First home buyers will be ringing their hands in despair but existing home owners and investors will be breaking out the Champagne at the latest red hot housing valuation figures.
The average value of all dwellings throughout New Zealand has increased by $64,941 in the 12 months to the end of November.
According to the CoreLogic House Price Index, the average value of all dwellings has risen to $769,013 in November this year from $704,072 in November last year, giving annual growth of 9.2%.
That's an increase of $1249 a week.
In the Auckland region the average value of dwellings increased from $1,038,477 in November last year to $1,115,955 in November this year, or $77,478 (7.5%) in 12 months.
The biggest increase in Auckland in dollar terms appears to have occurred in Manukau East, which includes suburbs such as Howick and Pakuranga, where the average value has risen from $1,136,387 in November last year to $1,249,379 in November this year, an annual increase of $112,992 (9.9%), or $2173 a week.
The biggest increase in the main centres was in the Wellington region, where the average value rose from $735,507 in November last year to $834,885 in November this year, up by $99,378 (13.5%) in 12 months, or $1911 a week.
Several places recorded annual value growth of more than 20%, all of them rural districts or provincial towns - Rangitikei $27.1%, Clutha 26.7%, Gisborne 26.3%, Kawerau 24.3%, Waitomo 23.0%, South Wairarapa 21.6% and Masterton 20.7%.
Only two places recorded annual declines in average value - MacKenzie District -3.9% and Queenstown-Lakes -1.4%.
But even in Queenstown-Lakes, where property values have been hit by the devastation caused by COVID-19 to the international tourist trade, average values have increased by 5.5% over the last three months and have almost returned to the level they were at 12 months ago.
"Anyone who owns assets like housing are benefiting from the stimulatory monetary policies [of the Reserve Bank], which are lowering interest rates, while the young and those renting are more likely to have seen their income impacted by the pandemic and are less likely to see a wealth benefit from asset appreciation," CoreLogic's report on the HPI figures said.
The table below shows the latest average dwelling values for all districts throughout the country and their percentage movements over three and 12 months.
The comment stream on this story is now closed.
| CoreLogic House Price Index | ||||
| November 2020 | ||||
| Territorial authority | Average current value | 12 month change% | 3 month change % | |
| Far North | 509,402 | 7.9% | 4.5% | |
| Whangarei | 610,588 | 12.2% | 5.4% | |
| Kaipara | 621,135 | 10.5% | 3.4% | |
| Auckland - Rodney | 1,018,486 | 8.3% | 3.1% | |
| Rodney - Hibiscus Coast | 989,872 | 7.9% | 2.3% | |
| Rodney - North | 1,046,356 | 8.6% | 3.6% | |
| Auckland - North Shore | 1,276,987 | 6.8% | 4.1% | |
| North Shore - Coastal | 1,460,201 | 6.5% | 4.7% | |
| North Shore - North Harbour | 1,225,549 | 6.4% | 3.7% | |
| North Shore - Onewa | 1,041,435 | 8.3% | 3.9% | |
| Auckland - Waitakere | 892,933 | 9.4% | 4.4% | |
| Auckland - City | 1,311,486 | 6.5% | 4.3% | |
| Auckland City - Central | 1,149,618 | 6.5% | 5.6% | |
| Auckland City - Islands | 1,174,825 | 2.1% | 1.3% | |
| Auckland City - South | 1,178,689 | 7.8% | 4.1% | |
| Auckland_City - East | 1,642,411 | 6.0% | 4.2% | |
| Auckland - Manukau | 978,165 | 9.4% | 3.8% | |
| Manukau - Central | 763,327 | 9.2% | 3.8% | |
| Manukau - East | 1,249,379 | 9.9% | 4.1% | |
| Manukau - North West | 852,498 | 9.3% | 3.6% | |
| Auckland - Papakura | 761,679 | 7.9% | 3.4% | |
| Auckland - Franklin | 726,236 | 7.6% | 2.9% | |
| Thames Coromandel | 843,159 | 8.6% | 4.5% | |
| Hauraki | 496,619 | 12.1% | 8.6% | |
| Waikato | 542,330 | 8.4% | 2.6% | |
| Matamata Piako | 526,710 | 7.3% | -0.4% | |
| Hamilton | 659,613 | 10.5% | 2.6% | |
| Hamilton - Central & North West | 607,212 | 9.8% | 2.3% | |
| Hamilton - North East | 813,187 | 9.7% | 4.8% | |
| Hamilton - South East | 611,685 | 11.3% | 1.3% | |
| Hamilton - South West | 598,805 | 12.1% | 3.6% | |
| Waipa | 666,212 | 10.5% | 2.5% | |
| South Waikato | 312,692 | 16.8% | -1.0% | |
| Waitomo | 288,132 | 23.0% | 13.1% | |
| Taupo | 601,439 | 9.3% | 2.8% | |
| Western BOP | 741,030 | 10.9% | 5.0% | |
| Tauranga | 820,424 | 7.9% | 2.9% | |
| Rotorua | 571,133 | 15.8% | 6.3% | |
| Whakatane | 529,337 | 6.2% | 0.3% | |
| Kawerau | 316,678 | 24.3% | 1.3% | |
| Opotiki | 388,805 | 16.3% | 7.0% | |
| Gisborne | 496,990 | 26.3% | 14.6% | |
| Wairoa | 277,021 | 18.5% | 11.4% | |
| Hastings | 627,649 | 13.0% | 5.7% | |
| Napier | 636,257 | 10.6% | 3.2% | |
| Central Hawkes Bay | 448,810 | 17.2% | 3.9% | |
| New Plymouth | 543,807 | 11.1% | 5.7% | |
| Stratford | 352,642 | 14.0% | 0.0% | |
| South Taranaki | 308,368 | 17.1% | 8.3% | |
| Ruapehu | 286,518 | 13.8% | 6.8% | |
| Whanganui | 392,430 | 18.6% | 6.2% | |
| Rangitikei | 339,222 | 27.1% | 6.1% | |
| Manawatu | 504,391 | 16.8% | 6.2% | |
| Palmerston North | 562,723 | 18.1% | 7.9% | |
| Tararua | 298,681 | 16.6% | 1.1% | |
| Horowhenua | 468,067 | 17.7% | 5.2% | |
| Kapiti Coast | 712,509 | 13.3% | 6.0% | |
| Porirua | 753,479 | 19.0% | 8.9% | |
| Upper Hutt | 691,366 | 17.4% | 6.2% | |
| Hutt | 722,747 | 15.0% | 4.9% | |
| Wellington City | 943,804 | 11.4% | 5.6% | |
| Wellington - Central & South | 917,042 | 8.7% | 3.4% | |
| Wellington - East | 1,039,036 | 15.4% | 9.3% | |
| Wellington - North | 872,260 | 12.6% | 6.0% | |
| Wellington - West | 1,091,543 | 12.9% | 8.8% | |
| Masterton | 486,544 | 20.7% | 9.7% | |
| Carterton | 517,325 | 11.4% | 5.0% | |
| South Wairarapa | 665,592 | 21.6% | 17.5% | |
| Tasman | 668,836 | 7.9% | 3.0% | |
| Nelson | 681,891 | 6.9% | 3.2% | |
| Marlborough | 565,672 | 15.5% | 7.9% | |
| Kaikoura | 482,823 | 0.8% | 1.2% | |
| Buller | 218,220 | 3.7% | 5.6% | |
| Grey | 235,122 | 5.3% | 0.9% | |
| Westland | 282,711 | 6.1% | 1.2% | |
| Hurunui | 430,553 | 9.1% | 3.8% | |
| Waimakariri | 486,273 | 7.3% | 4.3% | |
| Christchurch | 531,149 | 5.2% | 2.3% | |
| Christchurch - Banks Peninsula | 561,424 | 3.6% | 4.5% | |
| Christchurch - Central & North | 619,065 | 4.2% | 1.8% | |
| Christchurch - East | 403,344 | 5.6% | 2.6% | |
| Christchurch - Hills | 732,886 | 6.5% | 2.9% | |
| Christchurch - Southwest | 504,502 | 5.7% | 2.3% | |
| Selwyn | 581,014 | 4.2% | 1.9% | |
| Ashburton | 390,315 | 7.0% | 2.5% | |
| Timaru | 399,756 | 6.3% | 2.3% | |
| MacKenzie | 561,613 | -3.9% | -4.4% | |
| Waimate | 287,503 | 6.8% | 1.0% | |
| Waitaki | 379,827 | 11.3% | 5.8% | |
| Central Otago | 586,368 | 5.8% | -0.4% | |
| Queenstown Lakes | 1,190,592 | -1.4% | 5.5% | |
| Dunedin | 571,552 | 13.1% | 4.8% | |
| Dunedin - Central & North | 585,120 | 11.9% | 5.8% | |
| Dunedin - Peninsular & Coastal | 520,863 | 10.7% | 1.7% | |
| Dunedin - South | 551,320 | 14.9% | 6.3% | |
| Dunedin - Taieri | 593,608 | 13.3% | 3.1% | |
| Clutha | 313,212 | 26.7% | 5.1% | |
| Southland | 359,385 | 5.8% | -4.3% | |
| Gore | 288,202 | 12.6% | 0.6% | |
| Invercargill | 370,216 | 9.8% | 2.0% | |
| Auckland Region | 1,115,955 | 7.5% | 4.0% | |
| Main Urban Areas | 877,518 | 8.7% | 4.1% | |
| Wellington Region | 834,885 | 13.5% | 5.8% | |
| Total NZ | 769,013 | 9.2% | 4.2% | |
No chart with that title exists.
