NZ Election 2020

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#2490832 25-May-2020 07:34

Handle9:

What is your solution?

No one sensible says the current situation is good but how do you fix it without a heap of negative consequences?

There are levers that central government can pull but if you want a house for 450k in Auckland there are serious downsides to be considered.

Then pull them. There are serious downsides to having houses cost 9x incomes too, but we've deemed young people acceptable collateral damage in that regard already.

It's going to take a while to bring supply on line. We're facing a period of price stagnation, possibly even deflation as a result of Covid19 anyway. Having prices take off again afterwards is in no one's best interests.

Start small. Stamp duties that can be waived for FHBs would be a good start. Perhaps even a half-step implementation of the original 15% Labour CGT instead of the TWG report recommendation would be worth considering once the market hits a low point.

I'd go a bit further and introduce hugely aggressive LVRs for investors not buying new builds.

As for actual housing itself - I'm a big fan of the three-level, three bed 140sqm Universal Home style terraced homes in blocks of six at Hobsonville Pt. It's pretty weak by international standards but they do show a livable family home on a small footprint in a multi-unit block can be done if we really want to. You can pre-fab buildings up to five stories, so scaling this up might be possible.

quickymart

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#2490892 25-May-2020 09:42

For my part, I wasn't born or raised here. But my boys were and they go to school here. And they're in good schools, that they both enjoy attending and are doing well in.

While I'm not a fan of Auckland (I'm an import, I guess you could say) it's where I am stuck for now. I'd be happy with a 3-bedroom apartment (don't really need a house), near their schools on the Shore. That's all I ask for. When you have kids, it's not so easy just "move out of Auckland and look for something else, that's the way of the world now, suck it up". I challenge you to convince anyone in my scenario that that's the best way for their family.

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#2491010 25-May-2020 13:06

quickymart:

For my part, I wasn't born or raised here. But my boys were and they go to school here. And they're in good schools, that they both enjoy attending and are doing well in.

While I'm not a fan of Auckland (I'm an import, I guess you could say) it's where I am stuck for now. I'd be happy with a 3-bedroom apartment (don't really need a house), near their schools on the Shore. That's all I ask for. When you have kids, it's not so easy just "move out of Auckland and look for something else, that's the way of the world now, suck it up". I challenge you to convince anyone in my scenario that that's the best way for their family.

Being realistic though, what you are asking for isn't going to happen at your desired price range. Not now and frankly not ever. Now there are the odd cheaper suburb on the North Shore but it's one of the highest priced regions in the country. You aren't just battling with a lot of the factors that have been in discussion (and a lot of them are ethically unjust and I feel for anyone hit by that) -- the fundamental issue you face (and I really mean no disrespect in raising it) is that you want to live in a mostly gentrified/premium area without having the income to support that desire. And if you really must live on the Shore (if I remember correctly you have two boys?), they might have to share a room to make things workable financially.

GV27:

There are serious downsides to having houses cost 9x incomes too, but we've deemed young people acceptable collateral damage in that regard already.

It's going to take a while to bring supply on line. We're facing a period of price stagnation, possibly even deflation as a result of Covid19 anyway. Having prices take off again afterwards is in no one's best interests.

Start small. Stamp duties that can be waived for FHBs would be a good start. Perhaps even a half-step implementation of the original 15% Labour CGT instead of the TWG report recommendation would be worth considering once the market hits a low point.

If things were all about me, I personally agree with you 110% on taking necessary measures to reduce property prices. All that I am calling out is that it will be political suicide for any mainstream political party to attempt these kind of measures/whatever it will take to reach the end goal. The boomers and older generation will be out in force to preserve their advantage and simple demographics tell us that they will win. Also, don't forget the huge crowd of people in their 30s who will be looking to utilise the tax free capital gains gravy train in the future to leverage themselves into property investing in the lower priced suburbs or out of Auckland.

Then there are the structural and financial stability issues of dramatic price drops to consider. We are sadly in a death bind. The Clark and Key governments allowed house prices to get completely out of hand to the degree that a lot of the structural distortions have become permanent. This, more than anything else, has been the worst aspects of the legacy bestowed upon the country by these people. Things are getting to a point where for at least one generation (if not more) we are going to have to accept that many people will be permanently locked out of home ownership. This is why I agree with what Labour has proposed in terms of securing people's rental tenures and to free renters from the indignity of not even being able to hang a picture without a landlord's permission.

In light of my pessimism over whether the kind of price reduction we would both subjectively want can be politically and structurally safely achieved, my personal preference is for our politicians to waste no more time in taking steps to ensure at least that house prices remain relatively stable for at least 10 to 20 years so more people in the future might at least have a chance.

