Housing - Issues, Effects, Observations and Solutions?

To post in this sub-forum you must have made 100 posts or have Trust status or have completed our ID Verification

Forums › Politics › Housing - Issues, Effects, Observations and Solutions?

GV27

5977 posts

Uber Geek
+1 received by user: 4212

#279960 19-Nov-2020 06:41

Given we are starting to see some serious scrutiny of house prices and a lack of action by various parties over the year, I thought it might be a good place to share data/anecdata and discussions around how NZ can move on from 30 year 11x household income property prices.

A couple of interesting things relevant to today's issues:

1) RBNZ has a mandate to preserve financial stability in NZ, but at what point does having massive long-term commitments of future household cashflows like our massive 30 year mortgages become a thread to medium-term financial stability?

2) Urban Development MPS: Probably the single-biggest achievement of the Ardern's Labour Govt - taking the power away from Councils to set a maximum building height around rapid transit corridors. Passed in the last days of the previous Parliament, this could have a massive effect on places like Auckland and Wellington (provided we can deliver the transport networks to build rapid transit corridors!).

3) Tax tax tax. CGT. vs. Land Tax vs. Stamp Duties vs. something else? All assets or just property? Taxed annually or on disposal? Or do we go the full hog and have actual meaningful tax reform for the first time since 1984?

4) Migration: Covid19 did what governments weren't interested in doing. We're already hearing about opening up to high-value migrants and returning Kiwis. We were previously adding tens of thousands of people a year to Auckland - do we want to go back to this when Covid lifts?

5) The future of state building programmes like Kiwibuild and opportunities for things like large scale fabrication of terraced houses (up to five stories) - moving supply away from delivering $750K two bedroom two level houses to $800K 3/4 bedroom three to five level houses and what that would mean for state housing for bigger families, etc.

1 | 2 | 3 | 4

Mad Scientist
30012 posts

Uber Geek
+1 received by user: 6217

Trusted

Lifetime subscriber

#2607281 20-Nov-2020 07:20

saw an interesting observation from herald https://www.nzherald.co.nz/nz/nine-tweets-jacinda-ardern-probably-regrets-even-just-a-little-bit/B4XSYC7CQ2623XNXNX74IAYCFE/

Fred99

13684 posts

Uber Geek
+1 received by user: 10018

#2607315 20-Nov-2020 09:13

How many "housing/real estate" threads have there been on GZ?

Can't recall any of them where there was consensus on what the actual problem was, thus no consensus on what the best solution could be. I think politicians have the same problem - but worse - doing something "unpopular" will cost them their jobs, doing something popular with the majority won't fix the issue.

GV27

5977 posts

Uber Geek
+1 received by user: 4212

#2607445 20-Nov-2020 11:01

Fred99:

How many "housing/real estate" threads have there been on GZ?

Can't recall any of them where there was consensus on what the actual problem was, thus no consensus on what the best solution could be. I think politicians have the same problem - but worse - doing something "unpopular" will cost them their jobs, doing something popular with the majority won't fix the issue.

Eh, we might do better with one here than in General Discussion.

I suspect consensus is a problem because there's arguably no silver bullet to the cause or the solution - as with most things, incremental changes need to be made in lots of areas but we've put off most change for too long and hence we've ended up here.

The other issue it seems to be like Super - the electorate loves to hear oppositions promising to fix it, but when they become government, they decide they don't need to or want to do anything at all.

I think we're so far up the creek now that wholesale planning and tax reform - a 1984 moment, almost - is required to get us back on track to where we want to be. But I don't see anyone in politics who is likely to be in a position to make that happen who actually wants to make that happen.

GV27

5977 posts

Uber Geek
+1 received by user: 4212

#2607450 20-Nov-2020 11:22

https://www.interest.co.nz/opinion/108050/why-its-time-government-get-its-head-out-sand-and-address-distributional-impacts

Good reading and scrutiny of the impacts of the RBNZ money printers working overtime.