240 Comments
Housing market is on fire and as Mr Orr and Jacinda Arden does not want to act as favours rising house prise - infact they are the reason for this rising house price.
Mr Orr action and Jacinda Ardens inaction is the reason but it seems that Jacinda Arden has totally lost ....gone one step ahead of National leader ...Now blaming people for housing crisis but themselves
https://www.newshub.co.nz/home/politics/2020/11/jacinda-ardern-partly-b…
Real Shame that people gave her absolute power and now have to wait for three years to throw out.
Why did we elect a young person with no experience except for pulling faces, to lead us??? Was supposed to be better than the pony tail puller, but is she?
Agree.
I am not thrilled with the Ardern and team's inaction but don't believe for once the alternatives would have done any better.
Don't forget, Collins campaigned hard on removing FBB and reducing the bright-line test to 3 years. Tell me that wouldn't have made things much worse.
Its depressingly sad that after years of rhetoric in opposition to find out they are no better *all* their fake promises fooled us... those that make the most noise have the least to offer right. If the ABs played like this we would call for the captain to resign or be sacked. Politics is diffrunt I suppose we will reelect in 3 years...
Speak for yourself, I didn't vote Labour - they had no policies. Now, enjoy the fact Jacinda is declaring a climate emergency, LMFAO
Very true.
Odd that folk here are suggesting a fire is more comfortable a place than a frying pan.
Jacinda is right that self-absorbed voters have played a role in this conflagration, but it is still the responsibility of politicians to influence and lead. She has to decide whether she wants to lead or simply become John Key 2.0
Hey come on, she can wrap fish and chips. That's a skill! Her voters wanted someone shiny and new that's all. Doesn't madder about all that poverdy and stuff. So long as she's doing her fb check ins in her PJs then she's a real person, just like one of us... right?
Agree. What is the difference between labor and national now? Both ONLY know pushing up house price. Next time I will go with green, if Labor could not success in lowering house price 30%.
TOP had the most sensible policies in regard to housing
Agreed.
Ha but did you vote for them?
The greedy weren't ready to help the needy.
You mean like taxing house capital only, and thus encoraging debt and opening all sorts of loopholes?
The first thing she did as pm (even before having a baby while on her best ever 400k salary) was upgrade the Auckland home to a 2 mill (now likely 3m) mansion.
What her and hubby Clarke own secretly via trusts is another story ...
Buy up while you have the market scared when first elected knowing you'll soon declare cap gains off the table to cash in on those investments.
Smart young lady.
Reminds me of when winny told labour he'd picked them to govern and whole labour room erupted.. then when asked if that was due to winnys news she lied and said they were watching TV and only found out when winny announced it to public... I was scared at the degree of cold deception by someone everyone trusted based purely on personality.
Check out her socialist comrade videos on YouTube if you want a bedtime horror movie.
Voters often get the government they deserve. How many of the malcontents on here voted Labour?
I voted labour and have no regrets. There wasn't a better option. National had policies whose only purpose was support property prices. This is more about the reserve bank and low interest rates anyway.
Lies! TOP was a perfectly viable party. Also, Act have been concerned about housing far longer than Labour.
You realise there's more than 2 parties to vote for?
Yes I looked at the other options too. I didn't vote TOP because of the wasted vote and I'm not sold on the UBI thing.
Wasted vote argument is ridiculous. What if 250,000 other Kiwis did the same? Imagine voting for the party with the policies that you best align with instead of herding into the red or blue camp?
Yes but in true kiwi spirit people don't vote with their hearts lest they cast a vote for the "losing team". How embarrassing that would be, voting for a party aligned with your values that doesn't subsequently get elected.
no difference for labor and national now. they know nothing but pushing up house prices~
I voted Labour, honestly the only reason I bothered to vote was because I wanted cannabis legalised... *sigh*
There are no alternatives at present any other vote is wasted as only national and Labour could have had a chance of forming a govt.
I think NZ will be ripe for a populist takeover in a few years if this continues. This house action alienates and creates increasing wealth disparaty. Just need the right person (like trump) to come along promising to burn it all down.
No both Labour and National were wasted votes, I wanted my vote to make a difference so I voted ACT. Helped get a load more of them in than ever before.
I checked my CoreLogic value via ANZ banking on 2/11. And again 2 weeks later on 16/11. Only a +$10k increase in value. I'm drafting up my resignation letter as I write this comment.
Yeahhhhh somehow I don't think this will end too well.....
Just saying, but you can get a nice place with a pool close to the city in Kangaroo Point, Brisbane for just north of a million AUD. The average price in that suburb (equivalent to Parnell or Kelburn) is around 1M. Brisbanes GDP is 170B and NZs entire GDP is about 204B. https://www.realestate.com.au/buy/property-house-with-3-bedrooms-in-bri…
Yep. New Zealand is buggered.
It's cheap for a reason. Also, that GDP figure is for half of Queensland - a state which rely's heavily on coal mining - not really a feel good story in 2020.
What's the reason?
I have family there - you are definitely not buying a house with a pool for $1m in one of Brisbane's top suburbs, not even close. You will get a decent place in the suburbs though. I get it's cheaper, and there are great lifestyle options north and south as well. I find the city very soulless though, it's not a pretty city either. Unpleasantly hot in summer, very few corporate head offices. I find it sterile and cultureless personally.
You could probably buy a really amazing house in Houston, TX for the same price as Brisbane. And has a GDP bigger per capita than Brisbane... so what?
Who wants to live in either Brisbane or Houston. Muggy, boring, full of red necks and with awful brown rivers that you can’t swim in.
NZ’s desirability as a fantastic place to live, and therefore property prices, are only going up in the future as more and more people want to live there (compared to Brisbane and Houston and other average cities).
GR told HDPA on 9 sept that the govt would not raise or extend the BL...Emphatically he said NO. Listen to last night business report on zb. IRD just need to chase up the two thirds who ignore the law and do not declare sales.
Hi Greg, Houses up not by $1250 or $2000 per week but by as much as $6000 plus per week. Many houses that were selling for $900000 before lockdown are now going between $1.2 million to $1.4 million.