I note with interest what you observed about the terraced housing at Hobsonville Point. Before we bought our current place, we actually looked at a few of these and some of them had quite premium internal finishings but were priced at a level that your average Kiwi couldn't afford/wouldn't rush to buy for that kind of money without getting a Big House. We need to get away from the cultural obsession with a large plot of land, measuring a home based on physical footprint only versus focusing more on usability, and the like. We paid in the eyes of our friends way over the odds for a small terraced townhouse (2 THs joined side-by-side) which was built by a couple to house themselves and the husband's mother. The shell of both houses were just akin mid tier-ish spec homes of circa 1.1 million range but the couple spent an enormous amount of money glamming up/designing the interior with things rarely seen at property of this size and price range. They sold after the mother unexpectedly passed away and we saw some of the material bills and they were huge. When they tried to recover even just a tiny portion of their actual costs of the works, people just weren't interested in paying even a tiny bit more for much better "insides" compared with paying the same price for a physically bigger but much more poorly built/featured houses nearby. We are just very culturally fixed one way as a people.

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#2491143 25-May-2020 16:00

quickymart:
For my part, I wasn't born or raised here. But my boys were and they go to school here. And they're in good schools, that they both enjoy attending and are doing well in.

While I'm not a fan of Auckland (I'm an import, I guess you could say) it's where I am stuck for now. I'd be happy with a 3-bedroom apartment (don't really need a house), near their schools on the Shore. That's all I ask for. When you have kids, it's not so easy just "move out of Auckland and look for something else, that's the way of the world now, suck it up". I challenge you to convince anyone in my scenario that that's the best way for their family.

I was convinced that just such a scenario was the best way for my family so moved them to a different country. While part of the appeal was travel and career opportunities a lot was financially driven. My daughter has a learning disability and now with the current situation we won't see family for a year or two. It'll get to 45 degrees today, and most days for the next 3-4 months. That's life, we have made sacrifices so we can be better placed financially.

No one is forcing you to move but if you stay you do not change your life will not change. That's the way it is. Complaining and wishing won't change it.

This isn't a justice thing, in a just world all houses in all cities would be the same price. Auckland is judged by the population to be the most attractive city to live in. Greater than 30% of the countries population lives there so prices will be higher. Auckland prices are grossly unaffordable. It isn't going to become affordable in the next 10 years or likely the next 25.

Handle9

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#2491223 25-May-2020 18:04

GV27:

Handle9:

What is your solution?

No one sensible says the current situation is good but how do you fix it without a heap of negative consequences?

There are levers that central government can pull but if you want a house for 450k in Auckland there are serious downsides to be considered.

Then pull them. There are serious downsides to having houses cost 9x incomes too, but we've deemed young people acceptable collateral damage in that regard already.

It's going to take a while to bring supply on line. We're facing a period of price stagnation, possibly even deflation as a result of Covid19 anyway. Having prices take off again afterwards is in no one's best interests.

Start small. Stamp duties that can be waived for FHBs would be a good start. Perhaps even a half-step implementation of the original 15% Labour CGT instead of the TWG report recommendation would be worth considering once the market hits a low point.

I'd go a bit further and introduce hugely aggressive LVRs for investors not buying new builds.

As for actual housing itself - I'm a big fan of the three-level, three bed 140sqm Universal Home style terraced homes in blocks of six at Hobsonville Pt. It's pretty weak by international standards but they do show a livable family home on a small footprint in a multi-unit block can be done if we really want to. You can pre-fab buildings up to five stories, so scaling this up might be possible.

I largely agree with the sentiment around incentives. It won't make a huge difference in the short term. The ship in Auckland has sailed for the short term. Longer term there can be changes to improve housing affordability but it requires a significant change in expectations.

Auckland will grow to ~2 million people in the next 10-15 years. The current style of housing isn't sustainable. Town houses, real apartment buildings and serious intensification has to happen for housing to be remotely affordable. Due to the size of the city a backyard will become an aspiration rather than something that can be reasonably expected. This is normal in larger cities globally. Many families here in Dubai hate the idea of a "house". They would rather live in apartments and don't want the hassle of a house.

Apartments don't need to be multi million dollar penthouses or 25 square meter slums. They can be modest family buildings which "normal" families live in. This doesn't fit with the current New Zealand expectations.

Rikkitic

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#2491229 25-May-2020 18:14

Handle9:

Apartments don't need to be multi million dollar penthouses or 25 square meter slums. They can be modest family buildings which "normal" families live in. This doesn't fit with the current New Zealand expectations.