Paul1977

5171 posts

Uber Geek
+1 received by user: 2192

#2607451 20-Nov-2020 11:28

And home owners will have very different views on the subject than renters.

As a home owner I certainly don't want to see prices dropping, but I don't have a problem with them stabilizing.

I'm against land tax or CGT (at least on primary home). When buying and selling in the same market a capital gains tax seems really unfair because you haven't actually made a real profit.

I can certainly understand the frustration felt by those who are finding it financially difficult (or even impossible) to purchase their own home, but it just seems like any short-to-medium term solution to help this group will penalise those who already own a home.

Obviously the goal is for house prices to be at a reasonable ratio to income, but the only way that can happen without penalising current home owners is for house prices to increases at a slower rate than income until eventually the ratio is more affordable. Even if measures could be put in place to achieve this, it would probably take a generation to get there.

quickymart

14940 posts

Uber Geek
+1 received by user: 13953

ID Verified

#2607856 20-Nov-2020 21:59

My personal view on it is that there's simply not enough houses to meet demand, hence why prices rise. Yes an additional 100,000 houses overnight would be a godsend, but I don't see that happening anytime soon. I actually thought Kiwibuild was a great idea - although I feel $650,000 was still too pricey - just a pity it didn't get off the ground as much as it should/could have.

Dell

Shop now for Dell laptops and other devices (affiliate link).

GV27

5977 posts

Uber Geek
+1 received by user: 4212

#2608745 23-Nov-2020 08:31

quickymart:

My personal view on it is that there's simply not enough houses to meet demand, hence why prices rise. Yes an additional 100,000 houses overnight would be a godsend, but I don't see that happening anytime soon. I actually thought Kiwibuild was a great idea - although I feel $650,000 was still too pricey - just a pity it didn't get off the ground as much as it should/could have.

Kiwibuild would have been a start but it was doomed without pulling the tax and planning levers at the same time.

You'd have to think a tax on vacant houses would be an easy place to start - won't capture renters or owner-occupiers, just to help rattle a bit more stock out into the market.

quickymart

14940 posts

Uber Geek
+1 received by user: 13953

ID Verified

#2608814 23-Nov-2020 09:34

Like I said in the other thread - I was amazed at the number of vacant shops in Newmarket when walking through there the other day.

Would it be too difficult to maybe convert some of those into housing or apartments or something? Yes there would be some work involved (installing kitchens/bathrooms etc), but at least the property owner would get something in return, as opposed to the $0 they're making while a vacant shop sits there doing nothing. Might only work for the really large shops though.

GV27

5977 posts

Uber Geek
+1 received by user: 4212

#2608971 23-Nov-2020 11:11

quickymart:

Would it be too difficult to maybe convert some of those into housing or apartments or something? Yes there would be some work involved (installing kitchens/bathrooms etc), but at least the property owner would get something in return, as opposed to the $0 they're making while a vacant shop sits there doing nothing. Might only work for the really large shops though.

Without high migration or international students, there's not much of a market for apartments. Kiwis are notoriously averse to them, and that's partially our own fault. Apartments represent comically poor value in NZ, and there isn't a lot of trust in building quality or body corps to entice people.

quickymart

14940 posts

Uber Geek
+1 received by user: 13953

ID Verified

#2609093 23-Nov-2020 13:44

If there aren't enough houses with sections available though (like right now), I suspect a number of people would be swayed into an apartment, just to get onto the property ladder to begin with.

Edit: Also: politicians weigh in: https://www.stuff.co.nz/national/politics/123474831/jacinda-ardern-and-john-key-weigh-in-on-rising-house-prices-debate

Funny how only now John Key says housing is an issue, yet he didn't do anything about it when he was in power - I seem to recall National even saying there was no housing crisis, as recently as 2016-2017. It's only when the election came around suddenly it was a problem.

