By Bernard Hickey
Housing and Building Minister Nick Smith has denied New Zealand faces a housing crisis, describing media reports of a crisis as a beatup and instead insisting the situation was a "challenge" where a supply response was needed to meet strong demand, which was a "sign of success."
Prime Minister John Key later also told a business audience on Thursday that Auckland's house prices and congestion issues were a "sign of success".
Smith was asked in Parliament by Labour Housing Spokesman Phil Twyford if he stood by previous statements that reports of a crisis were a "media beat up."
"The Government’s position is that it is not a crisis, but that there is a challenge. New Zealand is doing so well that it is attracting New Zealanders home and an increasing number of people want to live in New Zealand, and as a consequence of that good-news story, we need to make sure that we build more houses," Smith said.
He was then asked about an IMF report that showed New Zealand had the second-fastest real house price growth in the world in the last year (behind Qatar) and the fastest house price to income multiple growth in the last four years. The report also showed New Zealand's house price to income ratio had grown the second fastest in the world in the last five years behind Turkey.
"I would note on the IMF chart—if that was to be the test—that the most affordable houses and the best places to live are Syria, Greece, and Spain. Actually, this Government’s ambition is not to be like any of those three countries," Smith said.
Prime Minister John Key then intervened to question Smith about the difference between the Government's policies and Labour's while in Government from 1999 to 2008.
"The first step this Government took was to remove depreciation for buildings, which affects the demand side of investment housing. The second step the Government took was the first phase of Resource Management Act reforms. The Government then introduced the HomeStart scheme—that is a $420 million investment. The Government has provided for increased housing standards, with 290,000 houses insulated," Smith said.
Claiming credit for lower interest rates
Shortly afterwards, ACT Leader and Epsom MP David Seymour then challenged Nick Smith's comments that housing affordability had improved under National. Smith agreed that higher interest rates would stress home owners, given prices were now substantially higher than in 2008.
"If interest rates return to 2008 levels of over 9 percent, it would put families with a mortgage under extreme pressure. That is why good economic management that keeps interest rates low for longer is absolutely critical for families and home ownership," Smith said.
He then agreed that he did not have much influence over interest rates, but that they would be higher if the Government had been profligate. National MP then asked Smith about the AMP 360 Housing Affordability reports produced by Interest.co.nz.
Smith said these reports showed housing was 24% more affordable now than in 2008.
"Why was the Minister prepared to take the credit for falling interest rates, which he has conceded he cannot control, when the factors, such as supply, which he says he can control, have deteriorated over the period referred to in his quote?" Seymour asked.
"I do accept the key element of housing that I do have responsibility for is supply. I note in the period that I have been the Minister house construction has gone from 13,000 a year to 27,000 a year. In fact, the housing build rate has increased more in the last 3 years than it has at any time in New Zealand history," Smith responded.
Key also sees success
Key told an Employers and Manufacturers Association event that Auckland's problems were a good problem to have.
"If you look at the challenges Auckland has at the moment - and you know, they're well documented from housing to transport - they are in a funny kind of way a quality problem to have because what they reflect is that Auckland is doing well," Key said, as seen in this NZ Herald video.
"You've got net migration not just strong from India, China and Australia but actually net migration from around the country," Key said.
"If you look at cities that are doing badly, yip, they may not have issues on their housing and may not have as much traffic jams - although I will point out last Thursday I was in Te Kuiti in a traffic jam - but the point being, in a way what would we rather have?" Key asked.
"And the truth is we would rather be having to deal with the challenges of growth and say 'OK we've got to deal with those issues but gosh they're signs that as a city we're doing incredibly well and actually as a country we're doing incredibly well'."
(Updated with comments from John Key)
135 Comments
I am an avid National supporter , but have to admit that man, Nick Smith is a walking disaster.
Just how on earth does he think with Auckland's boundary limits , the 3 years its taken get the City plan approved, and over 1000 new arrivals every seven days , complex resource consents , simple water connections costing almost half a years minimum wage , are we ever going to meet demand for housing ?
Let alone houses at a reasonable price
In the meantime we have 17 year-old high school dropouts with a nail - gun earning $50 /hour as chippies .....more than a recent grad Doctor .