This is the norm in European cities and elsewhere. Is there any research on current NZ expectations? I would imagine that many people living in overpriced garages and sleepouts and sharing space with other families and worse would be delighted with a modest apartment. I find it difficult to believe that the problem is 'expectations'.

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Handle9

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#2491232 25-May-2020 18:19

Rikkitic:
Handle9:

Apartments don't need to be multi million dollar penthouses or 25 square meter slums. They can be modest family buildings which "normal" families live in. This doesn't fit with the current New Zealand expectations.

This is the norm in European cities and elsewhere. Is there any research on current NZ expectations? I would imagine that many people living in overpriced garages and sleepouts and sharing space with other families and worse would be delighted with a modest apartment. I find it difficult to believe that the problem is 'expectations'.

People living in garages aren't buying houses.

The furore over the proposed intensification in the last Auckland unitary plan shows the expectation issue. Both for current and prospective home owners.

GV27

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#2491235 25-May-2020 18:31

Handle9:

Auckland will grow to ~2 million people in the next 10-15 years. The current style of housing isn't sustainable. Town houses, real apartment buildings and serious intensification has to happen for housing to be remotely affordable. Due to the size of the city a backyard will become an aspiration rather than something that can be reasonably expected. This is normal in larger cities globally. Many families here in Dubai hate the idea of a "house". They would rather live in apartments and don't want the hassle of a house.

Living in bigger cities usually means things like rapid transit, higher incomes and agglomeration benefits (e.g. more speciality shops etc). However we have none of these. We do, however, have the high prices, long commutes and all the other downsides to being a 'global city' that I'm not sure anyone really asked for in the first place.

Like at some point you have to decide whether you actually want NZ to be something different or just another point on the map like every other city on Earth. If we are being asked to import so many people that people who are born here have no reasonable chance of owning a family home that isn't an apartment, then maybe we need to talk about whether we actually want that for NZ at all. So far it's not that appealing as a prospect, if I'm honest.

Rikkitic

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#2491240 25-May-2020 18:40

GV27:

Like at some point you have to decide whether you actually want NZ to be something different or just another point on the map like every other city on Earth. If we are being asked to import so many people that people who are born here have no reasonable chance of owning a family home that isn't an apartment, then maybe we need to talk about whether we actually want that for NZ at all. So far it's not that appealing as a prospect, if I'm honest.

Is this an anti-immigration argument? If so, I think it is mistaken.

There are plenty of excellent family homes that are apartments. Nothing wrong with that at all. The two are not mutually exclusive. And as has been pointed out, if you absolutely must have a house with some land around it, just don't look for it in the city. There are plenty of other places that offer this.

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Handle9

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#2491261 25-May-2020 19:31

GV27:

Handle9:

Auckland will grow to ~2 million people in the next 10-15 years. The current style of housing isn't sustainable. Town houses, real apartment buildings and serious intensification has to happen for housing to be remotely affordable. Due to the size of the city a backyard will become an aspiration rather than something that can be reasonably expected. This is normal in larger cities globally. Many families here in Dubai hate the idea of a "house". They would rather live in apartments and don't want the hassle of a house.

Living in bigger cities usually means things like rapid transit, higher incomes and agglomeration benefits (e.g. more speciality shops etc). However we have none of these. We do, however, have the high prices, long commutes and all the other downsides to being a 'global city' that I'm not sure anyone really asked for in the first place.

Like at some point you have to decide whether you actually want NZ to be something different or just another point on the map like every other city on Earth. If we are being asked to import so many people that people who are born here have no reasonable chance of owning a family home that isn't an apartment, then maybe we need to talk about whether we actually want that for NZ at all. So far it's not that appealing as a prospect, if I'm honest.

Immigration drives significant population growth but not all of it (approximately 1/3 of the population growth is domestic). Urbanisation isn't solely driven by immigration, it is a global trend. People move to Auckland as they can earn higher salaries and have better job opportunities. The land mass isn't magically growing so it requires significant intensification with the associated infrastructure. Mass transit doesn't make sense without significant intensification.

If that style of living doesn't appeal to you then move. You can't magic Auckland back to the 1950s. It will not happen.

There are very reasonable arguments about normalisation of intergenerational wealth and reseting of policy levers. That can not stop urbanisation and make Auckland an affordable city if you want a quarter acre pavlova paradise (or the modern equivalent). It just won't happen.

GV27

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#2491617 26-May-2020 10:36

Handle9:

Immigration drives significant population growth but not all of it (approximately 1/3 of the population growth is domestic). Urbanisation isn't solely driven by immigration, it is a global trend. People move to Auckland as they can earn higher salaries and have better job opportunities. The land mass isn't magically growing so it requires significant intensification with the associated infrastructure. Mass transit doesn't make sense without significant intensification.

