion each for residential and commercial construction and around $7 billion for infrastructure.
Five years after the damaging February 2011 earthquake, insurance claims have yet to be fully settled. As at 30 September 2015, insurers had paid out $26 billion, with the median insurer having paid out around 80 percent of estimated final payout (figure 4).
https://www.rbnz.govt.nz/hub/publications/bulletin/2016/rbb2016-79-03
"I could have told you before that we have expensive houses, we took too many migrants and our mortgage rates had dropped a lot, while we hadn’t been building enough new homes."
That was the politicians (National & Labour) plan to make Kiwis feel good about their house prices rising. So that they would ignore an economy being driven to endemic low wages by excess immigration allowing employers to keep avoiding productivity investment in training NZdrs & spending capital.
The concurrent diversification into Tourism (at one point bigger than dairy) on the back of the LOTR & low cost flights plus the overseas student "Education" sector (= back door PR & citizenship for NZ & Oz) extended the economic house of cards.
All these chickens are now back home roosting, deciding their next move.
Many of the asian tourism owned hotels, bus companies , gift shops etc exported a huge ammount of the tourism cashflow, leaving low paying jobs for migrants, the kiwi workers where never and are not now interested in $25per hour jobs in Queenstown making beds, cleaning rooms and serving beers. Jump on Trademe and search for flatmates wanted Queenstown....... where would you live? Young kiwis wanting adventure maybe more interested in going to Europe / UK and working in pubs there......
I cannot see wide body jets full of Chinese tourists returning for many years, cruise ships maybe, there are lots of oldies with money to burn and limited years to burn it in.
In nz we have so many foreign owned hotels. Our banks are owned by Australia. Nzx is over 75% foreign owned.
This is why we need to be so careful when suggesting we should bring in large overseas companies to provide build to rent solutions. This will be another huge funnel of capital leaving our country ever week.
Our PM won a surprising victory in 2017 by promising to restrict immigration, build a 100,000 affordable houses and being very dismissive of the wealth effect preferring to target well-being. She certainly knew these things were toxic and we voted her into power.
Then when in power she changed position somewhat. Pushed immigration up to record levels, built no affordable housing and championed slashing interest rates. Oh well.
Facebookism.
Having worked in private (mostly) and public sectors, I have few illusions...but mostly the response was managed pretty well, considering the magnitude of everything that was done. Probably why National said "oh we would've done it basically the same but more or better"... A few mistakes and failures, as would absolutely be expected when dealing with new things at high speed. Far better than many other countries managed.
Hard policy decisions can not come from Labour or the Nats. We will need a third party to push back on it.
But establishment media has been captured by the rules which government money has been handed to them on. No debate will be had because they are just Pravda now. They lie to your face and completely fall silent when what they advocate fails or when policies fail.
Just remember that the establishment media deliberately refused to talk about immigration in 2020 and used its veto to prevent it becoming an issue. They are always the lapdogs of establishment power and always will be.
It seems to me that countries that open up land for easy development have lower house prices, thinking north of Brisbane sunshine coast etc..... sure stupid low interest rates have pumped up prices, but by lowering them 40% by putting rates back to normal is now obviously happening. So a combination of interest rates at reasonable levels, debt to income limits, more land available at mush lower prices and a serious look at construction materials monopolies, maybe we can get prices lower..... Having enjoyed how quiet nz is I am not wanting the tourists back, but Hospo dies if they don't come and i like a cold beer in Queenstown every so often......
looking at international events asset prices are going way lower here with no policy required.
As I mentioned the other day when this research was released, there is no focus and / or speculation as to what the bubble will do to consumption. The question is too big to answer and the RBNZ or Treasury has already released research that shows that the bubble has a benign impact on consumer spending.
I think their research is going to be turned on its head.
"Stating the obvious" also generally gets you labelled a Doom Goblin (lol) because our society thinks that 'greed is good' and 'getting ahead' (of your fellow man?) by speculating on housing with debt is a highly respectable way to conduct oneself.