Things have gotten so surreal, even incongruous , that someone or something is going to hit the re-set button............ at which time we will all wake up from this dream , many with an debt hangover .
After several responses from his assistants about just how busy he is, an appropriate note for today's email to the good Hon Dr Nick Smith.
"Thank you for the update. I also read today that Hon Dr Nick Smith explained that the housing crisis is merely a 'challenge'. One would hope that having downgraded the urgency of the situation he will have more time on his hands to rely to me and others with the solutions to this challenge? Therefore, I look forward to an answer soon"
It felt right.
I wish the opposition would have some better comebacks to the garbage National shovel out.
For example, if it's dismissed as only a "challenge" it should immediately be framed as complacency with a supplementary question asking exactly what things have to come to before National would consider it a crisis.
Auckland house prices have gone up both from their pre-GFC peak and their GFC bottom than any other city in the OECD. And today I read in the paper that QV are reporting other cities in NZ rising at the hyper unhelpful rate of 25% pa.
As if the result didn't already say incompetence & indifference but today Nick Smith (and National) went out to scream it.
National's party song should be "Don't Worry Be Happy"
so JK now wants traffic jams in all NZ cities as that is a sign of success, another jokester, my sides are hurting from the laughing
If you look at cities that are doing badly, yip, they may not have issues on their housing and may not have as much traffic jams - although I will point out last Thursday I was in Te Kuiti in a traffic jam - but the point being, in a way what would we rather have?" Key asked guests.
David Seymour's stance is quite interesting, given he is 1. ACT (and the people suffering from this crisis are not your typical rich right-wing ACT voters), and 2. he is part of the government rather than the opposition.
Maybe he is trying to moderate himself / the ACT party to appeal to the dis-enfranchised national voters that don't see labour/greens/nz first as a realistic alternative? The new alternative centre/right party?
Labour is centre right? You have to be joking me. Free tertiary education for the first 3 years for all NZers, the state building houses to sell, new taxes, banning overseas buyers. How are these centre right?
NZ as a whole leans further to the left than the right compared to the rest of the world.
Seymour is an interesting fellow. As you allude to many of his views are not consistent with what many think ACT/Right Wing politics is all about. Seeing as he is where he is essentially because of an election arrangement with National, he certainly doesn't seem to be their puppet. It will be interesting to see what happens in the next election as I'm not sure National would give him another free pass.
I think he'd do quite well away from ACT to be honest.
I agree, it is hard to work out Seymore's angle.
I never liked him to start with but I must admit he has provided a reliable voice of logical reason this year, instead of puppet rhetoric that we would normally expect from a person in his position.
Plus, I think it is the perfect position for ACT to take, based on their ideology.
However, Seymore's comments shouldn't be the focus here. It needs to be the fact that we have a Prime Minister and Housing Minister going on record as trying to spin the current housing and transport crises as 'good'.
So, essentially, in the eyes of these two, the immense loss of productivity, huge debt exposure and lowering real GDP per capita (to name but a few areas of concern) are 'good' signs for New Zealand?
We laugh at the prospect of Trump being the next US president but seriously some of the rubbish the National Party proclaim makes most 'Trumpisms' look relatively tame and logical.
So a 9-1 loan to income ratio is good for the city when it is the taxpayers of the next 40 years that are having to pay it, and the people retiring in 10 years / retired that are making all of the money from this "good problem"?
Great way to have a brain drain of the younger population and being stuck with lots of cash poor, equity rich elderly people on a superannuation model where it is funded as it goes rather than being pre-funded by the generation that are going to receive it.
That it does. That is why I used an average.
Also I realise I said loan-to-income rather than house-to-income. I think the median house price / median household income was about 9-1, which would put the loan-to-income at about 7-1 for the new home buyers (as its unlikely they will have a deposit higher than 20%).
I realise new home buyers probably won't be buying the houses that are at the median house price, but they also probably wont have as much income as the median household income.
Did you read my correction - 7-1 loan to income ratios off 9-1 house price to income ratios.
This is based off the market rates and includes those that cannot afford houses (in both getting the deposit and getting a mortgage).
