Prime Minister John Key said in Parliament indications are that there is not a housing shortage in New Zealand, although there could be shortages in some parts of the country.
Answering a question from Labour Party housing spokeswoman Moana Mackey on whether the Prime Minister could confirm he did not think there was a housing shortage, Key replied, “What I can confirm is that house prices have either been falling or going sideways. And generally in a market, when there’s increased demand, prices rise.”
Made to answer the question again by Speaker Lockwood Smith after Labour raised a point of order to the first answer, Key said:
“In some parts of New Zealand there will be housing shortages, as the population increases, in others there won’t. But overall, prices have either been falling or staying the same which doesn’t indicate a shortage.”
Labour leader Phil Goff then asked Key if he could confirm new housing starts were at their lowest point in 45 years, and that consequently the Master Builders Federation was predicting a major housing crisis within the next 18 months?
Goff said yesterday he thought Auckland was in danger of a housing crisis due to recent low levels of building consents and skilled labour moving offshore. See more here in yesterday’s article.
Key said Goff’s first point was right.
“And that indicates that there isn’t an overwhelming demand for housing at the moment. If there was, of course, there would be people piling in.”
“I think that reflects actually what’s happening is that the Government’s policies are actually working, which is, we are rebalancing the economy away from one that’s solely driven by housing, into one that has a more diversified investment portfolio,” he said.
Key said earlier in Question Time there were two things that made a “fundamental difference” for someone wanting to buy a house.
“The first is after-tax income, and this government has cut taxes – so after tax income has risen. Second thing is getting inflation under control – this government has got control of inflation, therefore interest rates have stayed low,” Key said.
“So they are all the reasons why New Zealanders can get into a home,” he said.
“The third thing is actually this government hasn’t focused on building new state homes. What the Government has focused on is getting more people into those homes and that’s why we’ve a number of policies which have made a difference in that area.”
98 Comments
Duke, you are allowed to disagree with people and argue with people. If you don't like someone's argument then rebut it with one of you own, but play the ball and not the man. We have always tried to keep higher comment standards here than other blog sites, and that's not going to change.
There's some fantastic debate happening on this issue, including some of your other comments on the thread. Let's try keep the standards up.
Cheers
Alex
q'town tanked (high nzd?), wanaka seems ok, dunedin ticking along, no new stuff but plenty of renos
if anyone thinks we'll replace tradesmen goin to oz from winz in 6mths they're havin a laugh...and i expect chch repairs to suck in alot of guys from down here...expect rates in otago/s'land to rise later in '11 and into '12
Queenstown , I've always thought- and between us the wife and I lived there for 29 years - is a pre-cursor the what happens in wider New Zealand. It booms, fast and heavy; then NZ scurries along about a year later. Then is collapses...pooof... ( say like 1992), to be followed by the rest. And what do we see? mjt, has summed it up nicely, above!
Queenstown is a latrine. Most people will say the same now. It used to be considered some kind of crown jewel type of place, but has been so horrifically over-developed that only the most one eyed developer and realtor hack can't see how Godawful the whole Queenstown area has become. Queenstown is like skin cancer on the face of a model. In fact it's getting hard to see any "face", just cancer.
agreed, its a s**thole...but as NA says above its a canary for nz property/ construction trends coz it reacts so quickly to x rates (tourism/ foreign & expat investment), whereas in my exp. wanaka is more abt retired farmers bldg dream gaff? q'town is a cashcow but its being starved by high nzd...like da rest of da econ
Interestingly, when I was in the game, the only person I 'potted' to the Council, was a Registered Master Builder.
Shoddy work is shoddy work, regardless of memberships held.
That said, the RMB just used the leaky homes saga, to squash out others. My take is that fault would have been across the bpard, but they were in there from the word go - lilly-whiteand screaning about 'cowboys'.
All that has happened, is that getting building done has gotten more expensive. Which is why I went down a track which didn't have the labour content and/or the complexity
PM John Key is playing with words.
Of course he would say there is "no housing shortage" because to say otherwise would lose the election for him on the spot.