So are you sure you want to state the obvious when it results in ridicule?
Or have we simply created a toxic society that has lost its morale compass. Where short term financial gain for the few is more important than positive social (and financial) stability outcomes for the many...not just in the present, but in the years to come.
"Stating the obvious" also generally gets you labelled a Doom Goblin (lol) because our society thinks that 'greed is good' and 'getting ahead' (of your fellow man?) by speculating on housing with debt is a highly respectable way to conduct oneself.
So are you sure you want to state the obvious when it results in ridicule?
Attitudes and behavior only change usually in dire circumstances. And as it relates to the NZ economy, it's going to take a 'big crash' for this to happen.
By the way, one of the smarter people in Aussie economics and finance Christopher Joye y'day:
Financial markets are starting to price in RBA rate cuts next year, which makes sense in view of the housing armageddon that one of the fastest hiking cycles in the developed world---in the most interest rate and house price sensitive economy in the world---will trigger...
A very small number of us have been saying what Joye has been saying for many many months.
I don't think the NZ govt, RBNZ, NZ media, and the sheeple pay much attention to Chris Joye. He's an Aussie after all. It's unfortunate that we don't have someone as sharp and intelligent.
Back in 1999 when houses were affordable this is the interest rates we were paying.
Sorry, but a number of us have been saying for the last decade on this site that if you keep doing x, you will eventually get y.
And you can go back to Adam Smith's Wealth of Nations, and the like of Alan Evans et al to show that reality mirrors the theory, and knowing that once, you can keep looking forward as to what will happen in the future.
Yes, of course, things like immigration, cost of finance, etc. matter, but they are all in effect multipliers off the back of how supply can meet demand, ie they have far less effect if supply can more easily meet demand.
And the predominant supply constraint is land availability to meet demand in real-time. The ability to achieve this or not is based solely on Govt (both Central and Local) land-use policies.
Real articles and outcomes going forward, if this newly found knowledge to some is to mean anything, should be used to change policies so that at the bottom, when and whatever that is, that going forward we have a stable housing market that can meet our population needs, whatever we have decided that will be via our immigration policy, etc..
And your last couple of sentences, basically saying we can't make it better, but maybe not worse, is not worthy of being written by Interest.co.nz.
We have a Govt., and a RB running blindly forward into the future by looking over their shoulder and telling us what the last Govt. should have done, or what the facts in hindsight are telling them they should have done.
But never doing it going forward.
Nice to have you back Dale Smith, whoever you are. Some common sense never goes amiss. Sadly common sense is not part of the Labour Party agenda nor was it under Helen Clark nor was it since welfare was introduced in the 1930's. Welfare will kill the West. Welfare is killing the West, today & again tomorrow & will be again next week. Welfare has failed us & after nearly 90 years, we know it continues to grow to the cost of the whole of nations. That's just the sad fact. Homes for the people at the bottom end of the food chain is still the real problem. There is no shortage of high priced homes for anyone. TradeMe has tens of thousands of them. But the bottom dwellers are where the real problems lie. Those 20,000 families who just want a roof over their head cannot afford the 20,000 homes available on TradeMe. These people are very under educated, very lazy in many cases, very sick in many other cases. Their families are totally dysfunctional, if indeed they have one. The school system is also so poor at attendance let alone subject matter, that a lot of people fall through the huge cracks in almost every classroom in the country. Education is poorly led, poorly thought through & even more poorly delivered. It has been let down by its Wellington administration in a dismal fashion time & again for almost 50 years - that I'm aware of. It could be longer. I say it again - we do not have a housing shortage. We have a large & growing section of the population who cannot afford to buy a house, nor will they ever. We have a failing education system & a failing family system, both with very ugly sides to show. Indeed, therefore, we have a failed leadership system by default. Sigh.
Every body is forgetting or maybe too timid to address the other exacerbating factors. Namely, a corruptly rigged market for the supply of building materials (look what is falling out of the GIB business. This is the tip of the iceberg), and the old boys network that artificially constrains the supply of residential land.