You prove my point perfectly though.
At 9-1 house price to income ratio, you would need to have a 7-1 loan to income ratio on your loan, and what bank would lend to you at that? Exactly, no house for you!
Agreed there is no housing crisis but we have a challenge. Most people have jobs and are property owners. The majority of home owners probably have a household income of between $150k and 300k in Auckland, so that's not 9-1 home to income ratio. The minority on this site are gloom and doomsters, moaners and are extremely negative and jealous. They are shouting the loudest hence it gives an impression (on this site) that we have a crisis. It's a different world out there.
Yes, the problem Auckland has is that it is affordable for the reasonably affluent. Location, location, location is the motto because in the long run the best locations are the most affordable or best investments. There are many households with incomes of around 200k.
Have the best suburbs ever been affordable for those on a single average salary?
Also affordable in the sense of cheap is not necessarily a good description. For example I cannot afford to buy a house in Detroit or even Tokoroa. Perhaps the problem is not affordability but the quality of the location?
Instead of worrying about the affordability of the best locations let's look at the quality of the worst locations and fix that. How about that you revolutionaries?
Follow me not Gordon!
Unfortunately the IMF and OECD agree with the "minority" on this website
https://www.tvnz.co.nz/one-news/new-zealand/overheated-auckland-housing…
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=114…
"Most people... are property owners".
Yes, most people are property owners because they owned a property 4+ years ago, when prices were half of what they were now.
As such, whatever the home-to-income ratio is now (lets say 6-1), it was half of what it was then, as salaries have had minimal increases over the period.
You may say that interest rates have dropped so interest costs are similar. This is true, but the amount of principle required to be repaid has doubled, so the actual repayment costs (principle + interest) is MUCH higher than it was 4 years ago.
The concern is the economy of a city/country functions through a strong and fairly even mix of generations, so there are enough taxpayers at any given time in order to make up for the people that still receive the services of government but no longer contribute to the coffers through income tax.
What the current problem is doing is incentivising the people who feel that cannot purchase a property to leave Auckland/NZ. These people are the younger people who have much more of their taxpaying life ahead of them than the current homeowners.
And I am staggered that you think that the average household income for home owners is between $150k - $300k in Auckland. I would say $150k is probably closer to the upper end of that mark. Maybe try leaving the inner city leafy suburbs once in a while to see that Auckland extends beyond a 10 minute drive from the skytower.
Most people... are property owners". incorrect check the stats, tenants now out number property owners
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=112…
To me this article is a little ambiguous. the reason being is because It talks about people who 'Own their own home' in some instances and in others it talks about 'homeowners' . We mustn't forget that MANY landlords with multiple properties don't actually 'Own their own home' , they choose to rent from others instead.
Please can we name and shame all MP' of any persuasion, who own rental houses and visit Wellington and have a free and for nix accommodation, in their flitting around the world, deniability.....stage.
Please provide all expenses, all salaries, all perks and any other financial benefits of the delusional, wot me...benefit..nature.
Then perhaps we can Judge for ourselves, whether they are just plain stupid, or have their snouts in a trough.
Smith maybe right after all.
There are over 3000 houses, apartments, units and townhouses under $800K on Trademe for sale in the Auckland region today.
It's hard to use the word "crisis" when so called "locked out" buyers have so many affordable houses to choose from on any given day.
Being the suicide capital of NZ probably helped those palmy prices.
http://www.stuff.co.nz/national/health/5518442/Palmerston-North-high-in…
I love this sort of shifting of the goalposts. Affordability clearly means something different to those who have been experiencing capital gains in the Auckland housing market.
Remember back before the last election, when the Government's solution to the house affordability crisis was to raise the cap for the Kiwisaver subsidy for first-time buyers of Auckland property from houses under $450,000 to houses under $550,000? That sure was an effective long-term fix, wasn't it?
Quite right, I agree with Nick, we don't want to be like Greece or Spain, lovely sunny countries which had a house price and building boom based on wasteful government and too cheap money, followed by a nasty bust and 25% unemployment. New Zealand is a lovely sunny country which is having a house price and building boom based on most excellent and really very clever government policy, indeed I would say talented government policy , everyone says how talented, even the Australians say how talented our government policy is, and too cheap money. So all will be well, er, honest.