And if you look at the figures he is right. There are 1.44M houses of all kinds in the country.
Assuming 4.5 million people you get 3.2 people per house which is certainly not over crowding.
But it's different in different centres.
The shortages show up in the main centres and in desirabe suburbs.
There is plenty of space if you want to live in Taihape, Otara or Hari Hari.
If we lived in a dictatorship the State could move us around anywhere and even things out,
But we dont live in a dictatiorship and people live where they like or can afford.
Famous town , Hari Hari . Site of the landing of the first successful aero-plane flight from Australia to NZ . South , way way south , of Hokitika ........ Not many spare houses there , in Hari Hari . Try Invercargill or Timaru ....... But if you really like excitement , Parnassus is the town for you .
Unlike Mr Goff, JK has some kind of understanding of economics, as demonstrated by his comments that even if supply is tight, when demand is weak prices aren't going to do anything but stagnate or fall
The supply tightness will only be an issue if demand significantly rises - can't see that happening when yields for investors are poor, many first home buyers can't afford houses and / or can't get the finance, net migration is sluggish, cost of living is on the increase and interest rates won't go any lower!!!!!
John Key says no shortage of houses, he has a good number of houses, including in Hawaii, so guess he's right, he has no shortage. Even Rusel Norman would have to agree to that with all the houses he 's got also?(or will he be off-loading now before he tries to negotiate bringing in a capital gains tax?)
You need to know the number of un-occupied residential dwellings whether they are "for sale" or not.
Generally speaking the bulk of the coverage on this web site deals with property in some form or other. There are a variety of opinions from both ends of the spectrum. The area of most contention is the question of supply and demand in the form of whether there is a "shortage of housing" or not and whether that shortage accounts for prices being maintained and continued un-affordability.
What is interesting is the plentiful supply of data in the form of (a) sales by month (b) new listings at the close of each month (c) QV stats etc. What is missing is the number of un-occupied dwellings at each month end. Item (b) new listings can be distorted month on month by vendors withdrawing property from sale one month and then re-listing a month later. Barfoot and Thompson should be a reliable source of data and should be in possession of how many of their listings are in fact un-occupied. Why dont they release that? Where could you get that data from. One simple source would be from the electricity retailers. They do publish data as to the number of terminations, dis-connections and new-connections in the form of swapping suppliers. So they do have the data. On a short-term basis, if data from electricity retailers in a given region was collated, the number of new-connections less the number of cancellations represents either (a) unoccupied dwellings if net-negative, or (b) new first time dwellings if net-positive. Power companies also have the capacity to measure the number of premises that are (a) disconnected and not re-connected, and/or (b) still connected but no useage for more than one month - then its unoccupied. Power companies can also distinguish between commercial and residential consumers. Access to such data would provide a valuable insight into property movements. Would take a lot of the guess work out of this guessing game. Couldn't find this info in the census stats.
If there is such a shortage of houses, why are the only ones seemingly coming on the market these quite big, mostly 4 bedroom, double garage, houses with onsuites?
If all builders are building is houses that are probably unaffordable to most people especially first home buyers, why are they so surprised when not many people are buying them?
If the only cars coming onto the market were BMW's and Merc's would it be a surprise if hardly anyone was buying them?
Ive got 3 mates who with good jobs... all 100+ started buying houses, tearing them down and putting lots of 4 rentals on each space. They have done this a number of times. Borrowing on one to finance the next.
Looking to sell the whole lot now, originally they were going to use these for printing cash.
They are spooked.
Agents want 250,000 to sell the portfolio. Thats more than they have made.
Ticking time bomb...
Harsh. They built quality homes. My point was they know the tides turning and will get out. What a horrible petty person you are. They are like me late 20's. The places were built for young professional couples. Who want a nice place before they move on.
You are a sad bitter person. Climb back under you rock.
What a troll.
No urban development? No inner city development at all.
Where on earth did selling a leaky home to a family come from. Not everyone is as cheap and nasty and selfish as you.
Harsh. They built quality homes. My point was they know the tides turning and will get out. What a horrible petty person you are. They are like me late 20's. The places were built for young professional couples. Who want a nice place before they move on.