When you look at these and the issues raised in the article, they all have the same effect, it is blatantly obvious that the situation we find ourselves in is not some accident, it is one of very deliberate and long term design. Labor is as bad as National, but at last it is starting show some signs of changing. National on the other hand practically exists only to promote this situation. Only this morning Nicola Willis was saying that the answer to our problems is to open the flood gates again. As National will win the next election, here we go again. Rinse and repeat. Nothing will get better and we will slip further in the direction of a South American banana republic. Chile or Argentina? Once thriving economies, destroyed by governments that have done everything that they can to favor the wealthy, punctuated by the reactions of uprisings and revolutions. That is our future if we carry on down this path, which it looks like we will.
Again I repeat that the only hope that young Kiwis have is to leave the country and make their lives in an economy that is managed with some decency.
NZ has one of the best rural road networks in the world, and ironically Auckland City has one of the lowest road widths (totally road paved areas for any city in the world). And if any new development is designed to meet the emerging trends, then the development is the destination.
But the main point everyone continually misses is that if you can buy the land free from land banker speculation, ie at a far more affordable price, then you have all this extra money that can be used for infrastructure and PT if needed.
Or imagine if house prices didn't increase 30 - 40% during Covid. A FHB could buy an existing house for $600k instead of $800k, and have $200k spare borrowing capacity to install a heat pump, or solar panels, or double glaze, or replace the roof. Or all of these aforementioned things combined.
Yes, but the reason they increased in the first place, is because the price of land, ie land use policy, effects has a multiplier effect on anything that is built on top of it, simply because if they don't understand first principles, then they don't understand any other principal that comes thereafter.
If you understand the land use economics, then by default you understand everything else.
NZ housing is easily 50% overvalued, and that is the potential for the fall. I'm not saying it will happen now, but it's there for the falling.
Think of it like a forest that is allowed because of bad land-use policy to become overgrown with plenty of tinder. Now all you need is some idiot with a match.
And the result will be New Zealand becoming Turkey 2.0. This is no joke. As we are losing more productive industries, talented young kiwis and continuing to speculate assets prices, the cost of living will continue to go up, to a stage that, RBNZ will be unable to lift its OCR as it will effect financial stability.
At an ANZ business breakfast in the morning, ANZ New Zealand CEO Antonia Watson praised the Government for its new free trade deal with Europe, but warned that immigration should be a priority for it .
I'm shocked ...
At an ANZ business breakfast in the morning, ANZ New Zealand CEO Antonia Watson praised the Government for its new free trade deal with Europe, but warned that immigration should be a priority for it .
Antonia Watson is calling the shots now. To protect her balance sheet?
These ANZ trade delegations are a joke. I was previously asked by the ANZ (Australia) to give a presentation to a trade mission to South-East Asia but it was cancelled at the last minute. No skin of my nose and still went along to see what kind of businesses they were supporting. To be honest, it was a mess and the ANZ honchos barely interested spending more time talking among themselves and drinking craft beer.
I think we know the problems, those that don't are living in fantasy land.
Unfortunately voters are living more and more in fantasyland, so don't actually want to change anything away from the purple policies that encourage living in fantasyland. Hence anyone who wants to actually deal with reality is maligned, cast out and labelled "dangerous" to the status quo, becoming unelectable for those stuck in fantasy.
Agree - we've ended up with governments that are reflective of the general ignorance that is present within society.
And we've had leaders lacking the courage to do what it is right, because it risks becoming offside with the average (ignorant) voter.
So democracy becomes a toxic downward slide of populists attempting to please the stupid.
As Churchill put it - 'the best argument against democracy is a 5 minute conversation with the average voter'.
Its not just housing. Just look at the effect of immigration on the health system - overloaded hospitals who cant even cope with a flu season anymore. The dirty little immigration secret is that once all the "skilled" migrants of working age get permanent residency here, they are then allowed to bring over their elderly parents as well, who then qualify for free healthcare, and after 10 years of being here, a Govt pension. The taxes that the one migrant pays goes nowhere near being enough to cover the support of themselves and their parents. Its truly time that we have a referendum on the subject of immigration, because when the quality of life of citizens starts to decline, its time to say enough is enough.