Actually, there is one key difference between NZ and Greece and Spain, they were unable to let their currency collapse when their bubble burst (yes, I know, I know, there is no bubble in New Zealand, but just the same).
Actually, Spain is a great place - except for its pathologically corrupt politics. Wonderful landscapes, food and amazingly stylish houses (at least the traditional ones), no comparison to our revolting shacks. Ask the million poms living there. Having to find a job there is a different matter, however. In any way, NZ has no reason to be smug. I find Smith's comment pretty unconvincing and of course partially dishonest, as there is no real estate data on Syria at all. What nonsense.
So having a real estate bubble is something to be proud of? OMG. Spain in 2006 had more construction activity than the rest of Europe together and felt really smug, too. And then 2007 came and they had to go hat in hand for a bail-out. Wont happen here, of course, as nobody will bail us out. Maybe China, but only if we become a Chinese province also officially.
It is all rather curious. It does seem as if NZ policy (and Aus too) has been to sell existing assets to the next crop of cash rich immigrants as they step off the boat. It's sort of a continuous bail out, allowing people to retire from Auckland and head somewhere sunnier.
Presumably the simple model of producing stuff and selling it at a profit just doesn't cut it, and we need to continuously turn over our real estate to keep ourselves in the style to which we have become accustomed. Does this model just carry on forever with repeated booms and busts of varying severity?
Wow....... talk about getting a sense of Deja vu its like a Ponzi scheme, or like our Finance Company fiasco, which was dependant on new money coming to fund dividends and interest to investors .
As long as there are new entrants ( in this case migrants) its all okay .
I recall the former Labour Government saying the Finance Companies were not facing a crisis and refusing to have them governed as Deposit -taking -institutions ... which would have seen them governed just like any bank .
Look how that ended, spectacular collapses , Nanna's life savings gone and the Labour Government ...... OUT
Note JK and Smith are both boomers. They do not have to worry about housing costs. JK like me can house his kids. They both need to get in the real world and admit Y and Z have serious housing cost issues to tackle and that there needs to be some serious debate about how it is going to be sorted and quick about it.
Ever heard of Hubris ?
I am a boomer, but I can see we are fooling ourselves thinking that we are suddenly rich with newfound lottery - winning - scale equity in our homes .
I have been around as long as JK , Nick Smith and Bill English to understand we have boom and bust cycles , and they can be as high as Mt Cook and as deep as the Milford Sound .
These boys are also not stupid , and deep down they know the truth , or maybe not .... it could be Hubris
National can't say anything but there is no housing crisis - even if it is staring them in the face - they would have to admit that their immigration and housing policies were wrong for starters. They will continue to say this until they loose power or there is such a catastrophic failure in the housing or banking markets that they can't hide from it.
Their definition of 'crisis' is probably 'negative effect on our poll numbers', because they clearly don't give a crap about anything else. Even if a meteorite hit Auckland and the whole place was a smoking crater, that wouldn't be a crisis unless by some miracle David Farrar wasn't vaporised in the blast and reported that their approval rating was down.
Too many apartments are "mediocre": architecture judge
http://www.radionz.co.nz/national/programmes/ninetonoon/audio/201798846…
So much for Brave New World
Questioner: Green belt. With the price of land and the value of what we are putting on our properties here, um I just am feeling more and more beautiful land is being mowed down in housing. I know I behave better when I have something beautiful around me and um if we are going to be impoverished with our environment we need to plan for it.
Rod Oram: when we get a much better build environment here in terms of form and quality of build and all the rest we can do that and in addition this is such an amazing climate we can do it in such a way that buildings become largely self sufficient for energy and water too. So and that's the whole living building challenge which is a very demanding discipline but we can do all these things and make this a very exceptional and beautiful place to um live.
Breathtaking arrogance by an incompetent minister. Investors, many from overseas, are stoking an already strong demand. Auckland prices are in the stratosphere and many of these $1m plus houses are old, cold dumps. Should know, I sold one and used the cash to buy a nice warm one in rural Auckland where I can't hear my neighbours' TV. Australian houses are much, much better for the money.
