Solving the house price problem should be easy!

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Forums › Politics › Solving the house price problem should be easy!

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sir1963

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#3200793 28-Feb-2024 11:50

Eitsop:

quickymart:

Related: https://www.rnz.co.nz/news/political/510320/housing-minister-chris-bishop-sets-long-term-price-target-of-three-to-five-times-household-incomes

I applaud that target, but making land available is not the only lever

They can give RBNZ enough tools and choices to help maintain inflation and house inflation.

RBNZ Made a mistake in Last 2 years lowering the interest rates, and allowing the house price boom

They could have

set interest rates ultra-low
still required ration of 4:1 debt to income
required banks to ensure borrowers could pay when interest rates returned to normal levels

The first Step is to agree that high Inflation is bad

Second step is to agree high house price inflation is bad

Then to ask RBNZ, what tools they need to achieve stability

We can put up tents cheap !

Unless the price of materials, labour, etc also falls then housing will always be hard. We are already losing skilled people to Australia because of the higher wages.

Building consents is simply another way for councils to gather revenue, revenue they need to upgrade infrastructure. The alternative is to massively increase rates. With climate change, we could easily be looking at up to a $trillion to replace infrastructure, move whole communities, change our entire transportation systems back to rail, and then on top of that potentially lose a lot of export revenue as other countries go "MAGA" and bring production back home to get their economies going, reduce unemployment and gather more tax to enable them to spend for the same reasons.

Worse there are likely to be wars as large countries try to grab as many resources as they can, eg damming rivers and starving down stream nations.

LOW interest rates are what caused the problem.

4:1 ratio would have seen fewer people able to buy, a household on 2 average incomes makes about $110-130k, 4 times that is not enough for anything but a tiny home on a pocket section.

There is no "simple solution", the worlds population is billions of people too large for that now.

Too many people, too few resources. Mexico city is sinking 1/2 a meter each year because the aquifer has been drained and the habitat made unsustainable....22 Million people could be without water this year.

tdgeek

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#3200828 28-Feb-2024 12:56

sir1963:

We can put up tents cheap !

Unless the price of materials, labour, etc also falls then housing will always be hard. We are already losing skilled people to Australia because of the higher wages.

Building consents is simply another way for councils to gather revenue, revenue they need to upgrade infrastructure. The alternative is to massively increase rates. With climate change, we could easily be looking at up to a $trillion to replace infrastructure, move whole communities, change our entire transportation systems back to rail, and then on top of that potentially lose a lot of export revenue as other countries go "MAGA" and bring production back home to get their economies going, reduce unemployment and gather more tax to enable them to spend for the same reasons.

Worse there are likely to be wars as large countries try to grab as many resources as they can, eg damming rivers and starving down stream nations.

LOW interest rates are what caused the problem.

4:1 ratio would have seen fewer people able to buy, a household on 2 average incomes makes about $110-130k, 4 times that is not enough for anything but a tiny home on a pocket section.

There is no "simple solution", the worlds population is billions of people too large for that now.

Too many people, too few resources. Mexico city is sinking 1/2 a meter each year because the aquifer has been drained and the habitat made unsustainable....22 Million people could be without water this year.

A little like a home that needs annual repairs and maintenance. Often these can be fairly large costs that a homeowner may not want to pay there and then. Still a decent lump of cash, so they defer it till later. A few "laters" down the track, they are in for a repair bill that they may not be able to afford, so its quick fixes and the problem continues to grow

NZ Govts could have afforded incremental improvements to many sectors over the last few decades, but they didn't. No doubt voters will react if the words tax, levy, fee, are mentioned. Govts were in a rock and a hard place situation, probably due to voter reactions IMO

sir1963

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#3200834 28-Feb-2024 13:07

tdgeek:

A little like a home that needs annual repairs and maintenance. Often these can be fairly large costs that a homeowner may not want to pay there and then. Still a decent lump of cash, so they defer it till later. A few "laters" down the track, they are in for a repair bill that they may not be able to afford, so its quick fixes and the problem continues to grow

NZ Govts could have afforded incremental improvements to many sectors over the last few decades, but they didn't. No doubt voters will react if the words tax, levy, fee, are mentioned. Govts were in a rock and a hard place situation, probably due to voter reactions IMO

Palmerston North has a bridge on Amberley avenue, 2 years or so ago if they had done the maintenance it would have cost about $100K

Now its going to cost rate payers $3.5 million.

We see the same with schools, "deferred maintenance" programs for short term balance sheet niceness which morphs into a bigger problem, however the person who created the problem is no longer there and is not held accountable.

Handle9

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#3200915 28-Feb-2024 15:53

Eitsop:

The first Step is to agree that high Inflation is bad

Second step is to agree high house price inflation is bad

Then to ask RBNZ, what tools they need to achieve stability

So what are you going to do when the Reserve Bank says they need a magic wand to creat 300,000 more houses and the power to remove 500,000 people from the population?

Handle9

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#3200916 28-Feb-2024 15:55

sir1963:

There is no "simple solution", the worlds population is billions of people too large for that now.

The simple solution is you say Reserve Bank will fix it over and over while ignoring the causes of the inflation.

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