Is there an Auckland housing recession guess thread in place

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#1390245 19-Sep-2015 14:30

afe66:
TeaLeaf:
So we have a lot of people going to Auckland, ummmm, why? What do they make there? Why arent these people being diverted to ohter cities.

Because there is no will to think differently, it seems every time there are announcements of "job restructuring", it seems the jobs are being moved to Auckland.
A couple of weeks ago NZpost announced it was closing the call centre in chch and moving it to auckland (!)
If there was a job which could be done anywhere in the country I would have thought it would have been a call centre person..... no no it must be in auckland.

As someone who lives in the South island I keep an ear our when there are job losses/restructuring and it seems that if the job isnt being ended completely, its being moved to Auckland.
Wasnt one of the claimed benefit of the fibre network was to allow all sorts of services and jobs to be more independent in their location. I fear that instead of having more jobs outside Auckalnd serviceing the country, it will just be more people in Auckland services everyone else.

A.

(Mortgage free)

It's supposed to be laissez-faire "self-regulating" market.
Here's an example of market failure.

Some so-called proponents of the free market might claim that higher wages/salaries are needed to offset the higher living costs, as "the market" should determine pay rates.
But to do this is interventionist - actually "regional development" in reverse. In this case you'd have Invercargill workers paying increased taxes to provide high incomes for Auckland state servants. It's very unlikely that Aucklanders alone would be forced to pay such a cost, despite the fact that this cost was 100% caused by Aucklanders.
The free market would simply allow Auckland to fester through lack of teachers and police - and as a result fewer may choose to live there.

Tragedy of the Commons.

networkn

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#1390247 19-Sep-2015 14:36

jarledb: 400k mortgages? Have you seen Auckland prices? I don't think you can get a shed in Auckland for 400k

I'll tell you what. I have a shed in Auckland, I'll let you have it for 400K. :)

TeaLeaf

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#1390268 19-Sep-2015 14:58

Spot on Fred.

So no police, fireman, dishwashers, sewer workers, etc etc in Auckland. Yeah this system is going to work. Oh wait immigrants, they will work 3 jobs on top of their PHD based highly skilled yet not so highly pain main job to cover them (all immigrants are highly skilled/sarcasm). Now thats a work life balance.

And why are all these immigrants coming to Auckland? Why is the government not strategically planning our countries growth? Oh all the town planners got the squirts and left for oz, I forgot.

And as for CGT lowering prices, thats not the point of CGT or any tax. I pay GST on my Coca Cola, yet Its a consumer Tax. Why shouldnt I be taxed on making an income from property? Thats just common sense.

Whats the percentage of investors in the Auckland market who are not residents?

Id have no issue if they were the migrants, I think a lot of people get these 2 issues mixed up.

Im just trying to care and understand how it has all come to this and all I can put it down to is property owners in Auckland thinking they are getting rich, which some may say is blind greed. Not realising the totality of the ignorance for the countries future.

Perhaps Im well off base.

mattwnz

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#1390286 19-Sep-2015 15:28

mudguard: You wonder if the council made GV's closer to RV's whether that would cool it... Would certainly make the council some money! We've kind of given up to be honest, I don't have the time to look but there is some uncertainty over my job. Interest rates on term deposits certainly suck at the moment.
As someone mentioned, it would probably take some external force for anything actually bad to happen, prices could flatline or slow, but with the numbers migrating into Auckland from overseas and around the rest of NZ it probably won't change.

As far as I am aware, RV, GV, and CV are all the same thing...the Capital valuation... they are just called different things, as the name has changed several times of the year. Most councils seem to use QV for their valuations. They are considered the market valuation according to the QV website. . You can get an independent registered valuation done, but it may nor differ much from the CV unless the house isn't normal, or additional features. The CV also doesn't include chattels, where a registered valuation may.

mattwnz

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#1390291 19-Sep-2015 15:33

The problem in Auckland, is lack of supply. So I don't know why they are allowing so many new people into NZ when we don't have enough adequate affordable houses for people who already live here. At the very least they should be putting them into other towns and cities, as it is really only Auckland that has this problem with out of control house prices. The housing market is too big to fail, so I would expect to see a small drop, and no rise over a long period of time. But if the bubble does burst, who is going to hurt? Not banks, but possibly depositors, as we have no government guarantee scheme.