Simple fact: Investors outbid young NZ couples, and then turn these unfortunates into tenants in their own land. Naked greed, but then, it's easy money and TAX FREE!! Needs a political response.The fact that overseas investors want to buy our children's future is not a ''good sign'', it is simply a response to weak policy that allows people with no stake in our country to make huge, untaxed profits. Can of worms stuff.
Forget about LOAN-TO-VALUE-RATIOS there is not even a translation for this stupid hare-brained rule , in Mandarin .
These buyers don't care less about the LTVR , it works to their advantage , because Kiwis don't get a look in and have stopped going to the house auctions
The LTVR is actually another handicap for Kiwis wanting a roof over their heads , in addition to the cheap ( low interest) money coming here from Hong Kong and Shanghai which gives those buyers huge advantage over us .
Hmmm, lots of folk with lots of off the mark perceptions and much political drivel, I see.
A "housing crisis" is independent of price and ownership. It occurs when there is not enough accommodation to house the people who need it. With many vacant and under utilised properties throughout the country I fail to see how this can be shown.
Simply wishing to buy property and being unable to do so in a limited geographical area for any reason does not qualify as any type of crisis.
Well it's a crisis in ways beyond what you describe.
I would call it first and foremost an economic crisis. This nonsense is causing huge macroeconomic risk.
3 years ago I would have said a chance of a housing crash in NZ was less than 20%. Now I would say it's 50/50. It's got bubble written all over it.
If it bursts this country is in deep deep s$%t...
The house prices change Auckland, it has huge influence. The business are closing, because
there are no costumers. 1 in 10th houses in Takapuna are empty. People are moved far from
city center, it's why people buy more cars. People living where there is no infrastructure.
And where there is infrastracture no many are living. It's the reason why there are traffic
jamms. Investors buying houses and living it empty. Most of the salary is spent on rent
or to the bank, people can not afford to eat what they really want or go somewhere.
The cinema in city center almost always half empty. If you will go to other country then
you will see that cinemas, cafes - fully booked.
Immigrants who are living here are from poor countries and they are happy to live even
in dog house as long as they can send money to home country.
A lot of people waiting for their NZ passport to leave that place forever.
I think our goverment blind or heavily corrupted.
It angers me to see this govt labeling this a success. This debt fuelled binge will cost this country dearly. And john key knows it. Instead he tells everyone its a great thing. All for political gain. Nationals failure to act will bankrupt us all. And then we really will be like Greece, Italy and Spain. As for labour and the greens their policies are not much better. Rbnz must implement a borrowing cap linked to income. Our financial stability depends on it.
italy hasn't really done that bad, regardless what they say. most of the people own their own properly built houses and it's one of the countries with highest amount of private savings so when the shit hit the fan people could still live an happy life and pizzerias remained full. NZ on the other hand, i think a bubble burst would be a bloodbath
“The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane, and intolerable...”
HL Mencken
I ask myself, how do we get a govt that acts in the nation's best interest. Politics is in its own nature a self- interest agenda popularised via propaganda. We may not have lobby groups to the extent of what they do in USA political system but instead we have lobby groups as direct political party members and even MPs. The system is flawed. To some extent no system is perfect and all voters are ill-informed and also self-interest and vote for what they will get personally. As a country, we voted for this. I am not a hard lefty but if I think back to when Helen was PM, I think her intentions were more genuine and in the nation's best interest. However she was beaten by the big business money. As for john key, I feel he says one thing in public but thinks the opposite in private. Almost like trying to rip off the nation. It feels wrong but he's such a nice guy so long as you don't scratch beneath the façade. I've come to the conclusion that no govt on the planet can stop the downward spiral. Humanity should be far better. You can't fight it. All you can do it sit back and watch it all unravel. The hard decisions are not vote winners. What retired person will vote for an increase in pension age? What student will vote for interest on student loans? What property owner will vote for a capital gains tax across the board? These 3 policies has potential to impact 80% of voters, yet as a country all 3 policies are needed in the nation's best interest!!