Government recently changed family reunification policies and raised the qualifying period for super from 10 to 20 years NZ residency;
https://www.stuff.co.nz/business/126953153/law-will-make-migrants-and-r…
Personally, I think the super policy qualifying period ought to stipulate a minimum of 5 years working in NZ as the qualifier for immigrants/naturalised citizens. Seems just common sense.
Thats being phased in, and doesnt apply to anyone older than 62 (born before 1960). So doesnt fix the problem of elderly parents (70+) hogging hospital beds.
At least the last National Govt put a stop to the elderly parent visa, but then Labour brought it back as soon as they got in. Half the time the migrants dump their parents in NZ and then leave the country, freed of the burden of supporting them.
https://www.nzherald.co.nz/nz/migrants-parents-left-alone-in-nz/756W56B…
The old "young couple flies in, buys a house, has a baby, brings the parents over, flies back home where they earn more, leaves the parents + baby to sponge off the taxpayer generosity" gig.
70+ year old migrants walking around the streets of Flat Bush with a baby buggy and minimal English speaking capabilities.
Despite the rapid pace of residential construction in New Zealand over the last decade, the number of dwellings per inhabitant remains low and below the average for the OECD.
Huh? Rapid?
Auckland had just about the Western World's slowest rate of building new housing during the Len Brown/Penny Hulse years from GFC to 2017. In 2017 it opened up new swathes of exurban land while also removing some onerous brownfield restrictions, resulting in an increase in building activity.
Slow, below average or if I were extremely kind mediocre - these are all far better adjectives to use.
Yes, it is all relative.
There is always a first-measure question you always ask as to whether supply vs demand is working.
That is, What are the facts telling you - has the price gone up or down after the intervention?
It is pointless for them to claim that they are 'opening up more land,' to make housing more affordable when that causes prices to go up.
And of course, this might seem contrary to what I have always said about fewer restrictions on land supply being key to making housing more affordable.
But it is not. Counter-Intuitive yes, contradictory no. It just means, that both central and local Govt. do not understand how land supply works.
Their wonky thinking is this. When the council opened up the SHA within the RUB, in their minds they are increase the amount of land available beyond the present zoning.
But in reality, all they are doing is highlighting which limited areas with the RUB areas are next up for development, and these areas are already owned by land bankers and now feel the increased pressure from developers wanting to buy them, ie for the number of developers there was even less potential land than under the RUB, so the price goes up.
And of course, these developers have to join the monopoly wastewater infrastructure provider which is council so they get rorted in developer levies to join as well.
And thus, in spite of their heart-felt well-meaning words, the results show their actions caused prices to increase.
The Facts trump their feelings.
Yes exactly, but it is slightly more nuanced than that.
You first put aside all those areas worth protecting like historically areas, wetlands, elite soils, and further future transport corridors (both for new and widening of existing) etc.
And also remove the monopoly infrastructure restrictions from the council and then allow all other lands to have the presumptive right to be built on.
In theory, this makes available so much land that it is impossible to monopoly land bank so there is no money to be made doing this that they don't even try, or if they do, as you point out, you just go past them.
So land can be bought at not much more on the fringe than its rural land value, and will make all land going back into the city center cheaper as well.
Any land that does get developed will be at the market rate, which could be more or less, but always affordable, and which the govt. can still affect the demand (but not the supply) of by their immigration policy for example.
What you will also find is developments happening closer to the city because it is more affordable as well.
But there are a lot of bad faith actors out there as they are so tied up in their ideology, as long as they have any input they will try to circumvent the rules.
So in theory the present Govt, policy statement on urban development says the councils have to give more regard to affordable housing but render it mainly useless by using words like well being ie somebody somewhere doesn't agree with it, plus elite soils becomes any soil that council doesn't want housing on, wetlands are any land that it rains on, etc.