If that style of living doesn't appeal to you then move. You can't magic Auckland back to the 1950s. It will not happen.

There are very reasonable arguments about normalisation of intergenerational wealth and reseting of policy levers. That can not stop urbanisation and make Auckland an affordable city if you want a quarter acre pavlova paradise (or the modern equivalent). It just won't happen.

Ah, the quarter acre strawman, which I didn't advocate for at any point. Thanks for that.

The reality is, I, as an Aucklander, should have as much say in how the city looks as anyone else does. If you offered the general populace all off the downsides that come with more people living in Auckland (which has taken a disproportionate share of new migration in recent years) with none of the upsides, do you think they would knowingly choose it? Perhaps if people are so desperate for the apartment-living-regardless-of-whether-they're-well-built-or-any-less-expensive-than-houses-on-land experience, they could move to the numerous other countries around the world that already offer that.

But here's the thing: we aren't being given a choice between good intensification and bad intensification - we're just getting bad intensification by default, without any of the supporting infrastructure to go with it. I would be far more supportive of a compact-city model if we a) could build decently-sized, quality apartments and b) Governments showed as much urgency with developing public transport options as they do with increasing fuel taxes. The Light Rail farce should make any Aucklander highly skeptical about whether we are ever likely to receive the type of transit we'll need to support a compact city model.

Pointing this out does not mean I'm pining for quarter acre, 1950s, women should stay at home and look after kids or whatever else you want to project onto my beliefs. I just that we're actually getting the best deal if we are going to go down the intensification route. As said before, so far, I am unconvinced.

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quickymart

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#2491650 26-May-2020 11:07

^ I agree with that - and as an aside, me getting a flatmate to help pay my mortgage in a potential (future?) place - and an apartment is fine - would not bother me at all. I'm just frustrated that houses in Auckland were reasonably affordable for a long time and now they're not, mostly due to causes outside of my control.

I also get frustrated when I see comments saying "oh that's just the way of the world and the market, live with it". Comments like that come across to me as being from a property owner or investor (Ashley Church, anyone?) who thinks high prices are fantastic and would love to see them stay as high as possible, for as long as possible. That does nothing to help me, just trying to get onto the property ladder.

GV27

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#2491750 26-May-2020 13:00

quickymart:

That does nothing to help me, just trying to get onto the property ladder.

Best case scenario: Everything just sort of stays where it is, supply comes online quickly enough to at least keep pace with population growth from now on and wage inflation slowly drags houses back to affordable levels. Some progress on body corporate reform - not on the agenda for the current government - would have make apartments more appealing. Over time, gaps in Auckland's transport networks get filled and people in the outer suburbs where development is actually happening get transport services added faster than the inner city areas that already have the gold plated public transit but resist anything over two stories in their area on 'character grounds'.

Worst case scenario: Everyone goon-rushes NZ, all our overseas Kiwis come home at once, we have even less chance of supply meeting added demand (let alone making up the shortfall), we see any RMA reform get rail-roaded by coalition agreements after the election, and everyone just decides that we should accept our kids paying 40% of their wages in mortgages for 50sqm apartments and putting off having kids until they're in their late 30s because Auckland is a "global city" and "if you don't like it, move to Rotorua!".

quickymart

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#2491756 26-May-2020 13:13

I hope for the best case scenario!

Even worse I feel for the families in South Auckland living out of cars because they can't afford to rent due to spiralling house prices, never mind being able to buy anything. And the response of just saying "oh, that's the way of the world in Auckland now, tough luck" - doesn't really seem right, does it? If it was your family I bet you'd be singing a different tune.

GV27

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#2491781 26-May-2020 14:00

quickymart:

I hope for the best case scenario!

Even worse I feel for the families in South Auckland living out of cars because they can't afford to rent due to spiralling house prices, never mind being able to buy anything. And the response of just saying "oh, that's the way of the world in Auckland now, tough luck" - doesn't really seem right, does it? If it was your family I bet you'd be singing a different tune.

There is a a way out of it - and funnily enough, it's pretty much what Handle is suggesting!

We have to start building apartments that are decently sized at a decent price, in more central locations or around rapid transit corridors. That's it. It's basically the only way we're going to right the ship.

The difference is currently we are intensifying far-flung bits of the city that have no rapid transit while the bits in the middle with thinks like Link Bus services and frequent routes get to stay just the way they are.

Ripping out two houses and building a dozen or more forty minutes+ from the city across the region is going to have predictable consequences if we let the government drop the ball on light rail (or whatever it actually ends up being) and allow inner city suburbs to dictate terms to everyone else.

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