I've reached the same conclusion. Except I have to adjust my investment to suit the environment.
One thing I've noticed is that a lot of arguments against fixing things now are the same level of idiotic as they were in the Depression. The following link is to a really interesting documentary on life, politics and economics of that time.
“When you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you. . . you may know that your society is doomed.” Ayn Rand, "Atlas Shrugged."
Had the in-laws around for tea last night. Key and National came up so I asked them for their plolitical view. They were all over K+N so I asked them why - what have they done for NZ. They stuttered and stammered but came up with nothing. They got embarrassed and pissed when I pointed this out and followed up with the comment that they were just feeling that way because their house had doubled to 2 mill.
At the end of the day this is the hurdle Labour has to overcome. The retired gentry will be voting in the 90% range and will associate Key with the success they have had with their house value going up while they will completely ignore the damage he has done to their grandchildrens future.
Nick Smith - does he have a chromosone missing?
I get that response all the time when I ask key disciples to name his successes , they hmm and haa and the best they can come up with is they are better than labour or the greens or imagine if the other mob were in.
When I point out the huge NZ debt they have built, the lack of planning for the future. The stupid decisions they took I.e stopping funding the Cullen fund in the most favourable investing and cheapest interest period in the history of the world,or the selling of the power cos to buy more assets, where has that money gone opps, (and I benefited from that) there eyes glaze over as they just don't see it, like you said on paper they are now rich
This about sums it up
https://www.google.co.nz/search?q=nick+smith+minister&safe=strict&espv=…
But right now China is still adding excess capacity across a swathe of industries, and there is every reason to fear that the next global downturn will bring matters to a head, either because President Xi Jinping devalues the yuan to buy political time or because capital flight forces his hand. Either way we would face a deflationary tsunami.
Western leaders did not fully understand what they were doing when they tore down the defences over the last quarter century, and lightly overlooked what competition with Chinese labour might mean for tens of millions of their own electors.
http://www.telegraph.co.uk/business/2016/05/04/let-the-ttip-trade-pact-…
I do enjoy reading the anti rental property providers. Yet I wonder what they think about Nick's comment.
"The first step this Government took was to remove depreciation for buildings, which affects the demand side of investment housing."
Just what does that mean. If you affect the demand side of investment housing that means tenants will not want to rent? How does increasing the tax take by a Billion Dollars off property investors help tenants. In my property management business it meant many higher quality properties were sold because the owners could no longer afford to hold them. Then people complain about low grade rentals. Investing Accounting 101 Nick and Andrew. If you increase the cost of providing a service by increasing taxes and compliance costs something must happen with the retail cost in the hands of the consumer. Surprise the rents go up, the supply of new does not keep pace with demand so the capital prices go up. Do we remember the days when the supply of cars was controlled. Their prices were way too high. This is all simple stuff. How long will it take for the penny to drop on both sides of the house. Both are as bad as each other.
to quote....
People sense the 'recovery" is bogus, and their rational response is to save more money rather than squander it.
Sometimes one chart captures the fundamental reality of the economy: for example, this chart of money velocity and the civilian-population ratio.
Civilian Employment Population Ratio vs Velocity of M2 Money StockCivilian Employment Population Ratio vs Velocity of M2 Money Stock
When the blue line is up, more of the population has a job. (the blue line is the Employment-Population ratio.)
The red line is money velocity, the rate at which money changes hands. (Money buried in the coffee can in the back yard has a money velocity of zero.)
As Joseph noted, the correlation between the percentage of people working and money velocity was strong until 2010. In the post-2009 recession "recovery," the percentage of the populace with jobs rose modestly, but money velocity absolutely cratered to unprecedented lows.
(The one other disconnect was triggered by the 1987 stock market crash, which caused money velocity to dip even as more people entered the workforce. This absence of correlation was relatively brief.)
The correlation between more people working and money velocity is commonsensical. More people working = more household income = more spending = higher money velocity.
But something changed in 2010. Did the quality and compensation of work change? Joseph observed:
People started going back to work after the official recession ended in Q4 2009 but they were working for lower pay. With lower pay comes less disposable income, hence the cliff-like drop off in velocity.
