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Networkn
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#2310814 4-Sep-2019 22:21

NZ isn't Milan, but Auckland and Milan are similar in many ways as to their roles in the countries they reside in. Every decent city in the world has an affordability crisis. It's not a NZ problem any more than it is any other country in the world.

Re the fussy comment I made, I wasn't talking about the fussy people who can afford it, I mean everyone is fussy, whether they can afford it or not, that's my issue. If you can afford it, fussy isn't a problem.

There is no magic bullet, hence why a plan wasn't hatched under National and KB was an abject failure not due to the idea being fundamentally flawed as such (though it was that too) but the awful lack of planning and analysis. It was a marketing ploy with no substance behind it.

Labours only smart play now, is to ditch the idea of building homes for people. They could keep the part where eligible homes had a small subsidy of interest or some other financial incentive perhaps, but the play is to free up land, make building easier, potentially offer incentives for contractors who build to an affordable home framework (though that's quite complicated and there would be a lot of abuse by developers I suspect). Labour talked up home ownership as a basic Kiwi right, which I fundamentally disagree with. People need to get with the program and understand home ownership isn't a God given right. Lifetime rental is exceedingly common in lots and lots of parts of the world. People are so hell bent on it, that there is no planning beyond how to satisfy a bank so they can get a loan. No maintenance schedule and budgeting appropriately. I honestly don't understand how people on even above average household incomes can service their maintenance requirements. We have been shocked how much we need to spend on our home, and it's not a bad home, but time flies and stuff needs repair and upkeep. It was another failure in the planning stages with Kiwibuild, that they were supplying these "cheap" homes to "low" income earners, but how were they going to service the property come year 5. It was a recipe for slums.

There is a lot of talk about high wage economies and how we want to move out of low wage economies, but find me a Kiwi anywhere who is happy for their contractor bills to go up, and who isn't scrounging around trying to save $50 on a $2000 TV. People want things cheap and as long as margins continue to be under pressure, and price continues to be the biggest deciding factor, things won't improve rapidly.

If I bought an investment property now, it's exceedingly unlikely I'd consider Auckland. I had a look where I used to live in South Waikato. You can buy well constructed 3 bedroom homes with decent backyards for really respectable money and the rental return is marginally worse than what you'd get in Auckland.

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#2310817 4-Sep-2019 22:32

tdgeek:

networkn:

I expect before long there will be another market correction as interest rates increase and people are forced from their homes as a result of being over committed. The kids of friends of mine have just purchased a house which is JUST (and I mean JUST) within their means. Banks couldn't WAIT to get them a loan and despite their parents best attempts and even my own, they wouldn't listen to reason regarding how tight things were wound. They are living in an alternate reality where no one ever loses a job, appliances don't fail, or unexpected car repairs occur or that interest rates never climb.

That will happen. When the boom was over, prices remained high, fell slightly here and there. They go up in booms, they dint go back down again. They might stutter, as has happened, but they will remain high. Its getting keen again as Winter has past, more so than last year I read yesterday. Plenty of interest, all by first home buyers. I foresee interest rates staying low for 3 years minimum. Or longer, they will remain low. But the impending GFC means all bets are off. Thats out of our control

There should have been a larger market correction, but for the fact so much overseas buying. If that had been slowed or stopped, prices would have tanked hard, which is what is required. Australia are in the midst of it now, because they limited foreign ownership.

Some of the value drops are eye watering and there are unfortunately people, literally diving from their balconies as a result because people are so loaded up they are in a negative equity situation

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#2310844 5-Sep-2019 06:54

tdgeek:

Axis is nationwide and delivering how many thousands of homes? It says "Things considered a luxury in other developments, such as double-glazing" I thought that was the current building code. 2 bedroom units for 550k? They are small, small land to reduce cost as they say, and most are glorified apartments, and thats all good, and it's a model, but is it a model that suits many young families?

If it wasnt possible in 2012 (it should have been, affordability was a lot better),but in 2019 Axis is rebuilding NZ the way it should have been? You can build an ok affordable 3BR house, but not everywhere. You can build apartments but not for everyone. And no one can or wants to, build masses of any of them.

It comes down to, do we want to have an affordable home policy or lets just flag it. Decades ago, housing was desirable, the Govt was behind it. Now its a market driven concept. The market is not compatible with small affordable houses, nor interested in the plight of those wanting to achieve ownership.