If this is tried at the top of the market then it could cause the value of existing properties to fall or not increase so would not be popular, but if put in as policy at the bottom of a fall due to the inevitable aftermath of a booming market(like now), then there would not cause any further fall, but also no unsustainable increase, only a stable affordable housing market thereafter, leaving excess funds in people hands to save, or invest in more productive assets.
That's how it already works in other jurisdictions.
Couple that with an LVT on the unimproved value of land along with complementing cuts to income tax, and you might go a long way to ensuring we have enough teachers, police, healthcare and other important workers in the future. Fancy rewarding productive work instead of asset speculators!
An LVT is problematic as at its heart it is just another tax, going to who, the council? As you revert back to a Command and Control structure, you lose most of the benefits in bureaucratic meddling, time wastage, and extra costs.
Again it's just an added cost hidden as a solution to a problem that has been unnecessarily created. It's hard to make things more affordable by adding more costs.
It's just best to remove the problem to begin with and there will be all the incentive in the world for land bankers to move the property on once they realize its value is going to fall anyway.
And it can punish people unnecessarily.
For example, if the council doesn't provide infrastructure then you can't develop but still get taxed. Also, a farmer on the outskirts of the city should be allowed to farm as they always have, given that it will change hands in the future anyway and then its use can be matched for what the surrounding developed areas are trending towards.
Most of those points apply to all taxes, while LVT lacks some of the obvious negatives the likes of taxing income from productive work has. And better the LVT go back through society via council / govt investment than out to Australia as just more interest on higher prices. "Another tax" is obviously solved by taking away that taxation from elsewhere - e.g. productive work. LVT also have the advantage of being unavoidable, unlike income tax - which can be creatively avoided.
Zoning and valuation - as we already demonstrate we can practice - takes care of others. And administering LVT more complex or burdensome than administering income or taxes??? Extremely, incredibly unlikely. More likely to be the opposite.
Easing in LVT or providing a time-limited period of exemption when building would also help incentivise better use of urban land.
Good reasons why it's been described as the "least bad tax", and absurd we punish productive hard work as we do in comparison to other ways of making wealth.
But the idea is no zoning is needed, ie you are not presuming what and where the market is telling you it needs.
You 'zone out' the land you can't build in, not 'zone in' the land you can. This is the fundamental difference between the system we have now which is a presumptive right not to build with some exceptions, and the one I'm proposing is a presumptive right to build with some exceptions. The difference is night and day as to the potential land that any one time is available for the market to choose.
Ie you would continually have to create the problem by zoning to offer the solution with an LVR
There is absolutely no need to upzone land for any future purpose before the market decides that it wants to build there. And then the zoning is only retrospective.
^ Ironically doesn't understand land use economics.
You are attempting to make an argument about developer activity, but you are in fact just highlighting a mechanism for reducing land prices.
Simply increasing land supply at the fringe does little overall to affect the relative cost of land across the gradient (or the price of land wrt to distance). In a well functioning market, developers target land that is in fact expensive, not cheap, because that is the signal for demand within a locality. Simply shifting the land price function does not change developer behaviour (in equilibrium), as you suggest.
That's not what land economic theory and practical evidence shows.
And I'm not saying ONLY increasing land supply at the fringe, but remove most restrictions both up and out.
There is a direct correlation between the price of land on the fringe, and the price of the land going in, in any city in the world.
And you are using the word 'expensive' as an absolute definition when in fact it is relative. By international definition, all housing in NZ is unaffordable but within that unaffordability, some is more expensive than others. If given the choice, developers could easily buy less expensive land and pull the market towards them because it would enable them to build better quality at a more affordable price.
And any developer that uses how high the price of land is as a proxy for desirability, won't be a developer for long.
Is Rolleston a practical example of land economics? I don't think anything really happened until Selwyn Council "created" the IZone, purchasing the land themselves to make it happen. The Warehouse Group built their south island distribution centre, and then a great swath of nearly identical houses got built. As the population grew, they started building all the other amenities. Pretty sure that the original infrastructure for power, water and sewage has been updated a number of times, as they only built with enough capacity to fulfill their short-term growth estimates.
