[Discuss] Things that were meant to bring prices down but have not. (?)

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#3216282 9-Apr-2024 16:43

tripper1000:

Nope. The single biggest cause of high housing cost in N.Z. is high land cost. The cause of high land cost is failure to sub-divide. The cause of failure to subdivide is 1) Nimbies, 2) pseudo-environmentalism, 3) failure of the voter to understand supply vs demand.

the other factor is council restriction of supply, but also how its planned. if you know where subdivision is restricted to then it becomes easier to landbank and charge higher prices.

without density you need more land so your land cost goes way up. also the subdivision cost goes up.

the other factor is that councils gets money from developers. that cost gets put onto the housing market. instead of the cost being spread over a large amount of people, its pushed onto one market, which in turn gets passed on to the few at the bottom who have to pay it.

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#3216288 9-Apr-2024 16:48

tripper1000:

The Govt blocked oil exploration in N.Z. contributing to (world-wide) demand exceeding supply and the corresponding rises.

There's plenty of supply worldwide, OPEC+ manipulate the supply to push up prices. If New Zealand had oil exploration it would still be sold at the market rate and have no effect on prices.

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#3216309 9-Apr-2024 17:28

To Housing problem you have to add 'Housebanking'.
So you don't like risks of running a rental, or AirB&B just leave it empty.

Quite some years ago Gareth Morgan explained how this was his go to.
I daresay its done very well for him.
However it was more than popular in China, where investment options were fewer.
Then throughout Asia.

Its not just an Asia thing as you find reports of large parts of London, and Londongrad.

Someone mentioned Canada, and guess what, there has been a boom in empty houses.
https://dailyhive.com/vancouver/canada-over-1-3-million-vacant-homes

""
“Canada also has notoriously low property tax rates AND cheap money,” Punwasi wrote. “Usually, it’s one or the other, but the combination is like asking you to hold homes vacant. It’s a country with sub 1% property taxes, a central bank pushing mortgages below 2%, and 4% inflation. You would have to be an idiot not to hold vacant property with this setup.”
""

Oh then you have that other thing AirB&B pushing motels and hotels out of the market, and tourist spots all over the world have been cursing how AirB&B has hurt housing supply.

Seeing the appreciation in gravesite costs, I do wonder if next one will be buying up cemetery plots for investment ?

Technofreak

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#3216317 9-Apr-2024 17:34

tripper1000:

Groceries. Yes, the headline profit figure seems really large, however as a percentage of turn-over, profit is comparatively small. Most of the money that comes into the till immediately goes out again to pay the wholesale costs. They are handling huge volumes of transactions and skimming just a little off every transaction (termed profit).

There in lies the problem.

It's my understanding that it's in the wholesale area where the profits are being creamed off. The big chains own their wholesalers. The wholesaler makes the big margins.

That way the supermarkets can say "Look we're not making an unfair profit" AND also claim they pay the same price for their goods as does the small guy who also buys off the wholesalers. It also means when the Com Com comes calling things look to be OK and therefore "nothing to see here move along".

How else do things happen like a couple of years ago where Fonterra was getting ~ $5-00 per kg for cheese yet cheese was ~ $18-00 in the supermarket?

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#3216353 9-Apr-2024 19:41

tripper1000:

The Govt blocked oil exploration in N.Z. contributing to (world-wide) demand exceeding supply and the corresponding rises. Wars in eastern Europe & M.E. don't help either.

NZ oil was never refined into fuel. Marsden Point refined imported oil for fuel.

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#3216354 9-Apr-2024 19:46

Handle9:

There's plenty of supply worldwide, OPEC+ manipulate the supply to push up prices. If New Zealand had oil exploration it would still be sold at the market rate and have no effect on prices.

Yep, in exactly the same way we produce enough food to feed 40 million people but a leg of lamb costs $50: we pay international market prices. The farmers don't do us any special deals.

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tweake

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#3216364 9-Apr-2024 20:23

SaltyNZ:

Handle9:

There's plenty of supply worldwide, OPEC+ manipulate the supply to push up prices. If New Zealand had oil exploration it would still be sold at the market rate and have no effect on prices.

Yep, in exactly the same way we produce enough food to feed 40 million people but a leg of lamb costs $50: we pay international market prices. The farmers don't do us any special deals.

except we pay $50, overseas pays $20. export market has to compete on price with everyone else, local market not so much.

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Technofreak

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#3216371 9-Apr-2024 20:48

tweake:

SaltyNZ:

Yep, in exactly the same way we produce enough food to feed 40 million people but a leg of lamb costs $50: we pay international market prices. The farmers don't do us any special deals.

except we pay $50, overseas pays $20. export market has to compete on price with everyone else, local market not so much.

There in lies another part of the jigsaw puzzle.

P.S. It's not the farmers not doing us any special deals. The "problem" is between the farmers and your refrigerator.

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#3216374 9-Apr-2024 21:00

This certainly isn't going to help: ComCom losing 10% staff.