History is repeating itself. Same thing was happening by speculators in 2015 to 2016, Houses at that time were for $650000 were going for $900000 to a million.
RE is a Powerfull lobby and exploiting FOMO as never witnessed before which is supported by Mr Orr. FHB going into borrow million dollar plus is in extreme and though RBNZ governor will be please with high liberate of debt in most vulnerable people is a disaster waiting to happen.
I think you’ll find Greg is using published data to come to his conclusions rather than anecdotal fluff. Regardless, I don’t think these type of articles add much other than to further stoke the flames of FOMO.
Agree - FOMO created from all side. Fear can be created directly or indirectly in a subtle manner.
However the photo in the article above depicts the real situation and house market is really on fire on a weekly basis, if not daily and in such a situation both RBNZ and Government should be taking action promptly and not come out with statement that are thinking or setting up a committee ( setting up a committee or thinking are all delaying tactics and reflects intent). In fact Mr Orr is adding fuel to fire by statement that from March will reintroduce LVR, result people rush to buy and similarly even their action to contain the fire is actually to add more to the flame - their intent.
AGREE that photo depicts the true situation in housing market - no two doubts about it but in such sutuation Fire Brigade has to be called immediately to act.
Where is the Fire Brigade = Mr Orr and Ms Jacinda Arden.....
If they are thinking that they can get away being silent are wrong as housing may be a speculative product / Casino for them but fir many is a badic necessity and they are playing with it, which can not be brushed under the carpet.
JA is lucky that election happened last month...
If their is fire and Fire Brigade despite been aware and not acting is a crime......than Mr Orr and Jacinda Arden are committing the same crime by not acting.
AND remember the person who ignites / support fire is an arsonist. So will it be fair to call..........arsonist by average Kiwi and FHB as they are the one who have burned even the dreams of many to own a house.
Mr Orr and his team committed a crime by signalling to the market that "our worst case scenario is prices falling", showing they would push as much into the market as it might take to make housing a government subsidised and protected investment class.
This massive wealth transfer going on right now is a crime against younger generations, and NZ's biggest welfare scheme - for asset owners.
He also said that house prices aren't in his mandate - I think he might have some type of mental disorder (although it seems most central bankers believe the same conflicting arguments!)
lol this...for sure.
I highly doubt the majority or even half of FHB's are borrowing more than a million dollars.
When checking with RE agents as to who are the people buying 1.2million or 1.5million houses, his response was FHB and when checking witha mortage broker, he confirms that in Auckland FHB ars birriwing anything between$800000 to $1.2 million plus and me too was surprised but realityis that nit hard to get 8 to 9 times family income.
Low interest rates and KiwiSaver balances becoming significant for many couples in the FHB demographic along with no more overseas holidays and a healthy-ish economy has made this quite possible.
Concur 100%. Several years ago as a broker it was common for FHB in urban areas to pay around $1M. They'll be stoked now with their values and low rates.
Agree. The house I wanted to buy this year was sold almost 1.4m, but last year the similar one (even better) was only 0.97. The price rise looked only $1200 per week because so many terrace houses with little land area are selling this year, which made the average price lower.
If someone gave you the difference of 430k in cash what would you do.... use it to pay rent for next ten years (you can live the high life for next ten years). Or use it to buy a house to kick out the landlord for ever and never see him again. Lots of commenters would choose to rent not buy for various reasons such as flexibility, houses overpriced, have to still pay rates, insurance and do maintenance during freetime
Watch the tax man cometh.
Now having a basic necessity of a house is aspirational crisis.
It has been suggested that now even a thought of having a house is a crime - crisis created by aspiration to own home - This sums up how bad the fire is and still no action.
It reflects the pathetic mindset of many in NZ
https://i.stuff.co.nz/life-style/homed/real-estate/300169047/we-dont-ha…
I don’t think that’s what D Grant is saying in that article. His analysis is v good, btw.
Maybe labour's plan to make cgt palatable. Drive prices sky high and blame investors....who will take the fall. Wonder how much extra tax the bright line test will raise with higher top bracket tax rate also
False economy re bright line or any other sale tax because people just won't sell!
Couldn't make this stuff up.
Yes! the best way is improve LVR to 50% and interest rates to 5% (2.5 for FHB) for investors. Government and RBNZ only work for the rich now~~ State housing is also a joke. So many people are in the waiting list. Also the rent! it takes half of people's income~!
The great divide.
Potential FHB after reading this will be heading off to work this morning sick to the stomach and wondering at at the futility as to why they bothering working and saving. Extremely sad.
Those owning homes will be easily identified in the lunch room as the chirpy - if not cocky - ones.
If young people don't want to play the game they should pack up and head off to Continental Europe. Germany, Northern Italy and Austria are very affordable and for demographic reasons they are crying out for young professionals to join the workforce. When will they take the hint that New Zealand doesn't want them?
Squishy
I agree with your sentiment but your example is erroneous.
Homeownership rates in European countries are low. In the examples you give, Germany it is only 51% and Austria 55% - compared to NZ at 63%.
What's the rate of change like when compared between the countries?
Obviously rental quality and renters rights are light-years ahead in Europe too.
And also the quality of houses, NZ just can not compare with other countries in terms of housing quality. Here in New Zealand, you pay more than a million for really crappy houses. It's outrageous. It's just FOMO driving the market up at the moment, but if you really calm down and think, does it really worth that much? No, absolutely not.
COH
Do not assume that the quality of houses in Europe are superior.
Having travelled reasonably extensively in western Europe from my experience that is arguably not the case.
Many homes are very old (200 plus years), two up two down, narrow step dangerous stairs, small rooms, poor ablutions as tack-ons, and poorly insulated. Think "Coronation Street" and for many parts of cities in reasonably developed countries such Belgium, France, Spain, Italy, Greece, and Turkey numerous houses are below that standard.
My home town in New Mills, UK: terrace on a good street, stone,110 yard old, mint condition: $440k current valuation. Central heating.
Stanmore Bay median (mostly WOOD) $800k or thereabouts. No central heating usually. Many on stilts.
Land price is practically all of problem.
Sister in-law purchased in London (Hillingdon). 3/4 bedroom, 2 ensuites, lovely large kitchen and living room, big drive, huge garden, pond, and outhouse. Leafy area with a tube stop a 10 minutes walk away. All insulated, doubled glazed, dry and warm as. Was about nzd $1.35mil.
Wellington's shacks are going for the same price. Yeah, nah. Not to mention they get paid twice as much there.
Peak District is lovely but the weather is a downside,having said that a cracking summer there is hard to beat.Lived a little further south between Nottingham and Derby,great place,fantastic people marvellous access to countryside.
All those houses in NZ that will last 200 years... Lol
You take your plaster mc mansion, I'd rather a tusconey villa... Dangerous staircase and all.
Plutocracy
You are correct in terms of my understanding is that renters rights in Europe provide far more security and longer term of tenure. They also provide a greater sense of ownership in ability for tenant to do things such as decorating and painting walls etc.
While many praised the improvement (from a tenant's perspective) in tenancy laws last year, underlining that was that renting was increasingly becoming the case and not only there increased numbers but also longer term. I think I recall Jacinda acknowledging that there was a societal shift in terms of ownership/long term renting and that was a justification for bringing our law more in line with Europe. Underlying this shift there seemed an acceptance that long-term renters was not only about blue collar workers but was increasing including middle-social economic white collar workers.
Homeownership has been a traditional NZ cultural aspirational goal, but for many this is increasing unobtainable and the new tenancy law was seemingly acceptance of that.
P8.. but in Germany you have been protected from rent increases for at least five more years. More NZers would be happy to rent if they received the same protection.
The lower homeownership rate is partly due to the fact there is very little if any financial advantage in renting or owning, but there is a difference in what you might prefer depending on your age and ambitions.