You are a sad bitter person. Climb back under you rock.
What a troll.
No urban development? No inner city development at all.
Where on earth did selling a leaky home to a family come from. Not everyone is as cheap and nasty and selfish as you.
Like I said...
They were developed for young professionals wanting to live in town.
You think every NZ'er can live on a 1/4 acre block? You think every one wants to?
There was never talk about ,about a fortune, it was 3 mates with spare cash sorting out a way to supplement income by entering the renting game. Now the numbers are not adding up. They want out. They can stay and pay, but have enough nous to know when the winds changed.
One has already made a million dollar business, one is running a huge it business, and one is working in formula 2 in London.
So chill otut under your big rock.
I think, you'd want to get a full engineered report regardless. No ones buying anything without a full report. Trying to flog expensive houses with a nudge nudge wink wink.
You can't sell without an ecq report.
The house I'm renting isn't damaged. The landlord came round. Hasn't gone to ecq. I'm going to phone him to night and tell him to do it regardless.
PM John Key is playing with words.
Of course he would say there is "no housing shortage" because to say otherwise would lose the election for him on the spot.
And if you look at the figures he is right. There are 1.44M houses of all kinds in the country.
Assuming 4.5 million people you get 3.2 people per house which is certainly not over crowding.
But it's different in different centres.
The shortages show up in the main centres and in the desirable suburbs.
There is plenty of space if you want to live in Taihape, Otara or Hari Hari.
If we lived in a dictatorship the State could move us around anywhere and even things out,
But we don't live in a dictatorship and people live where they like or can afford.
I think John Key is quite right. The pattern of supply and demand in the last year or two indicates that the housing market is soft - falling sales, prices just holding but also looking weak. The question is why, when long-term migration is in approximate balance:
I believe that the migration figures do conceal a pattern which helps explain the softness in the housing market: those NZ citizens leaving (many of them for Australia) are the upwardly mobile middle class, professional and tradespeople. They are home-owners and are often selling up solid middle-class houses of above-average value.
Incoming migrants are mainly from India (see latest stats) - true, there are some Brits and S. Africans there with money - but the new migrants typically don't have much money and many will initially be renting instead of buying.
So there is an imbalance between the more expensive homes being sold up by those leaving and the cheaper (often rental) homes being sought by less-wealthy migrants.
Of more medium-term importance to the housing market is that demand is currently weak at a time when mortgage interest rates are at long-term lows and more people are on floating rates.
So fewer people are protected from immediate cost increases by a fixed mortgage. When RBNZ finally does raise rates, there could be a sudden jump in mortgage costs.
IMHO, I think the pattern will be a continuing gradual softening in house prices during 2011, followed by a sharper fall when mortgage rates start to rise.
good points
And remember 75% of Indian "imigrnats" are students who will place almost no pressure on demand for houses for sale
I think the large numbers of international students is a factor behind the rising rents, which is exacerbated around this time of the year just before uni stars (it will ease off after uni)
Rents have increased significantly, but still nowhere near enough to return yields on investment properties to healthy levels (on an averaged basis)
Its a very good point about demand being so weak when interest rates are pretty much bottom of the cycle. The only reason rates will stay "low" (still high by international standards) is if the economy remains in the crapper, in which case there won't be any upward pressure on house prices anyway
Just to get the heads up on the spruikers today regarding the piece in herald about a "shortage", I think that this is most definetly not the case for the greater Auckland, if you go north and south and west I believe you will find rents dropping, east and central they may be going up, but the herald is blatantly reporting rubbish told to them by RE agents. I categorically refute any shortage in Auckland or the country as a whole, this fear mongering needs to stop now, if an investment is so good you shouldn't need to scare people into it. The fact is that there are some of us out there that aren't scared.
No the Herald does not "report[s] facts in an unbiased manner". They publish any PR release they get that makes for a good headline.