No, but it was probably the model we would have ended up with. National ended up in the same boat as Labour finds themselves in; insufficient will to do anything about the RMA when they had the chance and now entirely hemmed in by the failures of Kiwibuild and an increasingly desperate Green Party. As for the Axis 3 bedders; many of them are terrace homes which is precisely the level and intensity of development we should be aiming at. N

Axis Homes also qualified for the Welcome Home Loans were priced accordingly, so it was a good model. National just lost the capability and desire to deliver it en masse (because they are idiots). If they had accepted there was a problem and just got on with it, it would have been far more successful than Kiwibuild ever could possibly have been. And it not doing it probably cost them the election, and Bill English/John Key as decent leaders as a result. Look at where they've ended up.

Even more damning though, with Labour now abandoning the supply-side remedies for housing, is the lack of migration reform that they also campaigned on. More people, fewer houses, cheaper interest rates... doesn't take an idiot to figure out what this means in the short term.

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#2310849 5-Sep-2019 07:23

networkn:

NZ isn't Milan, but Auckland and Milan are similar in many ways as to their roles in the countries they reside in. Every decent city in the world has an affordability crisis. It's not a NZ problem any more than it is any other country in the world.

Re the fussy comment I made, I wasn't talking about the fussy people who can afford it, I mean everyone is fussy, whether they can afford it or not, that's my issue. If you can afford it, fussy isn't a problem.

There is no magic bullet, hence why a plan wasn't hatched under National and KB was an abject failure not due to the idea being fundamentally flawed as such (though it was that too) but the awful lack of planning and analysis. It was a marketing ploy with no substance behind it.

Labours only smart play now, is to ditch the idea of building homes for people. They could keep the part where eligible homes had a small subsidy of interest or some other financial incentive perhaps, but the play is to free up land, make building easier, potentially offer incentives for contractors who build to an affordable home framework (though that's quite complicated and there would be a lot of abuse by developers I suspect). Labour talked up home ownership as a basic Kiwi right, which I fundamentally disagree with. People need to get with the program and understand home ownership isn't a God given right. Lifetime rental is exceedingly common in lots and lots of parts of the world. People are so hell bent on it, that there is no planning beyond how to satisfy a bank so they can get a loan. No maintenance schedule and budgeting appropriately. I honestly don't understand how people on even above average household incomes can service their maintenance requirements. We have been shocked how much we need to spend on our home, and it's not a bad home, but time flies and stuff needs repair and upkeep. It was another failure in the planning stages with Kiwibuild, that they were supplying these "cheap" homes to "low" income earners, but how were they going to service the property come year 5. It was a recipe for slums.

There is a lot of talk about high wage economies and how we want to move out of low wage economies, but find me a Kiwi anywhere who is happy for their contractor bills to go up, and who isn't scrounging around trying to save $50 on a $2000 TV. People want things cheap and as long as margins continue to be under pressure, and price continues to be the biggest deciding factor, things won't improve rapidly.

If I bought an investment property now, it's exceedingly unlikely I'd consider Auckland. I had a look where I used to live in South Waikato. You can buy well constructed 3 bedroom homes with decent backyards for really respectable money and the rental return is marginally worse than what you'd get in Auckland.

I don't get this God given right. Is there anything wrong with an expectation that I can buy my own home?

Affordability overseas is not uncommon, it has never existed here. We are a large country for our population. Affordability has happened over the last few year due to artificial foreign bidding on our properties. Unbridled immigration of kids who study, get a $35 diploma and work in KFC, and import their parents. Low interest rates. For us we imported our new problem, for Milan's its too many people for too little space.

There no magic bullet now, its too late, it should have been tempered by National. Too late now. KB was too late. There were three options. A plan such as KB to build EXTRA homes. It failed, as they are now not affordable. Second option is a plan like KB but a better plan. There is no plan from anyone. The third option is do nothing, leave it to the market which gives us full circle.

Your saying that in 5 years these KB buyers will be toast due to home maintenance? There is no such thing about a KB home, its a home. It was secured via a policy, there isn't anything odd about it. So all home buyers will be toast due to home maintenance, no that hasnt happened in the last 160 years of homes being lived in here

tdgeek

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#2310857 5-Sep-2019 07:40

networkn:

There should have been a larger market correction, but for the fact so much overseas buying. If that had been slowed or stopped, prices would have tanked hard, which is what is required. Australia are in the midst of it now, because they limited foreign ownership.