Young prefer to rent as it gives them more mobility to take advantage of job opportunities in various locations, and then when they are older and settled into a career and location then many prefer homeownership for non-financial reasons.
The point being there is far less FOMO based on financial reasons.
Dale, what? there is very little if any financial advantage in renting or owning?
Renting is entirely unaffordable. Why do you think we taxpayers subsidise the private rental market to the tune of $2 billion per annum?
It looks like NZ is not for young people, only for RICH people.. I think once COIVD19 finishes, young kiwis will rush out to other countries.
I do think there will be a flood of young Kiwis overseas as soon as (if) the situation normalises. The current situation is basically massive inflation for non-homeowners -- the real value of their wage or salary is shrinking by the day. Gov't and employers will freak out and open the immigration floodgates again, all the old white folk will wonder why they're a demographic minority in their nice suburbs, and we'll get a Le Pen-type party holding the balance of power between a shattered Labour and ineffective National.
Should be a transtasman bubble soon if I am not mistaken. Maybe after Xmas like end of January, why don't they open now, because playing politics
Young people should absolutely do that. There is nothing for them here. I spent 7 years in Australia and was able to save three times as much while having a higher standard of living in exactly the same job.
Absolutely.
A few towns in Italy pay people to move there too. You'd have to be self employed but imagine that working from home with absolutely no living costs. You get a house for about 1000 euros over there.
The crumbling type that cost a million or.more to renovate
You're 100% right! I've watched these videos on YouTube. Great prices NZD $2,000 -$25,000 .. HOWEVER, buyers are often legally require to renovate these holes. OK idea if you want a cheapish holiday home and live near Italy.
Absoludely. Hearing you.
Didn't say they weren't crumbling shacks though.
printer8
"Potential FHB after reading this will be heading off to work this morning sick to the stomach"
Yeah that's why Jacindas increasing sick leave to 10 days...
yes, no passion to work now~
"Potential FHB after reading this will be heading off to work this morning sick to the stomach"
You just described my morning. Why bother?
I may benefit from these shenanigans but I am appalled at this blatant wealth transfer from the wages and savings of poorer and younger Kiwis to landowners. It's not just a housing crisis but creates a moral crisis in our society.
Why should we expect people to obey the law, not take wealth that isn't theirs etc., when by government and reserve bank policy and pure selfishness of those who lobby we are hand over fist taking the wealth of NZ's younger generations?
This is obscene. An absolute rort caused by entitlement mentality.
Both major political parties have backed the status quo and the party wanted change (TOP) couldn't even get over the threshold.
People who want change need to take this to the streets. Peacefully. The frustration and anger swelling up amongst those who have been utterly left behind, will remain impotent until then. Unfortunately I feel we are likely another year out, before people truly realize that they don't plan to do anything. The changes to the tenancy laws were a meager offering, to make what they knew was coming slightly more bearable for the increasing numbers of people locked out of home ownership.
Agree. The tenancy law changes were a meager offering. They were needed - but more is needed now.
Time to get serious and implement #rentcontrolnow.
If I hear of any street protests I'll be there, definitely. Will take the grandchildren too.
Probably right up labour's ally but absolutely the worse thing to do when there is already far too few physical houses for the population.
Having said that, ill send out some rent increase letters today just incase ! Been too generous for too long. Still under median rent though.
Hope ya son held onto his palmy house, be worth 500k+ now I'd say. Easiest 250k he'll ever make. Cheers Cindy.
Houses don't disappear when converted from rental to owner-occupied home. I do so tire of these specious arguments, but we do need to point out the idiocy of them given the number of times they have been repeated to the public.
They do... 1 in 4 or 5 on average.
When you consider fhbs buy 3 bed thinking forward to family, and most rentals are every room filled in a typical flatting situation.
Hard data backs this up, with
I think averages are too broad a measure though. Do you have any statistics on how many couples are renting their own 3 bedroom place? I can tell you 99% of my friends or acquaintances who rent are in this position, the only ones who are "flatting" are single. In these cases a conversion from rented to owner occupied would not make people "homeless".
I understand my anecdote does not represent the broader market, but curious to know what "hard data" you have aside from averages which can easily be skewed at both ends of the spectrum (student accommodation vs widower accommodation).
"Been too generous for too long. Still under median rent though."
Me too I don't mind when I see that they've been saving or investing... they don't
Same. I believe support for collective action is now growing at a faster rate. Absolutely agree, far more is needed and rent control needs to be implemented.
Reality is ppl like you are just the other side of the same coin.
Speculators want easy gains, easy price rises to get rich.
You want price falls to buy cheaper.. then you'll quickly switch to wanting cap gains too.
Most dgm eventually buy then become the biggest supporters of house price rises about.
And currently more and more fhbs are entering the market, more and more people being converted from dgm to spruikers.
Wish for flat prices at best as we will never see policy changes to entice actual falls
I didn't think landlords liked sharing coins - just taking them off those who already have less than them? ;-P
I own a house mortgage-free. I still wish house prices would fall so the country is better for everyone to live in, and my children have a chance to own their own house, for the basic benefits of home ownership.
How much my house is worth makes no difference to me. I will always need one to live in. If it goes up in price, that just makes a nicer house further out of my reach.
The idea of becoming 'rich' and I guess the overall goal of 'retiring early' does not interest me. I enjoy my work, it makes me feel like I am pulling my weight in society, for what I consume. If I retired I would lose a sense of purpose in my life. Making money from owning other peoples houses would feel inherently wrong to me, and I would feel very awkward around the tenants.
Guess I am one of the rare outliers in your world?
This is what our society should be encouraging, instead we heavily reward greed. If we truly cared for each other as we would ourselves, everyone's needs could be met. A world full of people who care only for themselves, is hell on earth.
As a homeowner, I am better off with price falls if I want to trade up. Only once it reaches negative equity territory will it affect mobility.
That depends on whether you're constrained by deposit or servicing ability.
If you have a high income but low deposit (=many recent FHB) then rising prices help you to trade up.
When looking at the very very short term maybe you are right.
Which appears to be all anyone is doing these days...
It's only a matter of time. You cannot disenfranchise the masses forever.
Jacinda will definitely get another Christmas card from me. As a property investor I was very afraid that a Labour government might restructure our econony towards productivity and industry (thereby raising inflation and rates which would reduce fixed asset value) but in fact most of what little they've done has had the opposite effect. Hopefully they can collapse productivity completely (c'mon Green party!) so Orr can continue his wonderful work.
This is all totally normal and sustainable. Banks don’t even need loans to be repaid, just regular interest payments so they can reassure their shareholders. You’d be an idiot not to borrow 2m and buy an asset with negative yield - because it’s not your money!
Anyway, Mr Orr will have a ‘first-class’ bank insolvency problem to deal with eventually, between margin compression, the march of tech making banks irrelevant, and the smoking tyre-fire that will be left when this burns out.
Not enough gains, the people need mORR!
Orr "hold my beer, I got this"
FLP initiated...
aah! got the ol' ponzi rolling again Jacinda nick of time!
Well done "what's GDP?" Jacinda.
Its pants off for the housing market, and will be for a while, for it is the only horse pulling domestic economy (its the proxy for jobs & incomes).
My new Bank Teller is a simple matter.....Put all you Finances into a House, wait for the penny to drop, the dollar cost averaging to accumulate, the paper money trail to vanish and the Government money windfall to bail us out of Covid19/20/21/22/23/24 etc.
I do believe them masks are useless, because people are blind to reality. Tain't Covid started the downwards slide into homeownership. It is the Free Munny Market that the World Banks thrust up on us all. A "Home" is now leverage to the Stars and back, plus you can have as much munny as you throw at a House, then keep tossing more into the equation by borrowing more into the Futures.
