Quotable Value says housing values rose by more than 10% in parts of Auckland over the last year

Its not a boom , its called Irrational Exuberance

And its fueled by:-

• Aucland Councils incompetence in planning for growth
• An open- door- immigration policy
• Cheap money coming on-shore  ( especially from  China )
• The RMA and taking two years to get a section subdivided
• The awful and destructive practice of LAND BANKING which is land speculation disguised as investment ( Tax free at that )
• And the Beehive which is behaving like a hare caught in the headlight

Aucklanders think this unearned wealth arsing from revaluatons is a ticket to spend big and live  the dream , they are wrong .

Its worth remembering that a windfall lunch like this is never free , and its now in dangerous territory.

These price levels are not sustainable  and there will be casualties

If you have tried to rent a place in Auckland in recent times you would know the demand for housing is exorbitant so why wouldnt prices fall ? 

Prices will fall something like 40% one day. Only a fool can believe otherwise. 

I now accept theories that explain that a bubble like our one is sustainable until 2021-2025.

If we are still talking to each other on this site, we can remind each other as appropriate. 

It is b----y fools who think prices can never fall, who end up taking down the entire economy ultimately - them and the fool local governments who created the game-able property markets in the first place with a quota system on land. Unfortunately everyone ends up bearing the cost, and there is no real appropriate incentive like jail sentences, for people who are actually responsible. 

The more leveraged you are when the crash comes, the bigger the insolvency. I guess it makes no difference apart from the size of the haircut taken by your ultimate financiers - the taxpayers who will bail out the financial institutions.

Another way to look at it is that a lower NZD is desirable and this may be a way to achieve something the RBNZ wrings its hands over but does nothing about.

Roll on  Armageddon. 

;o))

Sooner or later somebody will tackle it because the current situation is unsustainable and the longer it is left, the bigger the problem and crash at the end.  Ponzie schemes never carry on for ever so the sooner we address it the less damage.  If National do not adequately address it in the next three years then there will be one hell of a mess when a future government decides to.  And if a future government decides to continue kicking the can down the road the future crash will just continue to grow exponentially.  As it stands Nationals initiatives do not look like achieveing much so we are still on a very alarming trajectory for the next couple of years at least.

The problem is not land banking.  Someone has to own those undeveloped tracts and putting on penalties isn't really going to help much - it will just mean the only people/companies that can afford to speculate are the ones that have enough market dominance to pass on the cost elsewhere.

Re-read that and memorise it.



The difficulty comes when the banker won't sell for reasonable market price - or does what is happening in other towns (like dannevirke) where the banker is also a developer or has similar interests, and insists on adding into the sales contract covenants that say the land purchasers will also buy an over priced house from the developer.

 So either asking far too much, and expecting demand to keep increasing until you get it*, or adding in unrelated extra overheads is the problem.  It might be that sections in areas scheduled for immediate use in the town plan are given higher rates demand if registered purchase notices are significantly above the local mean, and it may be that RMA needs a provision that removes the ability for associated parties to demand unusual encumberances to the local land lots (ie that there is grounds put in place to challenge and remove caveats and convenients etc that are associated party or specific - that would protect the areas property values, but not lock in particular suppliers or interested parties.)   Bare land for development _is_ a valid local resource issue.

The above link seems to have degraded. It can be found by googling Brendon Harre Top 10.

Brian Rudman continues on similiar themes with todays NZ Herald opinion piece "Santa, let's talk about housing".

I have left a comment there saying (waiting moderation).

"It is the State that provides the infrastructure for new urban developments -roads, water, public transport etc. The State also provides the legal framework -zoning, title etc.

If the State wants to nudge the market, to break the landbankers and property speculators then it just needs to add buying farms at farm prices. Do that in partnership with large scale affordable housing development agencies and then the mutal back slapping from our politicians would be genuine.

Do we have politicians with the political will to do what it takes to provide affordable housing?"

Brendon I think the answer lies in the 12 years........Baby boomers start exiting property.

Except , we dont have ;-

• Monaco's  Tax Haven Status
• Londons centre of  world banking and insurance status
• New Yorks financial centre status
• Moscows'  oil and gas ( and few parts of Moscow are at these prices the place has dreadful housing estates )
• Syndeys Listed mining Companies and financial hub status
• We have only cows , sheep and migrants with laundered money to keep us going

Great, isn't it? Money for nothing. That is New Zealand's and basically the West's current business model. Money printed by central banks is after all REALLY money for nothing and it finds it way to us.

You have done nothing.  important that.



That shows you how much devaluation has occurred to the rest of us.

I dont agree when you say "I have done nothing". You invested in a house when a lot others found reasons not to. 

Areas that baby boomers retire to will see a lift in prices, already happening in Tauranga. 

The effect of the election can't be understated, if a LGIMW combo had of got in we would have seen an almost total implosion of central government.  But a National victory has ensured continued growth in population, GDP, credit and inflation and in these conditions house price inflation becomes systemic and inevitable. 

I hadn't really thought about it, waymad, but the Rating Powers Act is so broad you might as well call it the Print Yourself Money Act.

There is a genuine option to rate undeveloped land within an urban boundary highly but to allow an exemption for those who have genuine reasons to use the land that way (the petting zoo etc). A common method for doing that is to require an annual declaration of circumstance for those who want the exemption rather than creating a zillion rules for who pays and who doesn't.

Unfortunately with the state of the AKL market being what it is I suspect the unintended side effect of that scheme would be to stop development completely rather than hurry it along.

I think you'll run into problems with Superior legislation and fundamentals that say certain groups cannot be targetted for punitive action if they have broken no laws.   Such targetting of fictious value could be easily considered targetted and punitive.



That's why I was wondering about making such claims related to RMA (ponies and thistles not being proper residental care or resource) and public good (land banking for a profit is one thing, perpetual holding for unrealistic gains is just a thorn in everyones side and serves no useful purpose for the owner).  Hence the possibility of introduction of controls to encourage or even force sale, should the price be over a certain figure (eg 30% or 50% over RV) that the pressure is then put on the owner, why aren't they selling at that figure,  such an introduction would give a purchaser an avenue to press a claim against the worst offenders.