Some of the value drops are eye watering and there are unfortunately people, literally diving from their balconies as a result because people are so loaded up they are in a negative equity situation

In the past, houses rose 10% a year, not linear. They corrected, but then continued the usual trend. There was never a time of losses and hardship. If you lost equity or your paper profit it will come back, it always does. This time the boom occurred when it should not have occurred as inflation is low, wage growth is low, the usual causes are gone. Interest rates would help to a degree, but this time its different. Houses wont tank due to the boom, there is still demand now as our housing stock over the period of foreign ownership and immigration has fallen short and still is. But few to buy them. Some areas due to location and demand have tanked, others have had little effect, others have seen growth, both low and decent. But, the conclusion I am getting is that there is no problem, there is no God given right, there is nothing to fix, and it cant be fixed anyhow. That being the case, those that do lose a lot of equity, too bad.

tdgeek

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#2310858 5-Sep-2019 07:47

GV27:

No, but it was probably the model we would have ended up with. National ended up in the same boat as Labour finds themselves in; insufficient will to do anything about the RMA when they had the chance and now entirely hemmed in by the failures of Kiwibuild and an increasingly desperate Green Party. As for the Axis 3 bedders; many of them are terrace homes which is precisely the level and intensity of development we should be aiming at. N

Axis Homes also qualified for the Welcome Home Loans were priced accordingly, so it was a good model. National just lost the capability and desire to deliver it en masse (because they are idiots). If they had accepted there was a problem and just got on with it, it would have been far more successful than Kiwibuild ever could possibly have been. And it not doing it probably cost them the election, and Bill English/John Key as decent leaders as a result. Look at where they've ended up.

Even more damning though, with Labour now abandoning the supply-side remedies for housing, is the lack of migration reform that they also campaigned on. More people, fewer houses, cheaper interest rates... doesn't take an idiot to figure out what this means in the short term.

I could call some of them terrace houses, some are apartments, few are ideal for young families. They serve a purpose for part of the problem. It would never be an en masse solution

RMA yes, fails everywhere.

More people has been dealt with. There are no students coming here to get a year 7 Diploma, a job at KFC, and no parents to import to live in the overpriced house they bid on. People with skills we want are free to move here. Foreign ownership has been reined in. NZ doesn't decide the interest rates that the globe needs to live with, we are the followers.

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GV27

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#2310859 5-Sep-2019 07:47

tdgeek:

That being the case, those that do lose a lot of equity, too bad.

There's a lot of young people still paying student loans and working long hours to pay down massive mortgages. I'm now one of them. The flow-on effect of not doing it was not having a stable roof over our head when it came to starting a family; it was literally now or never.

There are a lot of people who are in my position, who didn't have anything to do with house prices exploding, who are just going to give up and leave if we're expected to cop the losses on the massive loans we've taken on, while the generation that enriched itself at our expense gets to wash their hands of the problem and walk away. Kiwis can't keep treating the same generation of New Zealanders as a cash cow and expect them to just put up with it.

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#2310863 5-Sep-2019 07:58

tdgeek:

I could call some of them terrace houses, some are apartments, few are ideal for young families. They serve a purpose for part of the problem. It would never be an en masse solution

TD, I would suggest you go and take a look at Hobsonville Pt at some point when you are next in the area. The three bed terrace homes they were balloting for the past few years have been similar to this:

https://hobsonvillepoint.universal.co.nz/house-land/homes-for-sale/455-Lot-4-16-Walter-Merton-Road

109sqm is roughly the size of a three bedroom 60s/70s state house. I'd say those at affordable prices ($550k - $650k balloted) are pretty much ideal for young families, and those sorts of blocks can be pre-fabbed - I believe you can go as high as five stories with terraced homes and still be able to pre-fab them.

True, it's not a quarter-acre, but it's the sort of thing we need to be building in Auckland to bring in more supply at sensible prices.

And yes, Hobsonville is a totally planned suburb from the ground up, but it is a case study in what housing in the rest of Auckland could look like if we really wanted. I get a real kick out of visiting because it's actually a great place to go, and there's a lot of places in Auckland where we could achieve the same thing if we really wanted.

I'll shout you a coffee if you're ever in the area.

tdgeek

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#2310864 5-Sep-2019 07:58

GV27:

tdgeek:

That being the case, those that do lose a lot of equity, too bad.

There's a lot of young people still paying student loans and working long hours to pay down massive mortgages. I'm now one of them. The flow-on effect of not doing it was not having a stable roof over our head when it came to starting a family; it was literally now or never.