To take munny away from a Bank is electrifying, but if you have a Home Owners Card, you can bet the House on just about anything, because it is now not what you keep in a bank, that the Teller will give you, but what you believe is locked in your House, not in a Vault, that matters.
Renters are the new windfall investment Products that we all desire, that balloon upwards, never failing to please.
Thanks.
Please do not light a Match Renters....pretty please. We cannot hold a candle to your Super Powers, after 65...as well may you learn.
Reflecting on finally capitulating…I moved back to NZ in 2019 and realised I'd have to sell my flat in London to get the NZ house I wanted. I did this over lockdown then waited as I expected prices to calm down toward the end of the year. I was sure they had reached their ceiling in Wellington but underestimated the RBNZ. I started to get my head around currency debasement (nominal values increase but not purchasing power) and started offering on places I liked. Last month I got one accepted because I paid more than the 29 other offers. I feel like a winner and a loser at the same time. I was happy but felt terrible for the other families, especially the ones that stretched to put in the higher offers. That was us in the previous tenders. This process is horrendous. Out the probably 100+ people that were emotionally involved (extended families, kids etc), more than 95% of them had a terrible experience and we only enjoyed it at the final moment - the days leading up to that sucked. My parent's friends sold their family pad like this and said when they saw the offers and letters etc they immediately regretted doing it that way. Value seems more like what people can pay rather than what they will pay. Does anyone else think it should be banned? I do.
Did you have time to do due diligence (builders report etc.)? I feel this is going to be an issue going forward also. People rushing in to buy through pre-auctions and over committing, not knowing what they're getting themselves in for.
New Zealand is now short about half a million houses according to one report I read recently. This is not a country for working, lower middle class people or families because it's just not affordable
Really it's an argument of price vs value. The two are not equivalent with such distortions introduced by central banks.
Don't worry though, Orr with fix it by now pumping in $128b over the next couple of years (oh, that's $25,000 for every man woman and child in the country). And instead of just handing $25k to every man woman and child (which you know, would be sensible), he will only give it to bank shareholders and already wealthy property owners.
Horrendous is right. I know a couple that were finally accepted and have gone unconditional a few weeks back through the multi offer process, after missing out many times before. They have mentioned still feeling utterly drained, with crippling anxiety and depression, no real feelings of happiness over it despite the relief of having secured a place. The rest missed out and many more have absolutely no hope of ever owning a home unless we see the transformation change that was promised.
There's a famous quote that for those who think rising house prices are a good thing in current circumstances or want them to go higher - 'forgive them for they know not what they do'.
I know it well. It is easy to forget to take heart and remember we all need forgiveness, when full of anger at such blatant callousness.
Mr broken record here again,
Dear media. Please stop with the "breaking out the champagne" line. Owners of multiple properties will of course be better off. Leveraged owners of property will be breathing a sigh of relief. Regular owners with a long term view will be feeling queasy in the stomach.
That was my first thought as well. All homeowners don't think like that line suggests. My major concern is rent price rises. As I've said before #rentcontrolnow.
I have noticed that many more rentals are available now but they are sitting on the market for more than a month (particularly the new builds) as no one can pay the prices asked.
Anyone with children or grandchildren will be in despair.
Yes, and I admit to my part in this farce by giving my vote to Jacinda. I hang my head in shame. How could I have been so stupid?
Can't give it to National, that's even worse. Pretty much leaves TOP or the Greens.
Don't worry it's easy to fall for her...I did the first time not this time. I thought the Greens were the only party taking our inequality crisis seriously, so voted for them. I would also have felt bad if I had voted Labour given they care little for this mess...it's all concerned looks and words, actual actions amount to tokenism.
Tokenism. It's a good word. Thanks!
I think ineptitude is becoming more apparent in this crossword.... Talk is cheap Houses ain't. Problem solving is not making matters worse.....Banking is now being supported by graft...and I do not mean...work!.
Voting in inept people allows further issues to fail...especially when they are overpaid and out number most larger Nations Parliarments per head of capita....
We should have a perfect Country after all these years.. But that is not going to happen with this mob...I do believe they are now on a par with the Awkland Council....And Wellington for that matter, up shite creek without a paddle and no decent drains when it floods. over rated, over spent and over indulged. They have no idea of Economy, nor the Economy. ...tis a Shame and a Joke..but I ain't laughing. And as for prudence and value for money......Stuff that...no such bleedin luck......Bled Dry.
Even the Con-sultants they use, rook us all.....when will we/ they ever learn.......stupidity is as stupid does. Rant over for now..all change, no change...
Vive La Revolution...do not pay taxes, mortgages, rents, rates, over priced Houses, over priced food, Fuel,...Politicians and Bwankers....Land Agents and Rental Agents and Rental Mental owners......And stuff those who Put it All on the House. Like it or Not.
Can anyone explain to me the difference between these figures, and the recent "prices are up 20% in a year" headlines? Is it average vs median or a timing difference in figures being reported?
Recent stats in an article on this website I think showed it was closer to 13.9% average rise not 20.
Still massive though.
I relate to the other poster from London about his house. When we bought our own home this year (and sold the old one) it was a tender to buy. Hideous.
Paid more than all other bidders of course an utterly gut wrenching feeling to overpay. Other buyers had written letters apparently. We'd been looking for a place like we have for years. Anyway irrelevant point.
Point is I also relate to that feeling of being a winner and loser at the same time. The whole thing is bittersweet but mainly bitter. Plus we are still stuck with fixing up poor building quality although not from getting it checked out first - we knew what we were getting into yet had to completely overlook that to win the tender. 24 hours after we bought, a house next door but newer etc sold for $60k more than us. Since then another neighbour sold for $100k more...
lonewolf
The difference is due to the time frame over which the data refers.
REINZ data is over a month period and is based on contracts going unconditional (but not settled) in the previous month and is compared YOY month on month.
CoreLogic is taken over a three month period and is when the sale is completed and the change in title registered with LINZ which is likely to be more than eight weeks after going unconditional, settled, LINZ notified and CoreLogic processing it for that month. Some of CoreLogic data could well be including sales negotiated and agreed to at the height of the Covid down turn.
So due to the nature of the CoreLogic data and its processes, it is currently under reporting what are currently significant increases over recent months.
REINZ data - although it does have some limitations - provides a more current picture of what is happening.
Very interesting, thanks Printer8
Anybody yet to buy their own home has had more stolen from them though rampant inflation they they have earned (let alone saved) though slogging it out all year.
If you are not a homeowner there is literally zero point in working, saving, paying taxes or staying in New Zealand doing anything productive or useful.
Fortunately it will make the decision to leave much easier for many.
I can't see how this utter stupidity doesn't end in financial crisis for New Zealand within the next decade, there is going to be a Minsky moment baked in ahead somewhere.
But I guess that will just be the final parting gift from the boomer generation to the rest of us who would have to mop up the mess.
The sacrifice to save them from dying of Covid was totally worth it.
It's encouraging to see how quickly Jacindamania is transforming into utter contempt. The tragedy is that her renting voters didn't see through her bulls*** and spin a few months sooner.
It's going to take a miracle to save her neck come next election.
It's going to take a miracle to save her neck come next election.
They could easily save themselves - and NZ - with rent controls. And not just a rent freeze - as so many rents are too high as it is. Some who got into landlording more recently will find themselves making losses, but heck, when capital gains like this are becoming the norm, who cares?
If they sell up, there's another opportunity for a FHB to my mind.
Jacindas pea brain doesn't work that way. Her idiotic mutterings have repeatedly made clear that her solution is subsidies and handouts for the chosen few. Which of course, will only make the problem worse.
Labour are all about setting price floors, not price ceilings.
I think the hardest part about implementing rent controls will be the push back from Treasury. They just need to ignore that - and tell the pointy heads to get on with it.
Indeed, there are many that are needed.
But apparently doing anything is too hard and it's now the voters fault somehow, not hers.
