Hard News: Housing: the Feudal Model
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Sacha, in reply to
For some time demand has exceed supply
So how about we tackle the demand-side as well.
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Looks like more privatising the profits and socialising the costs. That pretty much sums up the current government's economic policy. I can't vote for such greedy, ultimately stupid people.
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Steve Barnes, in reply to
Yes, I’m sort of kidding. You shouldn't have to have played the various Sim City games as much as I have over the years to know all that.
I think sim city should be compulsory playing for everybody in Council.The concepts are really simple. You build where people want to be, build infrastructure, rinse and repeat.
It gets to a point where the whole thing gets out of control which leads to cost cuttings in maintenance and the central hub becomes a ghetto and the city rots from within.
Why do we even have this problem? we were told that te interwebs would mean we could all move to some bucolic paradise and work from home. Average Mr&Mrs Joe Bloggs wants shopping mall, casinos and restaurants and seem to be prepared to pay 10 years salary to spend an inordinate amount of time sitting in traffic going between pointless job for money to spend on getting over the fact that you have a miserable life. Why not smell the grass, watch the wind in the trees, etc.
It has been said (just take my word on that) that the ideal number of people in a community is around 150, outside that number all kinds.of shit happens, the size of a small village.
They sat it takes a village to raise a child, I say it takes a city to ruin one.
Anyway, as I was saying, I had onions tied to my belt, it was the style at the time....
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Steve Withers, in reply to
Intensification can also mean buildings with body-corporate setups that I have found to be uniformly unattractive and potentially hostile when I hear the experiences of friends and acquaintances. The Sentinal in Takapuna is typical. The developer contracted to a private company to be the effective arm of the body corporate. People who live there spend loads of time dealing with things are done they didn't want...and things that aren't done that they do want....(speaking broadly). Sounds awful.
Whereas...in places like Ontario, Canada, the provincial government essentially several corporates (like Cadillac-Fairview) the right to build endless apartment tower blocks all over the place...and people just rent. No ownership hassles. A ready pool of apartments available in most major cities....and rents are generally quite reasonable.
I don't know what's best. but I've lived in apartments and it can be a great life-style. But I have no idea why anyone would want to OWN one.
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James Bremner, in reply to
Bart,
So I am corrupt am I? Please.
How will more of the same that caused the problem, solve the problem?
Do you want to keep making property speculators and land bankers rich do you? Do you want to keep the one way property bet in place that screws the poor? I don't. Opening up land supply will change the risk calculation and induce many to sell, increasing supply.
So no more greenfield development anywhere ever? So your future for Aucklanders is a shoebox sized apartment that costs 20 times the median salary, while not far way there are wide open spaces. That doesn't make much sense does it?. NZ is only 1% built up, there is tonnes of room, we only need to free up a slice of it.
Developers build expensive homes because if it costs $500k to buy a section, you aren't going to put a $100k house on it are you? You are going to put a $400 or $500k house on it.
In the Kaizen quality improvement process, to get to the root of a problem, which first appear as a symptom, you have to ask "why" five times. If you ask "why" 5 times about most symptoms in the Auckland housing market you get back to land supply restrictions as the root of the problem. If MUDS can be used to bring more supply to market at lower upfront cost, that would be great news. -
James Bremner, in reply to
What would you do to reduce demand? Stop new people coming to Auckland? How do you legally do that? Stop Aucklanders having children?
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Sacha, in reply to
Finacial system demand. Impose LVRs, CGT, and perhaps even a financial transactions tax. Stop making it so damn attractive for foreigners to 'invest' their money in our property casino.
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Sacha, in reply to
If you ask “why” 5 times about most symptoms in the Auckland housing market you get back to land supply restrictions as the root of the problem.
If you are asking a neoliberal, yes.
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Roger Lacey, in reply to
the land use restriction policies generally favored by the left, that are absolutely f*&king the less well off, those that the left generally seem to think they care about the most, while delivering a windfall to the well off.
It could also be said that those who will benefit most from greenfield development are people who have bought swathes of productive agricultural land on the city fringe and will reap enormous tax free capital gains as soon as the zoning is changed.
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Mark Graham, in reply to
The recent Unit Titles Act is a mess. Another fuck up by the current Govt.
