Solving the house price problem should be easy!

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

Eitsop

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#306213 4-Jul-2023 22:20

Some ideas for solving house problems are

capital gains tax, like Labour had proposed
land tax, like TOP party
rent controls, like greens saying 3% rent increase cap
national I don't think has any ideas, other than blocking the above ideas

We need to step back and ask what we are NZers want for our population

affordable houses
that everyone in NZ should be able to buy a house
that people should be able to pay off their mortgage by the time they are retired
house price inflation should be inline with normal inflation

If the above is correct, then the answer is as simple as

changing the mandate of RBNZ to also control house price infaltion to the same target as normal inflation
giving RBNZ more tools to control inflation, eg
- interest rates are great to control house prices,
- Other tools to control normal goods and services inflation

While the above is simple, no government or political party will do what's right.. they only do what suits the people that get them into power. So we flip-flop between left and right politics, which most of the western world is suffering from. When will we get leadership that can combine both left and right sides of government to get meaningful long-lasting change.

Why do political parties believe they have all the right policies? its like waring factions believing god is on their side.

True Leadership would consist of having referendums on what the public wanted NZ to be like.. and executing that. This was clearly done with the right to die referendum.. and while the cannabis referendum showed a divided public for a decisive change.. it did indicate something could have been done.

We should be voting in people that execute a framework of results from referendums

So I open the floor to your views.. will they be left or right.. or middle of the road

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#3100351 5-Jul-2023 18:16

Your view is hard left, thats a problem. Same if it was hard right

Its a supply issue. In the 70's, governments build houses left right and centre. Now they don't. The market does, but at too low a rate.

There needs to be a push to builds, that doesnt exist. Builds are annoying, easier to buy, so a Govt needs to provide and incentive to build. Easy, as humans flock to deals. Using mortgage interest rates as the carrot will work. Low rates for builds, subsidised by buys, much like the clean car subsidies.

But the Right voters will revolt as it affects the housing. Left voters will revolt as that demographic has less capability to build. All rubbish as the determinant to buys or builds is the mortgage payment. For newbies, interest rates are a large part of those payments. They can be massaged.

mudguard

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#3100374 5-Jul-2023 18:47

It would be interesting to compare demographics over that building boom in the seventies.
Say how many houses were built from 1970-1979 and what did the population grow by?
If we've added 800,000 in the past ten years and that kind of growth holds steady instead of increasing, could we even keep up?

tdgeek

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#3100394 5-Jul-2023 19:38

mudguard: It would be interesting to compare demographics over that building boom in the seventies.
Say how many houses were built from 1970-1979 and what did the population grow by?
If we've added 800,000 in the past ten years and that kind of growth holds steady instead of increasing, could we even keep up?

No idea. All I can see is there was a concerted desire to build to provide housing. Now there isnt. If I became an adult today and had a job and wanted a home, most will buy, i.e. recycle whats already there, instead of being a new human and providing oneself a new home, thereby adding to housing stock in line with human growth. Supply and Demand 101. What humans do is grow demand but we grow supply at a lower rate. Here we are.

Eitsop

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#3100430 5-Jul-2023 22:09

tdgeek: Its a supply issue. In the 70's, governments build houses left right and centre. Now they don't. The market does, but at too low a rate.

Supply is part of the issue.. the other time house prices stagnated was the 90's when everyone went to Australia... but demand can be constrained. Which is why right now with high interest rates, demand has tapered, and if it increased more, we would see even less demand in market.

Also, if it is mandated to RBNZ to maintain house price inflation. people may start to see no capital gains, as such the only way to see returns will be from rental returns. as such if they can't get a good return then the market may lower, as investors look for better returns, eg money in bank.

Eitsop

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#3100435 5-Jul-2023 22:36

mudguard: It would be interesting to compare demographics over that building boom in the seventies.
Say how many houses were built from 1970-1979 and what did the population grow by?
If we've added 800,000 in the past ten years and that kind of growth holds steady instead of increasing, could we even keep up?

It is interesting in 70s the govt may have been madly building .. but this graph shows we also had a lull in immigration.
So was it the building or the lull in immigration that gave us extra supply?