I'm not letting up on this one. Already sent Jacinda an email, will get onto GR next and just keep it up. MSM needs to start promoting rent controls as well. This is a sort-of start - more like it needed;
https://thespinoff.co.nz/society/30-11-2020/six-wellington-flats-that-d…
I remember back in 2015/2016 when Labour got us all to sign a big petition to send to John Key to do something about housing.
He wiped is ass with it and did the opposite. Much like Jacinda will do.
It was about that point that it was decided expensive houses were worthy of celebration wasn't it - with him and Bill English giving each other high fives?
Here's a good example. In accordance with my proposal of RV/1000 = rent maxima (for the Wellington area, that is);
Wants rent of $590/week
https://homes.co.nz/address/porirua/cannons-creek/191-mungavin-avenue/W…
Current RV = $350,000 - rent maxima would be $350/week. Current rent estimate is $390-460/week.
New owner just purchased it in May for $460,000 (and subsequently wants $590/week).
I say, stuff them. Rents are spiraling out-of-control.
I'll relish seeing her squirm but somehow think she'll just squirm right out of it and go awol as always when it gets too hard. She'll be busy with her climate crisis.
Obviously watched teflon John in action enough and noted how to stop anything from sticking.
Smile and wave seems to work well?
I'm just waiting for her to say; 'look....at the end of the day' (how many times did we hear that under JK followed by some bending of the truth...)
And to that throw in a few absoludelys, a furrowed brow, a bit of hand waving then massive horse smile to wash it all down. Just like a cup of cold sick really.
As soon as my kids have finished getting the subsidized training and education from the NZ government they will be off to OZ to work and eventually buy over there I suspect. By time they have finished covid would of sorted itself out and the brain drain will repeat itself.
https://www.zerohedge.com/markets/vaccine-wont-cure-20-year-widow-maker…
I-O-I-O...its oof to work we go.
Could Interest please give us the academic and research evidence that supposedly demonstrates that increasing house values make people SPEND more money, not just feel richer?? Nice theory since 2008. Where is the evidence? Propensity of rich is to spend a lower % of their wealth and income than lower orders. As Keynes stated in 1936. That is Robdetson's justification for raising min wage. SO, where is that attitude now in respect to housing where rents are over $500 a week in Auckland and median wage of those renting is leaving them paying out 45-50% of income on rent??
Agree. I often hear it said, but have never seen the original citation or reference. Case studies are the lowest form of evidence but....Both myself and a friend joke about consumerism. He owns a small piece of commercial property and 2 freehold rentals. In terms of net worth, I'm a step down from him. We both come from working class parents and are both incredibly frugal e.g. old cars, buying 2nd hand from trademe (clothes, outdoor equipment, washing machines). We found it weird seeing young people in expensive restaurants spending up large but possibly complaining about house prices. The endgame was to be independent of both employment and the Government. He got there in his early 50s. I'm going to be 5+yrs later. Its not hard. It's a long term game.
Rolf you are delusional if you believe that scrimping and saving is going to help now. Be thankful that you were born when you were.
What's the story with Christchurch, is it a good place to live or...?
........NOT. I used to love that city, the flat, Hagley Park, the Avon river, the Church the Wizzard now its just a cold shit hole due to the incredibly slow rebuild.
The rebuild is taking a long time but it gets better every month. Lots of housing options and much more for the money than the other centres. Easy commuting - biking no problem as it's flat and weather is drier. I can be sitting in the hot pools in Hamner faster than I could reach the city limits in Auckland.
As far as PAID price is concerned, can we please remember that median in March 2017 was $900k in Auckland.
In Oct that figure was $1m. So, up 11.11% in 3 years and 7 months. Or 3.1% pa. Minus inflation is??
Looking at a convenient time span gives you a particular answer.
Price rises in rest of NZ are having a v poor impact on selling: DOWN 2.3% in last 4m compared to 2019.
NO ONE reports that.
You need to forget the inflation as it applies to house prices Mike, your wages are NOT going up at anything close to the rate of inflation. If the rate of inflation had been compounded on the average wage it would be like $150K a year by now but in reality it has hardly moved. Bottom line is its your wage or salary that pays off the mortgage and there is a total disconnect between the two, has been for decades now.
Agree. The rising property price just widen the gap between the poor and the rich.
Agreed. But my point is to look at REAL increase in prices. Can of course look also, as you say, at REAL wage rises by comparison.
Other one that does not get looked at is how much a person is being asked to repay (the loan) out of the average wage, compared to 7 or 15 years or 40 years ago.
No doubt the stats are not adequate for that.
Is there a real rise if we're printing money? Doesn't it mean that the numbers increase but value stays the same? Housing is largest part of cost of living even if not included in inflation stats
That's why the current central bank mandate is broken Johno. They're looking for inflation to meet their 1-3% target but can't find any because they're measuring consumption inflation - so they allow the banks to create more money/debt (see M3 money supply) but still can't find any inflation, so they lower the OCR....and this has been going on now since they started this crazy plan decades ago (note that inflation adjusted house prices in the anglosphere were pretty much flat for the 100 years prior to this experiment and since then have gone up at unsustainable rates). Question will become, what happens when the OCR hits zero - i.e. about now. You get to a point of max debt and max asset prices. You then risk deflation with high debt levels which equals misery. See Japan 1990 - present.
Mistakenly reported. Shift that button!
Post GFC all over again. I used to wake up to the news on the radio alarm in the morning telling my my house price had gone up $1500 this week. Not sure the world is the same place as it was in 2008, not convinced we are out of the woods on this Pandemic as yet.
Poor FHBs! Can government and Reserve bank do anything? !!
The Government can introduce rent price controls. Many aspirant FHBs would likely get a rent reduction and thus be able to save more quickly.
How many times can Kate mention rent price controls on a single article?
As many as I like, I hope!
Here's another good example of rent price control set at RV/1000 - weekly rent maxima for the Wellington region.
Owner wants $480/week;
https://homes.co.nz/address/lower-hutt/naenae/90-wilkie-crescent/LwNqk
Based on rent maxima of RV/1000 - the rent maxima would be $455/week.
Owner purchased it back in 2002 for $98,000. Even on the rent maxima, they'd be making a killing.
As many times as a poorly trained parrot .
They are busy pushing up house prices.
Patty.. can Govt do sthg? Definitely. Do they want to?
2000 was the optimum time to buy apparently.
If only I bought then, when I was 10 years old.
If only some of the young people I talk to bought before they were born. What idiots, how could they not have seen this coming.
I was 18 and did what I was told was the path to secure a good future working hard on a four year degree and then many more years clearing my student debt and saving hard to minimize the amount of debt I would need to take on in the future.
Turns out we were told some pretty big lies about how the world really works.
Ditto. So much for my safe, stable middle-class profession that could pay a mortgage on one income and still have money left over for toys.
Ditto. We were all duped.
I'm calling a class action against the socially reproductive education system!
A better education would have been: buy as much property as soon as you can and keep buying it for as long as you can through any means possible.
The QV house price index is looking like the elevation profile of Mt Everest.
Most people die on the way down on that mountain, not on the way up.
Excellent analogy.
Folks, I recall coming to this site 8 years ago as a lurker and the general commentary has barely shifted.
Is there any chance of people collectively organizing and banding together to press the powers to be to properly confront this issue? Surely with the amount of energy I see in here, we should be able to do something?
Protests in the street are powerless against a falling OCR number on the computer screens at the central bank.
I don't really see how protests help from here (2005 sure...) - what do the central bank or government do? Kate would like rent controls - that's fine. And I can see that might be beneficial in some respects, but its a bandaid treatment for a life threatening condition.