However within 8kms of central Auckland one would expect rents and prices to be on the up thanks to various Plan Modifications banning any development anywhere near any NIMBY (the planners had to do something during the GFC to keep their jobs - so they spent their time writing new rules obfuscating the planning process and providing themselves years of work writing environmental effect assesments). Being a local central Aucklander my experience is that prices have been increasing since the 2007 market 'peak' and rents are on the up, which according to Key's supply/demand theory would indicate a shortage.
Any numbers from the US are fudged.
The global economy is a dead horse.
Any asset price rises occuring will be down to The Benanke printing money.
The amount of Kiwi's able to buy is diminishing as purchasing power of our dollars is eroded.
Capital gains is illusion when you grasp what purchasing power of dollars is.
....... it's flat where I live ........
Gosh , even without Hickey around to bring us all down , the resident gloomsterisers are having a field day ..........
...... Any time a set of figgers are released from some part of the world economy , some knee-jerks immediately call it a jack-up , or a bankers' collusion ......... If the figgers are tinged with any degree of positivism , that is ....
Keep the Gloomsterisers on their toes , Duke ! .... ( stomp on their toes , then they'd have something real to wizzle about ! )
Duke, he's on a school camp with his daughter for a couple of days. He did post this on the rental market recently - http://www.interest.co.nz/property/nz-herald-tv3-report-madness-aucklan…
For once, I have to agree with you, Muppet King. Only central suburbs are in demands.
I am looking after a house for an older family member in Ponsonby while they are overseas, it was rented out $40 than what we asked for. However, another workmate is trying to rent house his house in Three Kings and had very little interests
Correct me if I'm wrong Mr. Moa; but haven't you got three separate hosueholds in there? That's possibly two of them that would have taken their own accommodation in recent times, that are now 'bunking up' and leaving those other two previously-used properties, empty?
There will be a housing shortage when Australians move to NZ to avoid catistrophic weather conditions, when South Africans continue to migrate to NZ because it's so much safer, when the Chinese &Indians migrate here because there is so much more room and when NZ's come back becuase the rest of the world is falling apart.
Most will move to Auckland - and the Nth Island in general.
I base this prediction on absolutely no research apart from my own reaction if I, for example, lived in Queensland and continued to get extreme weather phenomenon.
It won't happen overnight
but it will happen.
And what will all those people do, to earn a living, when they get here? Buy and sell houses to each other, I guess. Because there's bugger all else for them to do. Oh, and "they will bring there skills with them" doesn't cut it; because the first thing that happens is they place a massive load on the current infrastructure, that they will never pay for. That's huge tax rises here, and then....they'll be off again.....
" Catistrophic " weather conditions ? ..... You mean when it's raining cats & dogs ! .... I hardly think that'll be enough to cause Queenslanders to cross the ditch to NZ . Unlike Kiwis , Ozzies are tough buggers , and don't go crying to the government everytime they're dealt a disaster ........
...... uranus , you're far out , dude ........ but anyone who quotes Rachel Hunter can't be all bad .
Where? In the papers...!
"After the series of powerful storm systems of the 2005 Atlantic hurricane season, a few newspaper columnists and scientists brought up the suggestion of introducing Category 6, and they have suggested pegging Category 6 to storms with winds greater than 174 or 180 mph (78 or 80 m/s); 150–155 knots (280–287 km/h).[7][15] Only a few storms in history have reached into this hypothetical category. Many of these storms were West Pacific super typhoons, most notably Typhoon Tip in 1979 with sustained winds of 190 mph (310 km/h).[16]
According to Robert Simpson, there is no reason for a Category 6 on the Saffir-Simpson Scale because it is designed to measure the potential damage of a hurricane to manmade structures. If the wind speed of the hurricane is above 155 mph (249 km/h), then the damage to a building will be "serious no matter how well it's engineered".[
http://en.wikipedia.org/wiki/Saffir%E2%80%93Simpson_Hurricane_Scale#Category_6
Hey St. Nick : I'd never heard of a category 6 hurricane neither ( Ma'a Nonu excepted ) , once they're up to 5 , there's enough power to destroy man-made structures and cause loss of lives .