Another potential factor is higher inflation. Some recent estimates (Where's The Beef? ‘Lies, Damned Lies, And Statistics’) suggest the gap between official inflation and actual inflation in rent, food, energy and medical care in the past 20 years has subtracted 20% from paychecks.
The four "biggies" for the average American are rent, food, energy, and medical care, in approximately that order. These "four horsemen" have been galloping along at a faster rate than headline CPI. According to the BLS definition, they compose about 60% of the aggregate population's consumption basket, but for struggling middle-class Americans, it's closer to 80%. For the working poor, spending on these four categories can stretch to as much as 90% of total spending.
(If we add exposure to higher education's soaring costs, the rate goes even higher.)
So even if wages held steady, once we factor in "real" inflation, real take-home pay has declined by 5% to 20%, depending on the household's exposure to rent, food, energy, medical care (love those co-pays and out-of-pocket expenses) and higher education.
Another potential factor is the figurative coffee can in the back yard: people sense the 'recovery" is bogus, and their rational response is to save more money rather than squander it. Even though central banks have reduced the yield on savings to less than zero, people are still saving whatever they can.
Data suggests it's all three: lower incomes, higher inflation and a recognition that savings are more important in a ‘Lies, Damned Lies, And Statistics’ economy than more spending.
This chart says it all: real income is declining and the bottom 95% are poorer. No wonder people are socking away what they can and tightening their spending: they have no other choice, even as the Federal Reserve strip-mines their savings.
time to get long Pitchforks and GOLD
"Someone's sitting in the shade today because someone planted a tree a long time ago."
"I was lucky enough to be born in a time and place where society values my talent, and gave me a good education to develop that talent, and set up the laws and the financial system to let me do what I love doing — and make a lot of money doing it. The least I can do is help pay for all that."
"You want to be greedy when others are fearful. You want to be fearful when others are greedy. It's that simple."
- Warren Buffet
It feels like the time is coming, for the non debt laden to move from being fearful to greedy...
Ezy, algorithms don't give interviews... keep following the last of the human investors...
The Holy Grail Of Trading Has Been Found: HFT Firm Reveals 1 Losing Trading Day In 1238 Days Of Trading
http://www.zerohedge.com/news/2014-03-10/holy-grail-trading-has-been-fo…
Stamp Duty on ALL investors (22nd time)
when John Key debates house prices he likes to talk in Percentage terms and compares the % gains under Labour versus % gains under National.
I believe the real focus should be on the Average Amounts increased not on the percentage.
Under Labour 1999-2008 prices increased approximately 200k from 300k to 500k.
Under National 2008-2016 they have increased approximately 450k from 500k to 950k now.
Under Labour a 200k increase however under National a 450K increase.
Next time he talks percentages the opposition parties should remind him of the actual dollar amounts.
Labour only did two terms if I recall correctly. JK has done two and a half and will probably do four as Labour has no obvious leader in the house currently. If Labour could put up someone I can visualise as an effective PM they would get my vote back. They also need to get rid of King, Mallard and co. Professional politicians are not healthy in my opinion. JK got in because he was fresh.
“Everything intelligent is so boring.” Leo Tolstoy
Wiki:
A Russian writer who primarily wrote novels and short stories. Later in life, he also wrote plays and essays. His two most famous works, the novels War and Peace and Anna Karenina, are acknowledged as two of the greatest novels of all time and a pinnacle of realist fiction.
“Everything intelligent is so boring.”
I searched everywhere for that quote. Apparently it comes from Anna Karenina yet when searching the pdf I could not find it. I suspect it just comes from the mouth of a fictional character from one of Tolstoy's scribblings. A challenge for someone to find where it actually came from?
Anyway it is rather silly but fictional characters are allowed to be silly. Tolstoy also wrote:
Nothing is so necessary for a young man as the company of intelligent women.
Also young men should note:
It's hard to love a woman and do anything.
Yep Justice. I am a classic example. Long term centrist even nudging slightly to the right I have seen the massive failure of this govt and I have shifted to the left. Even without a charisma less Labour I would still vote for them today.