'The system' needs ever expanding debt to prevent itself from self destructing - as Orr says its asset price rises or severe recession/depression. And people are such wimps these days that a recession isn't allowable because we will do anything to avoid short term pain for longer term gain. Recessions are important to clear out the zombie companies and more efficiently allocate capital. But now we just push capital into non-productive assets and keep zombie companies alive by buying their bad debt. The system is kaput. We need to redesign the system and be okay with short term pain for longer term gain - things like falling house prices is actually beneficial for the longer term stability of the country (think in decades here people, not weeks or months). But I think it might now be too late as the anglosphere appear to be shaping up to do a Japan and perhaps have a few lost decades as we figure out how to deal with this mountain of debt.
Yes, protests about high house prices are somewhat futile given the low interest rate environment. But given low interest rates are here to stay for other reasons, we need to implement rent controls now. Rent controls will cool the market for investment property down. At the moment, new landlords think they can charge rent premiums to match the house price premiums they have paid. We have to address this at the rental (not the purchase price) end of the cost spectrum.
Agree Kate - keep up the good work.
You're on your own in other words but IO will pay lip service
Ah the troll is back ;-)
You're ad hom belies you... only paraphrasing what you said hun
Ok - I'll just tell Kate shes wasting her time next time - that make you happier?
Thanks for the support, I back myself too. And, I think I'll get somewhere on this.
Yeah for sure - if you have a narrative that your planning to use with the government and want some support from another email account, just let me know.
Ya dreaming, love.
I don't think protests are futile at all. The government could do lots of things, including building affordable homes sold at no profit.
There's a total lack of imagination and endeavour. Lazy would be a charitable word to describe it.
Thousands of committed protestors would have a lot more impact than venting here I would say
including building affordable homes sold at no profit.
Can't do that with land prices running hot. Haven't been able to do that since the 70s to my mind.
This isn't about the price of houses, but the price of renting those houses. Bring that price down through regulation and house prices will experience a soft landing. And if they don't, it doesn't matter - I'm more than happy for landlords to subsidise their tenants into a home. And if they choose not to, then house prices will slowly reduce as they get tired of losing money - and get 'spooked' by potential for steady house price depreciation.
Rents are the key.
The rent stats from mbie no less tell a different story from the one you're harping... good luck though as rents aren't increasing.
I see what you are saying. But those in power are far too comfortable in the knowledge that the people they govern are not willing to organise together and complain in person to demand change. It is not healthy for there to be almost no willingness from the people to participate in collective action and civil disobedience, even under such blatant exploitation as they presently enjoy. It is a sad fact, that things will have to get even worse, before we hear any real noise being made from those most affected. Not everyone on the street will know what they should be demanding, but the fact that the system has to change will be made more clear to the people in power.
That's a bit of a cop-out. I guarantee if there were thousands of angry people marching on the main streets around the country or outside parliament there'd be a lot more chance of the government actually doing something.
At the moment renters just seem to bend right over and take it. Why wouldn't the government just continue to ignore them?
ActionStation has been a very effective advocacy group - as has Auckland Action Against Poverty;
https://actionstation.org.nz/
https://www.aaap.org.nz/advocacy
But so far they are advocating for increased subsidies and benefit levels - in other words, increased burden on taxpayers and the welfare state to offset the cost-of-living.
My idea is instead to lower the cost-of-living, particularly for those in the lowest quartile income group and particularly in relation to the largest single cost: accommodation.
I'm glad Adern said no to increasing benefits - they'll just end up in the hands of landlords.
Exactly.
Given we are becoming more poor as a nation, we need to look at regulation, not welfare to keep living costs down while wages catch up to asset price inflation.
Its not just NZ though Kate - its the entire financial system (in equality is rising around the anglosphere). Perhaps the Greens are right and we need to introduce wealth taxes. But until people can see past themselves and take a utilitarian view on these issues (an ability which appears to be disappearing by the the month), then how do you get them to agree to reasonable policy to make the current system sustainable (hence I agree with Aderns argument that people are too selfish to allow good/reasonable policy to be implemented).
Raising taxes, or implementing a CGT, doesn't solve anything in a hot house market - people making this kind of profit on sale/resale will just factor such taxes into the equation. And given interest on savings is heading below 1% (also given we have no deposit protection in NZ), investing in hard assets is a rational decision for those with capital to spare.
Hence, to my mind, regulation of rental prices is the only way to go given the circumstances.
I think Singapore's HDB system is better. Effectively they divided housing into two markets, one controlled and the other open.
"HDB introduced the Design, Build and Sell Scheme to produce up-market public housing developments. New public housing flats are strictly only eligible for purchase towards Singaporean citizens. The housing schemes and grants available to finance the purchase of a flat are also only extended to households owned by Singaporeans, while permanent residents do not get any housing grants or subsidies from the Singaporean government and could only purchase resale flats from the secondary market at a market price. Such policies have helped Singapore reach a home-ownership rate of 91%, one of the highest in the world"
Sadly, that's true, but boy, people are suffering
But this has been my argument for a number of years now - that if we remove accommodation allowances etc, it will probably be the landlords who will start screaming louder than those who are struggling to put food on the table.
If we remove these subsidies that are flowing towards rents and more expensive houses and the culture of landlord'ism then we might be on track for a healthier community. The obsession we have with turning everyones neighbor into a rent slave is ridiculous and harmful.
Yes, these subsidies just promote our culture of landlordism and need to be removed. They could do this in conjunction with real protections for tenants and create systems that lift people out of renting altogether. Why not use the money to that aim, rather than simply subsidizing landlords?
Agree they are. So we need to lower the cost of living via regulation.
Rent control doesn't work. Rent's rise when there is >demand than supply and trying to intervene to force the price down will mean less rentals available. More supply is the solution.
Yes, that's the orthodox economics view. But the world doesn't run on those parameters anymore. Hasn't been for quite some time.
And of the thousands who already can't get a private rental because they are considered high risk tenants ? These people currently costing tax payers thousands a week to be put up in 4 star motels.
Will rent controls make the 85% of rental service providers that are privately owned more or less likely to take on the ever growing number of 'high risk' tenants ?
Economics or modelling of complex systems are obviously not what you do. Socialism/communications/arts is fun stuff until they put one of them in charge of the country.
And you obviously do not care to understand the various factors that contribute to the creation of high risk tenants in the first place. Unstable housing situations and high livings costs are a normal fact of life here and have a huge impact on the development of people growing up in this country. You cannot blame everything on personal responsibility, in a system that is determined to keep a large number of people in the mud.
John Key had a suitable degree (did he not?) - yet failed to make any progress.
Will rent controls make the 85% of rental service providers that are privately owned more or less likely to take on the ever growing number of 'high risk' tenants ?
It doesn't matter one way or the other - the houses don't disappear. And if those service providers choose not to rent at all - then you introduce this type of tax/regulation;
https://globalnews.ca/news/7484960/vancouver-empty-homes-tax-hike/
That's referred to as use-it-or-lose it provisions. Orthodox economists would argue that even where scarcity exists in a market, un-use is, economically speaking, the most efficient use. They don't like to refer to hoarding as the most efficient use - as that would imply regulation is needed!
That's like saying gravity is orthodox, but the world doesn't run on those parameters anymore.
If you are serious about bringing rents down (and why not, it's a worthy cause), look for real workable solutions.
We need (competent)government and council intervention IMO.
But's not enough to say that the laws of supply and demand will sort it all out.
Look at Spain -- an oversupply of housing and huge homelessness at the same time. Owners won't sell at a loss, they'd rather hold on to their theoretical wealth.
The market can be irrational for years, decades, at a time. During those years, a whole generation can suffer poverty and stunted opportunities.
Show me where rent control has worked, and by rent control I mean forcing rent below market.
http://milwaukeeclt.org/2017/07/10/how-vienna-ensures-affordable-housin…
Complex and effective rent controls, in a very desirable city.
That's interesting but not directly applicable. It's been implemented over 50 off years and the state owns 58% of the rental pool. Vienna didn't just retrofit rent controls - they focused on supply which I advocated earlier.