TeaLeaf

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#1390306 19-Sep-2015 16:02

Precisely matt, WHY? why are we letting in so many darn immigrants firstly? to pay for baby boomers retirement is my guess. Secondly why are they all being shuffled into Auckland?

I just dont get it, Im not trying to spread doom and gloom. I just want whats best for my country.

jarledb

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#1390307 19-Sep-2015 16:09

networkn:
jarledb: 400k mortgages? Have you seen Auckland prices? I don't think you can get a shed in Auckland for 400k

I'll tell you what. I have a shed in Auckland, I'll let you have it for 400K. :)

Thanks for the offer. I think I rather stay in Napier. I don't mind coming to Auckland to visit, but the traffic problems in Auckland in and of itself is good enough reason to stay away, not to mention the crazy prices, even with that very kind offer.. ;)

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TeaLeaf

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#1390322 19-Sep-2015 16:39

Heres a theory, what if the 50% of investors that are not foreign investors but baby boomers, all decided its time to sell up, take theit $3m sunnynook mansion and decided to move to a nice part of the country?

Would that crash the economy, Im pretty sure it would effect the housing bubble?

Geektastic

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#1390478 19-Sep-2015 22:09

TeaLeaf: Spot on Fred.

So no police, fireman, dishwashers, sewer workers, etc etc in Auckland. Yeah this system is going to work. Oh wait immigrants, they will work 3 jobs on top of their PHD based highly skilled yet not so highly pain main job to cover them (all immigrants are highly skilled/sarcasm). Now thats a work life balance.

And why are all these immigrants coming to Auckland? Why is the government not strategically planning our countries growth? Oh all the town planners got the squirts and left for oz, I forgot.

And as for CGT lowering prices, thats not the point of CGT or any tax. I pay GST on my Coca Cola, yet Its a consumer Tax. Why shouldnt I be taxed on making an income from property? Thats just common sense.

Whats the percentage of investors in the Auckland market who are not residents?

Id have no issue if they were the migrants, I think a lot of people get these 2 issues mixed up.

Im just trying to care and understand how it has all come to this and all I can put it down to is property owners in Auckland thinking they are getting rich, which some may say is blind greed. Not realising the totality of the ignorance for the countries future.

Perhaps Im well off base.

So who does all these jobs in other equally or more expensive places such as New York, London, LA, Paris etc etc and where do they live? Answer: poor people, and they live in places everyone else does not want to live in.

And yes, all skilled migrants are by definition skilled. That is how they get here. I know - my wife and I did it.

If there are paths for poor unskilled workers then those should be closed down as those we do not need.

It's simply human nature to make large sums of free money when an opportunity arises. To expect people not to capitalise on such opportunities is frankly just cloud cuckoo land. Rule 1 is always 'take the money' and rule 2 is always 'screw you, I am alright Jack!' when push comes to shove. It may be romantic to think everyone believes in some fairy tale 'community' but history shows it is just not the case.

If some Triad gangster knocked on the door offering $3 million for a house worth 50% of that, even if the house owner knew they were a gangster well over 85% of people would take the money I think.

As to tax, I'd be more inclined to ask why should you be taxed for buying a Coke, not say let's tax every cent of everyone's income until they bleed.

Aredwood

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#1390489 19-Sep-2015 22:54

As has been said, the main problem is supply. Namely the so called "smart growth" policies introduced in the 90s. (should be called stupid growth). They established the metropolitan urban limits. With the idea being to stop cities from constantly spreading out. And encourage more high density living. In reality all it has done is push up house prices due to the artificial restriction on land within the limits. And the cities are still spreading anyway, in the form of "lifestyle" blocks. And within the limits they bought in tougher restrictions on infill housing. As well as development contributions. Add to that the change to capital value based rates instead of land value based. Land value based is better as it penalises people who own land that can be built on or sub divided. But who haven't done so.

So they are saying we don't want the city to expand. And at the same time saying we don't want infill housing. And then people wondered why prices are increasing so quickly.

But the councils have no incentive to change. As homeowners are more likely to vote in local elections. And the current setup favours those who already own housing.

In my own case the change to capital value based rates when the super city came in. Caused my rates bill to go down by about $500 for that year. (my property is big enough to be sub divided, therefore land value is almost the same as my capital value)

tdgeek

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#1390513 20-Sep-2015 07:38

Tough one.