Get a charismatic leader, some stability and play smart and they are great chance next election
Quite like the other two quotes.
10% stamp applies to all existing houses unless owner occupied. New builds would be exempt to encourage more supply such that investors can finally provide the service they harp on about.
Simple concept. Can just look at what they are doing in the UK if you want the finer details of how it should be done. What is the alternative ? Nothing else seems to be working and it just becoming more and more difficult for the first home buyers.
#23StampDuty
"Good economic management keeping interest rates low.." doesn't that show the economy needs stimulus? 'Poor economic management has meant low interest rates' is perhaps more correct, or 'global economic factors so far beyond our control has kept rates lower' would be more accurate. Not even border line, his comments are plain stupid. They spoke about all their initiatives - none of which have worked. Looking for an oversupply here, the huge amounts of development outside of Tauranga for example will be very difficult to fill. Developers will start hitting low ball offers. Undoubtedly going to over correct here and get ourselves into a good ol fashioned housing crisis. The pressure National put on the RB to ease rates further without putting any meaningful housing policy in is also a bit cringe worthy for me. Maybe I've been living in Wellington for too long, but just starting out in the work force and yet to own a home, I couldn't possibly vote for them again. What a shocker.
Devon Funds
No real political will to tackle the housing crisis
https://devonfunds.co.nz/no-real-political-will-tackle-housing-crisis
Michael Reddell
“Quality problems”
https://croakingcassandra.com/
From where I see the world, gen Y are far more financially savvy than given credit / portrayed here. Most of my colleagues are Gen Y hence I share my view. Few of them already own property. (properties for at-least one of them that I know), invest in stocks and most have KiwiSaver. One of them is actively going to auctions (not easy is the feedback). I wish him success.
I am not saying most gen Y own properties or do not have challenges. Every generation has challenges. Just don't be surprised if your landlord happens to be a Gen Y.
Today's honesty test and quiz for Kiwi un-biased flightless birds.
(It is Free, no charges... Yet.)
Or perhaps the next ReferendumB. Or shall we flag it. Yes/ No.
(I will only charge 1% of one fifth of a rats arse, unlike a certain policy maker)
Simple question, why is it all some people talk about is houses and how much they have been forced up, price wise to import inflation ...via lowered interest rates from all around this globe...particularly dare I say it...from Asian money changers, via USA subsidies.
Is it working??... Yes/No..
Are you working. Yes/No.
Why are some immigrants leaving their own countries in droves, from their own indebted nations, is it because they value our homes, or value their lives, even more at any cost. Yes/No.
.
Why is it necessary to import millionaires to pump up the Awkland crap and compete with poorer Awklanders, so that even a former doss house and a present p-lab is out of their reach. Is this wise.? Yes/No.
Why is it Banks can print money hand over fist, and stiff any poor saver with lowered interest rates that beg for an OBR to differ from an equally over leveraged and over burdened housing population, probably living beyond their means, in houses they could not buy if interest rates were 2 % higher.....anywhere else in the World, leveraged at 10 to 1... Is this a scam?. Yes/No.
When did screwing the public, become an obsession. When did fraud become an Australian Banking past time and a Politicians dream, but a Kiwis nightmare.
In your lifetime, Yes/No.
Why do we put up with it, is it crooked?. Yes/No.
Do we have to bear it?. Yes/No.
What is the answer?. None/More.
Who do we have to Blame.? Me/You. Our bloody expensive Capitalists.
Because I am fed up with all this phoney malar-key and I would like a change.
And if criminal proceedings are out of the question......Why? bother working, do you agree?. Yes/No.
Fraud is Fraud, is it not.? Yes/No
Scamming and theft by deception and an OBR is on the cards, will you suffer Who Knows??.
Whose fault is it...Savers or the over lenders and over leveraged.. ................Yes/No/Maybe/Perhaps
In any normal society, this would be ill-legal, would it not?. Yes/No.
Fraudulent means, Fraud you lent motives. Yes/No
Jail em... Yes/No.
Would your honesty be in Question if you have a Vested Interest.. Yes/ No.
I could go on.....but...there would be a small charge for wasting my time.
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