Realistically, we should limit immigation to highly skilled people only.

sen8or

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#3100459 6-Jul-2023 08:05

Eitsop:

mudguard: It would be interesting to compare demographics over that building boom in the seventies.
Say how many houses were built from 1970-1979 and what did the population grow by?
If we've added 800,000 in the past ten years and that kind of growth holds steady instead of increasing, could we even keep up?

It is interesting in 70s the govt may have been madly building .. but this graph shows we also had a lull in immigration.
So was it the building or the lull in immigration that gave us extra supply?

Realistically, we should limit immigation to highly skilled people only.

Sadly, its not only the highly skilled labour that we need, but NZers seem to be "above" entry level or / labour intensive work, so we import people for those roles (even if just seasonal workers, backpackers for working holidays etc)

sen8or

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#3100460 6-Jul-2023 08:15

Eitsop:

Some ideas for solving house problems are

capital gains tax, like Labour had proposed
land tax, like TOP party
rent controls, like greens saying 3% rent increase cap
national I don't think has any ideas, other than blocking the above ideas
We need to step back and ask what we are NZers want for our population

affordable houses
that everyone in NZ should be able to buy a house
that people should be able to pay off their mortgage by the time they are retired
house price inflation should be inline with normal inflation
If the above is correct, then the answer is as simple as

changing the mandate of RBNZ to also control house price infaltion to the same target as normal inflation
giving RBNZ more tools to control inflation, eg

interest rates are great to control house prices,
Other tools to control normal goods and services inflation
While the above is simple, no government or political party will do what's right.. they only do what suits the people that get them into power. So we flip-flop between left and right politics, which most of the western world is suffering from. When will we get leadership that can combine both left and right sides of government to get meaningful long-lasting change.

Why do political parties believe they have all the right policies? its like waring factions believing god is on their side.

True Leadership would consist of having referendums on what the public wanted NZ to be like.. and executing that. This was clearly done with the right to die referendum.. and while the cannabis referendum showed a divided public for a decisive change.. it did indicate something could have been done.

We should be voting in people that execute a framework of results from referendums

So I open the floor to your views.. will they be left or right.. or middle of the road

Peoples definition of "whats right" is going to vary significantly.

And politics is all about believing you can do things better than the other side. If we only had political parties both competing for the same votes with the same policies, whose to say those policies are actually for the benefit of society. Imagine if you will the only political parties out there were Act, National and New Conservatives (or whatever other "far right" party there is), would you want them all to get along enacting whatever policies suited? That to me (who is right leaning) is just as scary as having no alternative to a Labour/Greens/TOP choice only.

We have a "referendum on what the NZ public want" every 3 years, its called the election. They all dress up their views and policies, sprinkle them with fairy dust and hope that they appeal to more of the public than the other lot. Often its not the lack of promises / policies that are the problem, its the inability to actually deliver on those policies, but you get to hold them to account for those failures every 3 years.

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tdgeek

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#3100477 6-Jul-2023 08:57

Eitsop:

Supply is part of the issue.. the other time house prices stagnated was the 90's when everyone went to Australia... but demand can be constrained. Which is why right now with high interest rates, demand has tapered, and if it increased more, we would see even less demand in market.

Demand might taper but that's demand to buy a house. The other way to look at it is that the population grows. Is houses per capita remaining stable or is it dropping?

Immigration less Emmigration

Natural growth of births exceeding deaths

Eitsop

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#3100626 6-Jul-2023 14:25

tdgeek:Demand might taper but that's demand to buy a house. The other way to look at it is that the population grows. Is houses per capita remaining stable or is it dropping?
Immigration less Emmigration
Natural growth of births exceeding deaths

We give RBNZ to maintain inflation, independent of government in place

We could give RBNZ ability to

maintain house price inflation by way of cash rate
incentivise new house builds by way of cash rate discount, so banks need to give discount for new builds
use KiwiSaver as a tool to maintain inflation for goods and services..

ockel

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#3100629 6-Jul-2023 14:36

tdgeek:

Its a supply issue. In the 70's, governments build houses left right and centre. Now they don't. The market does, but at too low a rate.

Not sure where you got your data from but the value of residential buildings put in place during the 1970's was a tale of two halves. Happy for you to post your source information.

After adjusting for inflation (all building work value reported by Stats NZ is actual numbers so not in constant $$$ - and the volume stats are only in recent years) the value of residential building work went backwards fast in the late 1970's. Not exactly building left, right and centre. Source BAS -Building Activity by region (ann to Dec), NZ 1966-2022. CPI deflator from Stats NZ Economic Indicators.