Again, bad/irrational points. Every initiative must start at some point in time. And if the state owns a high percent of the rental pool - that too would be (I would hope) a consequence of rent controls. As private sector landlords exit (and it won't be en masse as many bought when house prices were much, much lower), the state could become the buyer of last resort. That would be a good outcome.
Again, orthodox thinking - the words 'below market'. That means nothing when the market is dysfunctional. Regulation, when done well, restores market function.
Hey Te Kooti. No that's not a good analogy - at all.
Physics is immutable. Economics is fluid.
As such economic models and theories must change as transaction and social systems change. Inability to explain social/market phenomena, or predict accurately has sullied the economics profession. Recall Greenspan's mea culpa;
https://hbr.org/2008/10/greenspans-mea-culpa
The Smith/Friedman invisible-hands-off approach was a recognised/admitted crock then, yet orthodox economists keep pushing the same barrow.
I'd be keen to know what's you think is not workable about my solution? I do realise in pegging a rent maxima to formula based on RV, there is a need to recognise regional differences depending on how inflated each market is. So for example, Auckland might need to be (RV/1000) less x%; whereas Wellington might be RV/1000; and Chch might be (RV/1000) plus x%.
I haven't looked close enough at each market yet. But what I'm aiming for is a simple-to understand, commonly applied formula relating to a rent maxima calculation, that is based on publicly available information.
That said, I'd be really interested in exploring any workable alternate solutions you have in mind. I'm not keen on a 'rent freeze' as many rents are unaffordable as at now (e.g., the need for the accommodation supplement).
What matters is tha the formula is simple and it applies to all tenanted properties.
Agree.
There are plenty of examples of departures from orthodox neoliberalism.
Unfortunately Labour don't seem to understand this.
It's not likely Labour, they have policy advisors for this sort of work - it's Treasury (and possibly NZ academia needs to lift its game too).
Pushing the OCR down doesn't create inflation either - but we keep doing that.
When rents are kept low so are housing prices. This means it's more likely someone could afford to buy instead of rent. If they still can't afford to buy then the government can intervene in a rent to buy scheme. There really should be no need to rent a home at all as it is an essential good. Governments needs to intervene to make home ownership accessible to everyone.
Absolutely agree. There is no reason for people to be forced into having to rent as they are presently.
Agree.
Agree.
TK... doubt rent freeze would reduce rentals available if we also add prohibitive tax on unoccupied property. More supply is not easy and takes time. Just look at the last few years.
Reducing demand significantly could be done quickly and easily, so to me, the solution should be predicated on demand reduction with increasing supply being less of a goal.
Rents should be falling, they are in nearly every other Western city I've read about. IMO, rents can only be rising in NZ due to a shortage of properties available. That could be immigration, Kiwi's returning, I have no insight. If you push rents down though, it's going to cause all sorts of unintended consequences, like existing tenants giving notice and moving.
That's why you have to make all rents (for existing and new tenancies) relative, that is, based on a single formula for the district/region. Some existing rents will come down. New will be set at the same rate as existing under the same maxima rule. And some existing tenancies (particularly for the high-end rental properties) will come under (i.e., be less than) the rent maxima.
Agree
The greed on show in the market right now is quite sickening. I've been watching extensively for a good year now. Looking to buy rural land. Vendors who get you all the way to the sale and then drop out only to then re-advertise less than a monthly later at 100k more than the 6 months ago official valuation. Vendors sitting on a property that just won't sell at the advertised price who withdraw even with interest or others who can't sell increasing the advertised price another 50k 'because the market'... It's insanity out there.
Seems to me there would be no major difference between Labour and National. They both appear to want to build our whole economy on house price inflation and (mainly) third world immigration.
Why can't there be a CGT with varying rates depending on if it's you primary residence or an investment. It could be either be a simple percentage or a slightly more complex calculation for primary residences probably based on time held and the current median in your region(not nationally), but always the top income tax rate for investment properties.
Because too many loopholes. Already it's being exploited by the MA and PA investors who pass themselves off as landlords or home owners and flip flip flip move move move all the time never pay tax.
That's why.
BAN on housing investments. We need this not now but five years ago.
They need to improve LVR to 50% and interest rates to 5% for investors!
I have the SOLUTION .......it's so easy ! ......SCRAP the accommodation supplement.
To all those Landlords who crow about the "free market" out there, then brag about their "business acumen", while having their hands in the taxpayers pocket, should let the rents find their "true" market value !
There is obviously a demand for FHB's and people who just want a home (please note ONE) - so there is nothing to lose, but to watch the "true" market forces at work.
On a good note for the landlords, with their "savvy investor" badge they wear proudly, let them "work it out" instead of the taxpayer subsidising their increasing rents.
You do that in a staged approach, once you have increased the State housing stock to meet demand. The State charges a rent maxima of 25% of household income. If you set the rent maxima formula for the housing sector to achieve (roughly) a 30% of median or average household income maxima, then A/S is no longer needed as a subsidy to the private sector.
Kate, you have explained that well, thank you. Are your average household income figures gross or net of income tax ?
Glad you found it useful. The measure adopted by NZ government is gross - so 30% of gross household income is the maximum affordability measure (i.e., termed 'aggressive') for accommodation cost outgoing. Beyond that is unaffordable.
Here's the metric and terminology used;
https://www.calculate.co.nz/rent-affordability-calculator.php
State housing (i.e., what they term as 'standard') is 25%.
This is a pet peeve of mine. Gross income is not real. The only thing I can pay my mortgage with is take-home pay. If you earned $100 but only took home $20 in take-home pay, then housing at 30% of gross isn't going to be much use to you. It sounds naff at first, but 'net income' is further reduced by compulsory student loan repayments (at a lower threshold and higher rate than in Aus) and then GST on most basics of life (e.g. food, transport to work, etc).
Agree, but every metric is going to have outliers, exceptions and unique circumstances.
The GST point will be factored into cost-of-living calculations, but student loan debt is a really good example of a punishing exception to that rule.
And, it is also a way the government could bring down the cost-of-living instead of increasing benefits and supplements. They simply forgive all existing debt balances on or where courses are completed, or defer the compulsory aspect of repayment for a specified period as a COVID recovery measure.
you don't have the solution....there are no silver bullets
I don't think you cant fix the systemic clusterf**k that housing has become by tweaking only one lever...but I do agree it is one of the levers
unfortunately the easy decisions become the hard decisions later...and later has arrived early due to covid...
funny how the country nearly went broke by subsidising farmers and manufacturers....we weren't going to make that mistake again.....and here we are again thirty plus years later subsidising directly or indirectly landlords and banks
@gnx ..... so true , we are really subsidising mainly Aussie owned banks and private landlords .....at least the banks could keep all their profits within NZ !
Another good way is stopping using equity to by investment properties, except improving LVR to 50% and interest rates to 5% for investors.
RBNZ should stop flooding the money into property market NOW..
Its clear that housing is the elephant in the room that this government simply doesn't know how to fix and clearly doesn't want to try
TOP did have the most appropriate response re housing, but you know - Jacinda's popularity vote won out, last I heard she was trying to create another "crisis" about climate change to fight another distraction from running the country...
I was a FHB within the last 5 years and know first hand how hard it is to break into a crazy property market, I left Auckland precisely because I refused to live in a hovel in a bad area and pay >$700K for the pleasure
If I bought in a middle class area I would had to work full time just to pay the mortgage and my partner would have had to work to live and our kids raised by childcare
Clearly you cannot 'save' your deposit effectively with house prices climbing and rents climbing with them, while incomes stay static - simple maths says it doesn't work
Interestingly there are other places in NZ where houses are still relatively affordable and the lifestyle is often much better as well without having to sacrifice income or in some cases it can increase so a win/ win
Where'd did you move - pros/cons vs Auckland?
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.