MikeAqua

8024 posts

Uber Geek
+1 received by user: 3817

#2609160 23-Nov-2020 15:21

Increased supply of land should reduce the costs of land and therefore the value of new and existing houses.

Increased supply might also increase the size of the market and encourage more competition on the building side, lowering prices.

Ditto materials - maybe. We possibly don't have a big enough market for real competition on materials.

Mike

Lenovo

Shop now for Lenovo laptops and other devices (affiliate link).

GV27

5977 posts

Uber Geek
+1 received by user: 4212

#2609172 23-Nov-2020 15:39

quickymart:

If there aren't enough houses with sections available though (like right now), I suspect a number of people would be swayed into an apartment, just to get onto the property ladder to begin with.

Depends if you're taking on the risk of something that will leak and require hundreds of thousands of dollars in repair and decimate whatever equity you manage to pay down, and probably costs near enough to a house with all the the severe limitations that come with apartment living to the point where you're better off just taking on more cheap debt and getting something with land under it.

Even if it's not true, perceived risk is as dangerous as actual risk.

quickymart:

Edit: Also: politicians weigh in: https://www.stuff.co.nz/national/politics/123474831/jacinda-ardern-and-john-key-weigh-in-on-rising-house-prices-debate

Funny how only now John Key says housing is an issue, yet he didn't do anything about it when he was in power - I seem to recall National even saying there was no housing crisis, as recently as 2016-2017. It's only when the election came around suddenly it was a problem.

That would be like Labour's rewriting the Income Tax Act in the early - mid 2000s and never introducing more formal capital gains taxes, which suddenly mattered a lot once they were in opposition. It's like Super - both parties have plenty to say about it when they're not in a position of having to do something.

MikeAqua

8024 posts

Uber Geek
+1 received by user: 3817

#2609174 23-Nov-2020 15:40

GV27:

3) Tax tax tax. CGT. vs. Land Tax vs. Stamp Duties vs. something else? All assets or just property? Taxed annually or on disposal? Or do we go the full hog and have actual meaningful tax reform for the first time since 1984?

4) Migration: Covid19 did what governments weren't interested in doing. We're already hearing about opening up to high-value migrants and returning Kiwis. We were previously adding tens of thousands of people a year to Auckland - do we want to go back to this when Covid lifts?

5) The future of state building programmes like Kiwibuild and opportunities for things like large scale fabrication of terraced houses (up to five stories) - moving supply away from delivering $750K two bedroom two level houses to $800K 3/4 bedroom three to five level houses and what that would mean for state housing for bigger families, etc.

The tax debate is pretty much dead and buried. Beyond tinkering with the top rate, Ardern has zero interest in tax reform. National would cut tax.

Migration - the govt could have almost completely shut the border (kiwis living legally overseas aren't 'stateless') but didn't.

If the state is going to own more houses, they would be better off buying/building rental properties and undercutting the private sector on rent. Not something I would agree with, but they might be able to distort the market sufficiently to decouple rents from land value. This would require a massive investment.

Mike

MikeAqua

8024 posts

Uber Geek
+1 received by user: 3817

#2609191 23-Nov-2020 15:47

quickymart:

Funny how only now John Key says housing is an issue, yet he didn't do anything about it when he was in power - I seem to recall National even saying there was no housing crisis, as recently as 2016-2017. It's only when the election came around suddenly it was a problem.

National were working on the supply side, but didn't have the numbers in the house.

They were developing the special housing areas.

They were late to the game, but heading in the right direction.

Key didn't campaign on housing. Ardern did and it's gotten worse on her watch.

Mike

MikeAqua

8024 posts

Uber Geek
+1 received by user: 3817

#2609223 23-Nov-2020 16:18

Great cartoon here

It's the first cartoon in the deck as at 23/11/2020

I didn't post the image as I'm unsure about copyright etc.

Mike

1 | 2 | 3 | 4