...... Re property : An article in today's Business Spectator argues that the " baby-boomers " who turn 65 this year will begin to cash in their investment properties , and to scale down to smaller accommodation ........ They go on to guesstimate ( pulling a mighty long bow here ) that house prices in Australia will be 30 % lower than they are today , in 2050 ( inflation adjusted ) ................ [ the Gummster has difficulty guessing the future beyond afternoon-tea time ...... But 2050 ? ...Ye gads ! ..]
Hi, Roger. And, yep, to all the above ( It's the rum that does your attention span in, by the way). The only 'serious' bit I'd add is from personal experience; I didn't wait for 65 to roll around. I'd venture a few more under 65's are going to try and beat the rush, as well. Oh! And that: as you know, I'm a deflationist. That means nominal prices way lower than 30% if you add the two figures together......
Hey St. Nick : I was employed in Australia from 1983-'99 , and even way back then , alotta guys were opting for early retirement , from their early to mid 50's . Luckily for them , Santos had a generous superannuation scheme for staff , and you could tap into it from 55 years old , on .
........ Regarding my Rhum , the bottle proudly declares that it's " 5 years aged " ....... top-shelf stuff ! ...... A 250 ml bottle set me back 23 pesos ( 67 cents NZ ) at the Petron [ tank up the car on petrol , and tank up the driver on 40 % alcohol v/v Tanduay Rhum ! .] ...
Ah! The good ol' days. When Melbourne and Sydney ( I did 10 years in each; left '92) were quieter, gentler....more affordable...place to live in. 'Round about then I took the 'easy' option, as well. Now? I look back and wonder "What the hell was I thinking!". Maybe my brain never recovered from the Soju in Seoul that year ( it came ina a cardboard carton, like, milk does; and cost on par with your top-shelf stuff.That should have been the clue!)
Only if we never get a government with some balls.
But why would Aussies move to NZ? There's nothing here for them, and they all dream about being Americans anyway. No, NZ would definitely be their last resort.
South Africans? We get the bottom of the barrel, the ones with bogus CVs who've never done or learned anything useful in their lives. The "good" ones go where the money is, and that's not NZ.
Chinese and Indians? See my first point.
Now, I'm not racist, I have nothing against Asians or Indians personally, but again we seldom get the useful ones, or those with any real money: they go to the USA, or Canada, or anyone else richer than us and offering better prospects (ie the rest of the developed world).
NZ is a dumping ground for the refugees nobody else wants or will accept.
Even if we do continue to take every basket case that washes up on our shores, the existing glut of property will easily absorb them for the foreseeable future, no matter how much the desperate PI spruiker types (including those at the Herald) may try to claim otherwise.
1) Our standard of living, along with all other Western nations, that have lived beyond their means, is about to fall
2) We are overpopulated in terms of our capacity to provide employment for our citizens. Unmployment rates will keep rising, especially in the sector that needs most support; our young.
3) Corruption is a relative term. What is koha, for instance?
4)See (2). Immigration is slowing, and will stop, if we have any ambition of giving people who are already here, jobs.
5) Interest rates are about 3% below average on an OCR basis. Whilst I expect them to fall further in the short term, there is no doubt at some stage they will explode.
6) Replacement cost has little to do with market value. If you have to sell, you have to sell, no matter what it would cost you to rebuild it! And people will need to sell...
7) New development is only limited by statutory restictions. Government/local councils can expand land supply at their whim.
And.... it's not "me" Duke, saying all this, only. Listen to what your Governmenbt is saying "Rebalancing" does in no way mean "we are going to encourage New Zealanders to buy already overpriced property on more credit". Quite the opposite.
National governments and their Big Business overlords desperately want to encourage a high unemployment rate, asthey believe it leads to lower wages and salaries and benefits for existing and prospective employees. They want everyone so living in abject fear of losing their jobs that they will accept any third world offers tossed in their direction. And they are probably correct.
- at least it is less likely to be from a Natural Disaster than our "tough" friends across the ditch.