There are a lot of people who are in my position, who didn't have anything to do with house prices exploding, who are just going to give up and leave if we're expected to cop the losses on the massive loans we've taken on, while the generation that enriched itself at our expense gets to wash their hands of the problem and walk away. Kiwis can't keep treating the same generation of New Zealanders as a cash cow and expect them to just put up with it.

Home ownership is not a God given right apparently. Im not aware of any generation that woke up, asked Govt to make house prices explode. The one that enriched itself lived with 18" mortgage rates, 15%+ inflation, and they also didnt wake up to ask Govt to make it happen. I have no idea how any Kiwis are treating you as cash cow? There must be many people now, who bought 6-8 years ago and have creamed it. Is that another group of baddies?

As for a stable home, I could not agree more. Home ownership is a factor the increases stability and happiness, and reduces crime. Its a goal to achieve then you have mini goals as you feather your nest. One day your kids will inherit the stability you created

tdgeek

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#2310865 5-Sep-2019 08:08

GV27:

tdgeek:

I could call some of them terrace houses, some are apartments, few are ideal for young families. They serve a purpose for part of the problem. It would never be an en masse solution

TD, I would suggest you go and take a look at Hobsonville Pt at some point when you are next in the area. The three bed terrace homes they were balloting for the past few years have been similar to this:

https://hobsonvillepoint.universal.co.nz/house-land/homes-for-sale/455-Lot-4-16-Walter-Merton-Road

109sqm is roughly the size of a three bedroom 60s/70s state house. I'd say those at affordable prices ($550k - $650k balloted) are pretty much ideal for young families, and those sorts of blocks can be pre-fabbed - I believe you can go as high as five stories with terraced homes and still be able to pre-fab them.

True, it's not a quarter-acre, but it's the sort of thing we need to be building in Auckland to bring in more supply at sensible prices.

And yes, Hobsonville is a totally planned suburb from the ground up, but it is a case study in what housing in the rest of Auckland could look like if we really wanted. I get a real kick out of visiting because it's actually a great place to go, and there's a lot of places in Auckland where we could achieve the same thing if we really wanted.

I'll shout you a coffee if you're ever in the area.

I'll look forward to that

Yes there are some not bad places, and yes they arent all "apartments". But was it 550k for a 2BR? That's steep. KB failed as 550 to 650 is not affordable, but Axis's are in that range? Its not big, so Im not sure how it would scale if they were built here and there. Certainly the ground up of the development is a big plus as that gives it huge character.

The problem is we build 30,000 annually. Few of those are affordable. We need EXTRA affordables. We have full employment, so we cannot soak up trades people from the pool of 8% unemployed. As they arent there, they are working

I hare the cliche the perfect storm but the last 8 years has probably been just that

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#2310923 5-Sep-2019 09:00

tdgeek:

I'll look forward to that

Yes there are some not bad places, and yes they arent all "apartments". But was it 550k for a 2BR? That's steep. KB failed as 550 to 650 is not affordable, but Axis's are in that range? Its not big, so Im not sure how it would scale if they were built here and there. Certainly the ground up of the development is a big plus as that gives it huge character.

The problem is we build 30,000 annually. Few of those are affordable. We need EXTRA affordables. We have full employment, so we cannot soak up trades people from the pool of 8% unemployed. As they arent there, they are working

I hare the cliche the perfect storm but the last 8 years has probably been just that

$550K for the 2.5 bedders, threes/fours were $650K and apartments and one bedroom units were $450K when I was doing the ballot process. Helped substantially by the Welcome Home grants which were something like $20K if you had a household income under the stupidly low cap, and provided you'd been chipping into Kiwisaver for three years.

The pre-fab angle is less labour-intensive than a full build from the ground up, so it's really our only shot at meaningful supply without importing extra population to try and make it happen - if you got it humming, you could deliver homes at a cheaper price point than the Axis homes cost to build on-site, and the planning reform to allow those developments to happen in places close to the CBD while you shore up the transport links to the outer areas.

I don't blame people for not buying into that kind of housing until they see it because there simply isn't anything like it in this country we could compare it to. But if it can give us something better than shoeboxes for modest money and be warm, dry and close to things like schools, then it's what we should be aiming for from this point on.

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#2310927 5-Sep-2019 09:19

GV27:

$550K for the 2.5 bedders, threes/fours were $650K and apartments and one bedroom units were $450K when I was doing the ballot process. Helped substantially by the Welcome Home grants which were something like $20K if you had a household income under the stupidly low cap, and provided you'd been chipping into Kiwisaver for three years.