Back in the day, prices cycled upwards 100% every 10 years, not linear. The rule of thumb was get the best house you can afford, struggle for tree years, then let inflation sort it out. Wages up solidly every year, mortgage payments fairly static. Now, inflation is low, end of the easy way to buy houses. Interest rates are off course also low, up goes affordability and house prices. These days couple have kids later, earn two incomes, up goes affordability and house prices. If interest rates rose, that would help, BUT, that causes financial distress.

Supply? Well, an under supply hasn't stopped people going to AKL, they aren't living in the streets, so I don't see under supply as a key issue.Its the ratio between owners and renters. We need to ban home ownership for non residents. an SOE could be setup to build swathes of housing estates, as long as they aren't akin to suburbs of poor state housing areas. Allow 60 year mortgages, so that residents can join the property ladder, that will temper rents, albeit also add to demand. If everyone could get a house, by way of low deposit, 60 year mortgage, at some point in time, the housing issue would not exist as a house becomes a commodity. Few rent, so less pressure on high rents, which causes higher property prices.

driller2000

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#1390581 20-Sep-2015 12:48

mattwnz:
mudguard: You wonder if the council made GV's closer to RV's whether that would cool it... Would certainly make the council some money! We've kind of given up to be honest, I don't have the time to look but there is some uncertainty over my job. Interest rates on term deposits certainly suck at the moment.
As someone mentioned, it would probably take some external force for anything actually bad to happen, prices could flatline or slow, but with the numbers migrating into Auckland from overseas and around the rest of NZ it probably won't change.

As far as I am aware, RV, GV, and CV are all the same thing...the Capital valuation... they are just called different things, as the name has changed several times of the year. Most councils seem to use QV for their valuations. They are considered the market valuation according to the QV website. . You can get an independent registered valuation done, but it may nor differ much from the CV unless the house isn't normal, or additional features. The CV also doesn't include chattels, where a registered valuation may.

Independent RV's are COMPLETELY different things - they include a physical inspection of the property - so are detailed and specific for the property for the date of the valuation

the other council based valuations mentioned (CV) are done for a given area and on an average basis and there is no site specific inspection and almost no detail - ie. land and house area + general features + age being the main criteria - they are also done over a protracted period so the date of the valuation is a fudge at best - and they can be several years out of date given the space between the valuations

this is based on my exp with actually getting 2 or 3 RV's done on the family home for finance purposes - with quite different numbers resulting between the RV and CV - especially in a market like Auckland where the rate of change is a bit crazy at the moment...

As to the original question posed by the OP...I have followed Tony Alexanders posts for several years now and he has produced some pretty good material on this subject e.g.:

http://tonyalexander.co.nz/wp-content/uploads/2015/05/Sporadic-8-May-12-2015.pdf

And the thing I like most about him is at least he admits that he and his peers are at best guessing ...and that their record e.g. re interest rates has been woeful since the GFC

Fred99

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#1390606 20-Sep-2015 15:17

And the thing I like most about him is at least he admits that he and his peers are at best guessing ...and that their record e.g. re interest rates has been woeful since the GFC

Well "bubbles" aren't identified until after they collapse, as defining an intrinsic value for most assets is almost impossible. However there's one thing which can be used - the cost of human labour/effort. On that basis, using multiple of earnings, then Auckland house prices are about double the long-term average, the one and only thing raising and holding them at those levels is "affordability" because of record low interest rates - and "faith" that there isn't a bubble about to burst.

Fred99

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#1390609 20-Sep-2015 15:29

In Auckland, more than 33,000 houses were registered as unoccupied in the most recent data from 2013. A breakdown shows about a third had residents away. The remaining 22,152 properties are listed as empty.

This blows away any argument that supply:demand demographics are a main cause of the silly prices. Investors are holding on to many of these homes waiting for the "right time" to sell, rental income not even a factor - especially when renting out the house could come with a risk of being assessed for capital gain when you sell. Much easier to say - "no we bought this as a family home - but our circumstances have changed" - to brush-off IRD. Missing out on a few thousand $ of rent income is far more palatable than being socked for a few hundred thousand $ in taxes.
Will this mean 20,000 new listings when "opinion" shifts - and more people believe that the market has peaked? I don't know.

gzt

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#1390632 20-Sep-2015 15:58

That is interesting but without comparison to historical data it is meaningless. Secondly if an owner can afford to leave a house empty, they can probably afford to hang on to it in other circumstances if need be.

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