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Handle9

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#3216401 9-Apr-2024 21:44

tweake:

SaltyNZ:

Yep, in exactly the same way we produce enough food to feed 40 million people but a leg of lamb costs $50: we pay international market prices. The farmers don't do us any special deals.

except we pay $50, overseas pays $20. export market has to compete on price with everyone else, local market not so much.

Nah. Retail prices of New Zealand meat are fairly similar in export markets.

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#3216420 9-Apr-2024 23:40

tehgerbil:

...

2 - Energy market investigation.

In 2019, the Government investigated energy prices and forced removal of low fixed charge tariffs and prompt payment discounts. Since then of course energy prices have risen steadily and despite the lower users being forced to pay higher fees, overall the prices are still rising steadily.

In 2019 Meridian Energy were found to have abused their market power by dumping water instead of using it and allegedly caused over $60 millions of excess energy prices. In December 2023 the Commerce Commission flatly refused to investigate Meridian citing a lack of resources despite the Energy Authority officially confirming Meridian caused $80 million dollars and 600t of excess carbon damage to the economy and environment.

And now of course - Meridian, Contact, Genesis and Mercury made a collective $2.7 billion in operating profits in the just ended financial year. - Sep 1 2023

....

You are conflating a bunch of of different unrelated stuff here.

Regarding Low user tariff's , the government has not forced retailers to remove them. Instead the government has phasing out the requirement for retailers to offer them (and most retailers are choosing to phase them out). Quite different.

It is good policy, and in line with official advise on the topic. Low user tariffs have significant issues. Low user tariff's create a cross subsidy from standard users to low users. This was by by design, and thought to help lower social economic electricity consumers. However research has indicated that it is not efficient in achieving that goal. Indeed those who benefited were households with low numbers of people, (especially those with modern efficient appliances, and those who spend a lot of time away from home on holiday), also it also significantly benefited those with expensive solar system's, and those with gas hot water. The latter was a particular issue, incentivizing gas hot water in a climate crisis is not ideal.

Of course the underlying rapid rise in energy prices has been blamed on reducing low user tariffs, when it has nothing to do with it.

The real underlying issue here is structural with our wholesale electricity market. It provides too much revenue to old schemes, insufficient incentive for new investment, and is unsuitable for NZ to move to 100% renewable electricity.

40 years ago NZ was one of the worlds most efficient energy producers, and in the as a country we thought we could make it more efficient via privatization. Sadly this hasn't worked out, both on the retail size and the generation side.

On the retail side we note have several high payed CEO's, and high priced marketing campaigns, encouraging us to switch between retailers offering essentially the same product. And of course I need to sit down every two years and dedicate an entire evening to shopping my plan so I don't get ripped off as is the norm for sticky customers.

On the Generation side, our market system has failed to incentivize sufficient generation build to keep wholesale prices reasonable. It also has issues compensating reserves sufficiently, leading to security of supply scares.

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#3216424 10-Apr-2024 04:33

Handle9:

tweake:

except we pay $50, overseas pays $20. export market has to compete on price with everyone else, local market not so much.

Nah. Retail prices of New Zealand meat are fairly similar in export markets.

beg to differ. not what i have seen in the SE Asia and Pacific region

Dairy is similar, when you can pick up a 1l of milk in Malaysia which is packaged in Takanini for just over half what you pay in NZ there is a problem.

Handle9

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#3216555 10-Apr-2024 14:31

Jase2985:

Handle9:

Nah. Retail prices of New Zealand meat are fairly similar in export markets.

beg to differ. not what i have seen in the SE Asia and Pacific region

Dairy is similar, when you can pick up a 1l of milk in Malaysia which is packaged in Takanini for just over half what you pay in NZ there is a problem.

No idea for UHT milk but we pay much the same in Dubai as we do in NZ for NZ meat, cheese and fruit (mostly apples).

tweake

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#3216584 10-Apr-2024 16:44

Handle9:

Nah. Retail prices of New Zealand meat are fairly similar in export markets.

a mate that goes back to uk fairly often would beg to differ. its also hit the headlines here a few times.

tehgerbil

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#3217064 11-Apr-2024 13:03

tweake:

Handle9:

Nah. Retail prices of New Zealand meat are fairly similar in export markets.

a mate that goes back to uk fairly often would beg to differ. its also hit the headlines here a few times.

https://groceries.aldi.co.uk/en-GB/p-oakhurst-half-leg-of-lamb-typically-115kg/2815210000000

£10.99 per kg ($23NZD)

https://www.newworld.co.nz/shop/product/5104657_kgm_000nw?name=-lamb-leg-roast

$22.49 per KG

I appreciate there'll be the occasional sale but certainly it appears Handle9's not wrong here.

A kiwi leg of export lamb and a supermarket leg are within spitting distance cost wize.

Curiously we export 3.8billion dollars of Lamb annually, seemingly around 90%+ of what we produce is shipped overseas.

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