The pre-fab angle is less labour-intensive than a full build from the ground up, so it's really our only shot at meaningful supply without importing extra population to try and make it happen - if you got it humming, you could deliver homes at a cheaper price point than the Axis homes cost to build on-site, and the planning reform to allow those developments to happen in places close to the CBD while you shore up the transport links to the outer areas.

I don't blame people for not buying into that kind of housing until they see it because there simply isn't anything like it in this country we could compare it to. But if it can give us something better than shoeboxes for modest money and be warm, dry and close to things like schools, then it's what we should be aiming for from this point on.

Fair call. There was lots of chatter about prefabs, quite a few news articles on them. Never seemed to fire. In retrospect the Govt could have setup a program to push anything that is a leg up. Your subdivision, pre fabs. Actively assist prefab businesses to expand. I felt buy DIY special that have good bones, reno them (helps local economy) flick them off at cost plus not much (to cover program admin) and recycle dungers into first homes. Its not a 100,000 target, but its a continual neutral cost maintenance of the first home market

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#2310935 5-Sep-2019 09:28

tdgeek:

Fair call. There was lots of chatter about prefabs, quite a few news articles on them. Never seemed to fire. In retrospect the Govt could have setup a program to push anything that is a leg up. Your subdivision, pre fabs. Actively assist prefab businesses to expand. I felt buy DIY special that have good bones, reno them (helps local economy) flick them off at cost plus not much (to cover program admin) and recycle dungers into first homes. Its not a 100,000 target, but its a continual neutral cost maintenance of the first home market

Yep, unfortunately that requires things like capital investment funds being available for pre-fab capacity development, which probably won't immediately translate into a campaign-friendly statement like, oh I don't know, 100,000 houses over ten years :P It's just not sexy for the electorate, but you can't make the good stuff happen without it.

It's annoying because National had the economic capacity and capability to deliver it but didn't want to, and Labour wanted to but is just pathologically incapable. It's the same story with transport, etc. Not exactly inspiring heading into the next election, is it?

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#2310998 5-Sep-2019 10:34

Problem solved:

Government says it will now build just one really nice home

As part of today’s long-anticipated reset of the Government’s flagship KiwiBuild policy, Housing Minister Megan Woods says the number of houses to be built in the next 8 years has been “scaled back” from 100,000 affordable homes to just one really nice home.

(on a more serious note, rather than bickering about the inevitable result of a well-intended but ill-conceived failure , I'd love to see a concerted multi-partisan effort to sort out the ridiculous situation in NZ, where we've got about the most expensive building costs on the planet in real terms, even worse on multiple of median income terms, and pandering to vested interests everywhere who want to make sure it stays just how it is. Nobody wants to see house valuations drop, but that's probably an inevitable consequence of what probably needs to happen)

tdgeek

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#2311007 5-Sep-2019 10:53

GV27:

tdgeek:

Fair call. There was lots of chatter about prefabs, quite a few news articles on them. Never seemed to fire. In retrospect the Govt could have setup a program to push anything that is a leg up. Your subdivision, pre fabs. Actively assist prefab businesses to expand. I felt buy DIY special that have good bones, reno them (helps local economy) flick them off at cost plus not much (to cover program admin) and recycle dungers into first homes. Its not a 100,000 target, but its a continual neutral cost maintenance of the first home market

Yep, unfortunately that requires things like capital investment funds being available for pre-fab capacity development, which probably won't immediately translate into a campaign-friendly statement like, oh I don't know, 100,000 houses over ten years :P It's just not sexy for the electorate, but you can't make the good stuff happen without it.

It's annoying because National had the economic capacity and capability to deliver it but didn't want to, and Labour wanted to but is just pathologically incapable. It's the same story with transport, etc. Not exactly inspiring heading into the next election, is it?

So you feel National could have built 100,000 over 10 years?

Transport transends both parties too.

I cant wait to see the policies from Labour and National for Sept 2020.

Pre fab wise, yes capital investment would be available, but the businesses would need to commit to finding the builds, and Im sure we can throw some marketing cash their way. It would be a good news story IMHO as you can sell it to the people easily. As its faster and modular, if demand can be created, Im sure we could import a workforce if need be, and I'm sure there may be a non skill labour component in those prefabs which may help unemployed and kids out of school

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