I guess the Australians do have a tendency to "stick it out", but I am guessing that the hundreds of thousands of kiwi migrants may be less keen to suffer through continued category (1 -5(6)) storms when they could easily return home.
the spruikers are talking rubbish as usual
the main reason central Auckland is under pressure AT PRESENT (ie. before uni starts) is that students naturally gravitate to central locations, always have, always will
In a week or two once uni has started this demand will subside
the Herald has not even mentioned this factor, very unbalanced reporting indeed
actually there are still plenty of 3 bedroom flats around the $600 - $700 mark in central Auckland
When you consider that 4 or 5 students will often cram into these, then thats actually still reasonably affordable
Especially when they can walk or have only a 1 stage bus trip into uni
5 is the top duke
re rent or buy its abt ones own circumstance. i got divorced in '08, sold a big hse (got lucky, phew!) and put a 100k down on a shack in good area in Q1 '09. i got 100k loan which costs me $165 wk to service. my ex elected to rent, she pays $250 rent for the same sorta thing. now shes got 70k in bank and a new telly...ive put a new b'room in my place and will continue to add value...but im a builder so its cheap for me to add value. consensus here seems to be its gonna rise and its gonna fall...i think qv's will level peg for a few more years then it'll rise...always does. moral of the story? debt is the enemy in times of volatility
With regards to some of Duke's comments, some of them are in appropriate, and I will say this, you pretty much lost all credibility when you said that the herald is unbiased reporting, its about as unbiased as fox news haha
But seriously Duke, theres no shortage. Just like theres no shortage of spruikers. Any investment worth buying these days is one that you will never hear about in the news.
Dukie I have a job, not a bad paying one at that! I'm pretty sure a lot of people that contribute on this site do too, and I'm pretty sure we all try to contribute as positively to society as we can, thats why we all have an interest in seeing everyone in our beautiful country have their own home!
FYI, Olly N sees potential "watershed moment" as Mike Pero cuts commissions - http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=107…
Santos net profit rises 15% Oil and gas producer Santos has reported a 15.2 per cent increase in full year net profit on higher prices for the fuels.
On balance I think that Goff is right, certainly in places like Auckland as evidenced by prospective renters practically fighting over the high priced rentals. Key seems to be using the low building permits as evidence of a lack of demand. My reading of that is that the cost of building in NZ is so high that very few people can afford to build, which of course is consistant with a high demand for rentals. This is a viscious circle which will keep the renters poor and the landloards rich. This is a situation that Key has just revealed that he wishes to perpetuate.
Re the cost of building - I dont see too many builders or people in the building industry getting unreasonably rich or even rich at all. Wages in Australia are in the order or 30-40% higher and yet their house building costs are 30 - 40 % lower. My observation is that building materials and land are far too expensive. Most of our materials come from monopoly or cozy duoploy supliers. Governments of both parties have sat by and done nothing about this while they witter on about the cost of phone calls, which are far less significant.
The value of land is grossly over inflated by speculation fueled by an artificial supply constraint. The town planing process is either grossly incompetent or corruptly influenced. Farm land will support 4 sheep to the acre. At todays bouyant lamb prices the gross income might be as high as $600 per acre. Out of this you must get your costs and wages, so the land may really only be worth $2000 per acre as a rational investment. Stripping out the speculation built on top of the farm land value, the base cost of land for a section is negligible. It only costs a few tens of thousands to dollars to develop a section efficiently. Accordingly if we had a free competative market, sections at the margins of a city should cost in the order of $100,000 and efficient developers would still make a good profit. The urban sprall argument is a myth because once a supply/demand equilbrium is reached, new houses will be constructed at the rate required by the demand as it should be under any regiem. Any body who wants to restict the supply in the market has suspect motives.
conspiracy theory chris?
ur ryt tho. i lay tiles...in '07 i was gettin $100m2, now im gettin 70, and i suspect alot of guys are really sharpening the ol pencil atm. but...in '06 i built a place for $1500m2, now ud b lookin at $2500m2....thats 40 odd % inflation in bldg cost over 4yrs, but labour rates have gone the other way. the point is materials are too damn expensive in nz and it'd b much better for us to b part of the oz market, economies of scale n all that...economic union? bring it on!
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.