1971 3%
1972 22%
1973 24%
1974 17%
1975 -6%
1976 -7%
1977 -14%
1978 -27%
1979 -15%

Sixth Labour Government - "Vision without Execution is just Hallucination"

tdgeek

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#3100631 6-Jul-2023 14:42

ockel:

Not sure where you got your data from but the value of residential buildings put in place during the 1970's was a tale of two halves. Happy for you to post your source information.

After adjusting for inflation (all building work value reported by Stats NZ is actual numbers so not in constant $$$ - and the volume stats are only in recent years) the value of residential building work went backwards fast in the late 1970's. Not exactly building left, right and centre. Source BAS -Building Activity by region (ann to Dec), NZ 1966-2022. CPI deflator from Stats NZ Economic Indicators.

1971 3%
1972 22%
1973 24%
1974 17%
1975 -6%
1976 -7%
1977 -14%
1978 -27%
1979 -15%

People here often state about the 70's that the Govt built, perhaps everyone is wrong

ockel

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#3100647 6-Jul-2023 15:16

tdgeek:

ockel:

Not sure where you got your data from but the value of residential buildings put in place during the 1970's was a tale of two halves. Happy for you to post your source information.

After adjusting for inflation (all building work value reported by Stats NZ is actual numbers so not in constant $$$ - and the volume stats are only in recent years) the value of residential building work went backwards fast in the late 1970's. Not exactly building left, right and centre. Source BAS -Building Activity by region (ann to Dec), NZ 1966-2022. CPI deflator from Stats NZ Economic Indicators.

1971 3%
1972 22%
1973 24%
1974 17%
1975 -6%
1976 -7%
1977 -14%
1978 -27%
1979 -15%

People here often state about the 70's that the Govt built, perhaps everyone is wrong

In all my years of experience peoples perception and reality are often significantly divorced.

Our biggest periods of new builds (by value) in a low inflation environment (so volume and value are roughly equal) were 93-97, 02-07, and 12-17. Both 2014 and 2015 had 27-28% growth per annum in new residential building value/volume.

Sixth Labour Government - "Vision without Execution is just Hallucination"

mudguard

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#3100672 6-Jul-2023 16:48

sen8or:

Eitsop:

Realistically, we should limit immigation to highly skilled people only.

Sadly, its not only the highly skilled labour that we need, but NZers seem to be "above" entry level or / labour intensive work, so we import people for those roles (even if just seasonal workers, backpackers for working holidays etc)

Being blunt, but should those seasonal jobs even exist? It's probably a different conversation but comes round to housing. What kind of NZers could do these jobs? It's extremely poorly paid (hence the RSE workers coming from Pacific Islands to do it), it's for short duration, and generally away from main centres. Generally the accommodation is pretty temporary too. It's not really enhancing a community.

The housing issue is fundamentally thorny. Perhaps the target should be to get housing to a multiple of an average income.

Now do you need the average of two incomes, 1.5 maybe to allow for time out for kids etc? And how do you do it without a sweeping change that would wipe the value of existing houses? I honestly don't know, and as I get older I'm less inclined to think that there will actually be time to do anything given our ageing population.

tdgeek

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#3100694 6-Jul-2023 17:41

ockel:

In all my years of experience peoples perception and reality are often significantly divorced.

Our biggest periods of new builds (by value) in a low inflation environment (so volume and value are roughly equal) were 93-97, 02-07, and 12-17. Both 2014 and 2015 had 27-28% growth per annum in new residential building value/volume.

Low inflation is a relatively recent thing. Not dismissing your post but its about builds.

Ive been a property investor, not now but from age 19. The mantra was they will double in 10 years.Not linear. I mentioned the 70's as many others have but you are quoting 93 onwards.

Again not dismissing your post but by value, i'd rather go by volume. Volume is population.

tdgeek

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#3100703 6-Jul-2023 17:54

Turned the news on, live, they will ask if your own home is a human right. Didnt say if that means owning or being in one, but its the trend these days. Its less about reality (which any Govt can improve IF they desire, its about media bites.

I would LOVE a formula to solve everything. Love it. Just dont check the tax rates if we dont discover gold/tin/cobalt/uranium in NZ... That IS the reality.

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