It's all land economics, but not the right type, or should I say the best of an NZ version but still a very poor example of what it could have been, for the price.
I did modeling on a subdivision at Selwyn, using their real budget figures, and ran those same figures through as if it was allowed to be done without monopoly restrictions, and what was then a sales price of $198,000 per section could be done, with same developer margins, for $98,000.
What caused the 'flight' to Rolleston, and similar towns was affordability for what people wanted, ie they couldn't buy closer to Christchurch for the same price.
Also, Selwyn is unusual for a county in NZ in that its boundary comes very close into what is suburban Christchurch and that you could work across the border in cheaper Selwyn and easily commute a short distance into dearer Christchurch. The CCC did not like this of course. When Auckland amalgamated into its present form it gave it a huge monopoly reach that was clear of any competing city, and that's why they don't like any growth on their southern boundary unless it feeds back into the Auckland CBD.
In Selwyn, the employers followed after that, which was an initiative by the council, but the council gave themselves breaks they wouldn't give to private developers
The point is, this looks exactly like a town in say Texas, but at twice the price or twice as far out and still dearer than a Texas comparable.
And now the local council is making it very difficult for any further expansion, but in saying that, Selwyn has been one of the most progressive towns in NZ.
"And any developer that uses how high the price of land is as a proxy for desirability, won't be a developer for long."
So developers do not respond to demand signals? e.g. the price vector?
That's a very difficult position to defend, bud. It essentially says that developer activity is orthogonal to market demand for dwellings. Which is pretty counterintuitive to the way any market operates.
"There is a direct correlation between the price of land on the fringe, and the price of the land going in, in any city in the world."
What does that even mean?
Land prices are, effectively, a smooth function wrt distance. There's no such thing as a correlation between the derivative at one point of the function and another. Prices generally decay over space wrt to a whole lot of things. Exogenously adding supply at the upper limit will cause this function to shift. However, it does not really do much other than lower all land prices. The nature is a shift in the land supply curve(s) and not a change in the elasticity of supply or demand. So, simplistically, it produces a drop in nominal prices, but not necessarily a change in relative prices.
Lower land prices are good. But they don't really impact developer behavior - developers still want to develop where demand is highest. This may be mediated by planning restrictions (as in Auckland) but in a liberalised land market, this development will always emanate from the core concentrations of high amenity and, by extension, land prices.
I never said developers do not respond to price signals, I said that a high price is not a proxy for desirability. Big difference.
You seem to conflate the issue of why land prices are different in different jurisdictions with land use policy and any corresponding developer activity. The same developer in say Houston or Auckland may have the same development strategy, but in one jurisdiction he can put the same house on the market at 3x median income as opposed to 10x median income in the other, and yet still make the same real dollar developer margin. It is not about the developer per se, it's about a system that gets a price of less than 1/2 of the other with the same actors.
Re the correlation between fringe and CBD, Best to read up on that here: https://www.researchgate.net/figure/Density-Profile-of-9-Cities_fig4_45…, and follow the link for the full paper. It's the cost of land on the fringe that sets the price for all land going in. and that is clearly shown in affordable vs less affordable jurisdiction in the Demographia Report, http://www.demographia.com/dhi.pdf and as further commented on in the Productivity Commissions Housing Report.
And this sentence, 'but in a liberalized land market, this development will always emanate from the core concentrations of high amenity and, by extension, land prices.' This is not true for most developers, in that many developers' opportunities lie in getting land at the cheapest price possible so they can create extra amenities either within their own development or as part of adding value to the wider area including their own development. Plus purchasers will trade amenities for the price if they can only afford the price.
Re correlation. My point was your comment was nonsensical in what it was saying. Land prices are set (somewhat) by the cost at the fringe. But what your were saying made no sense from a technical perspective. The concept of what you were saying was lost due to the fact you made no sense from a technical perspective.
"I said that a high price is not a proxy for desirability"
Well, you are categorically incorrect. It is as simple as that. Price is a function of demand and demand is a function of utility. Where utility is high and supply is fixed or relatively inelastic, prices will be high. This is a core Marshallian concept that you are arguing against.
"You seem to conflate the issue of why land prices are different in different jurisdictions with land use policy.."
WTF? Did you read that paragraph before you wrote it? Let me get this right - you are saying that land prices and developer behaviour are not a function of land use policy?
I think with that statement we can end the conversation there as obviously we have revealed you are nothing but fluff and bluster trying to pass off as an expert in land use.
"'but in a liberalized land market, this development will always emanate from the core concentrations of high amenity and, by extension, land prices.'"
It is 100% true in the case that all agents bear the costs. The only thing that makes fringe greenfields attractive to developers is huge infra subsidies - essentially land use policy instruments (which you said have no influence on developer behaviour...).
But I am an expert compared to you, given I had been involved in developments in jurisdictions with low land-use restrictions, and in NZ when they were low and now are high.
And the theory behind what I am outlining is as per Adam Smith's Wealth of Nations, Alan Evans Land economics, and the links I have given re Alan Bertaud et al, which you obviously haven't read.
It s your type of ideological thinking that has directly led to NZ having some of the most unaffordable housing in the developed world.
That's where this conversation ends.
You are an expert compared to me? Interesting statement given you have no idea who I am.
You've read all those big books and not one of them even suggested that markets allocate supply to efficiently satisfy demand? Shesh. You better re-read them.
BTW - I hold a PhD in Urban Economics and work as a consultant on land use policy.
Surely there’s a place for a new centrist party, one that is business and innovation focused while at the same time being ‘green’. One that moves us away from ‘Ponzi economics’. That is very business minded but at the same time genuinely concerned about equity and the environment (all these things need not be mutually exclusive).
It’s kind of TOP but kind of not. Also TOP needs more charisma in its leadership team, and more backing.
Agree.
NZ first are probably the best of a poor bunch. They have an immigration policy on the website and Winston is all for lower house prices.
Not my cup of tea normally but also the leader is actually strong enough to sway a sitting government
i dont see any other parties that would work in coalition.
Excellent article David - I agree with these suggestions. Regarding a population and immigration policy - in my experience most government officials ( eg Treasury) and economists firmly believe that immigration and, by extension, rapid population growth, is good for NZ. These beliefs are based on pretty limited evidence that was unlikely to apply to a remote, resource constrained country like NZ. Both major parties have brought into that idea, and away we went. Hopefully the more recent evidence suggesting otherwise will start to be listened to. Also the racist component to many who are anti-immigration has not been conducive to rational discussion.
I also like your suggestions around more prudential regulation of bank lending, including setting limits to the proportion of bank lending that could be applied to housing. That is similar, albeit narrower, than the window guidance in Japan that guided the proportion of lending to various sectors that enabled rapid growth in the post war period.
The article is good, but it seems just like any "working group" the Government has arranged.
List the problems. List the solutions. Do nothing about it until the general election, and then only do the things that won't lose you votes and are easy to do.
Until we get a Government with backbone, our future is bleak as, and they won't grow a spine in this digital social media world we live in, where hoards of anonymous armchair warriors ridicule any public comment.
I would have suggested we throw out democracy and install a dictatorship, but what dictator is ever going to think of the greater good and not their own entitled self interest?
Seems we are destined to be ruled by a gaggle of selfish pricks.
"I would suggest the Reserve Bank should move ahead and introduce debt to income limits as soon as able"
Let's say they did that. At what level might it be set? It would have to be much much lower than the current level of 11.20( see The latest Demographia report). If it were set at say 6-still very unaffordable- would that not completely shut the door on almost all first-time buyers? Unless of course, the market were to crash and that in turn would put many thousands deep in negative equity and threaten the stability of the banking system.
Answers on a postcard please to Mr. Orr at the RBNZ.
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