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Steve Withers, in reply to
Mark: I'll check it out. Things like that can be well worth reading.
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Bart Janssen, in reply to
more of the same
Really? You must have lived in a different Auckland city than the one I’ve lived in for 40 years.
What we have done in Auckland for decade after decade is open up greenfield subdivisions on the edges of the city that is what we have actually been doing that has led to the current situation. At the same time local councils have again and again voted to protect one fifth acre blocks against intensification … except for ghetto apartment blocks in the city centre.
Pretending that by stopping the stupid expansion this council has suddenly created a crisis is disingenuous at best.
What you are proposing is more greenfield development … but this time with a financial structure that ensures even more of the risk is taken by the council and even more of the profit goes to the developer.
You are arguing for a continuation of the planning the stuffed up this city with the bonus of giving more money to developers.
What intelligent non-corrupt town planners have proposed is medium density development throughout the city. An end to stupid protection of one fifth acre sections and a planned build up of density along major public transport routes. Such housing will be lower cost and will be affordable because rich folks won’t want to live in it. Of course rich folks also don’t want it anywhere near their backyard. But it is the kind of development that will actually increase the supply of low cost affordable housing within the city as it exists now.
Developers will suffer (my tears are falling) land speculators on the edge of the city will suffer (more tissues needed).
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Paul Campbell, in reply to
What would you do to reduce demand? Stop new people coming to Auckland? How do you legally do that? Stop Aucklanders having children?
(tongue in cheekily) maybe nothing - many of the rest of us have this general feeling that at the moment our cities and infrastructure are being starved to feed Auckland - National want the votes - for example limiting loans for first time home buyers all over the country just to cool the Auckland property market isn't really fair to the rest of us - it's a big blunt stick to do something that ought to be surgically local.
I heard someone the other night suggesting that Auckland should be "left to stew in its own juices" to encourage economic and population growth elsewhere, it seems a bit overboard to me but a lot of Auckland's problems are geographical, it's built on an impossible isthmus, of course there are transportation problems - while you might get short term fixes, short of filling in the harbours, those issues will always be there slowly eating up lovely old neighbourhoods with motorways.
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Matthew Poole, in reply to
it’s built on an impossible isthmus, of course there are transportation problems
Of course there are transportation problems when the "solution" has been to build more and more lanes of motorway and starve public transport infrastructure to the point of near-death. Aucklanders are trying to say enough!, but the government isn't interested.
And Auckland has, historically, had a very limited "suck at the sav" in terms of spending. Very, very limited, relative to population. For the regions to get all bitchy because Auckland is now getting infrastructure spending that's been stifled for decades is, unsurprisingly, ignorant and selfish. No wonder they vote National.
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Sacha, in reply to
built on an impossible isthmus
not hard to overcome - the Congestion Free Network is a good example of what's needed. Welli is even more constrained than Auckland but has had decades of better investment in public transport options.
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Paul Campbell, in reply to
And Auckland has, historically, had a very limited "suck at the sav" in terms of spending. Very, very limited, relative to population. For the regions to get all bitchy because Auckland is now getting infrastructure spending that's been stifled for decades is, unsurprisingly, ignorant and selfish. No wonder they vote National.
you may think that - here in Dunedin we've been waiting for them to finish building a road out of town that doesn't go through city streets, an actual motorway, it might just happen next year, 40 years since they started it
Meanwhile - our post office is shutting down, cross town mail which used to go overnight now gets sorted in Christchurch, takes 3 days now, the Immigration dept shut down and left, the Ag research station is going, every few months the govt shuts down something else here, but the media is full of giant tunneling machines in Auckland, and how wonderful rich their people's houses are .... we keep getting told that we in the rest of NZ need Auckland to be a "world class city" for us to get ahead when we see stuff being taken away, jobs and people moving there at our expense.
I understand that Auckland has its problems, and they do need to be addressed - but mostly I'm trying to explain why outside of Auckland people may not quite see it the way you do - it's not just that we're jealous of Auckland, at the moment people really think that Auckland is being developed at our expense - really we need a more holistic approach to development than "there's votes in Auckland, but those people in Dunedin always vote Labour ...."
Oh yeah and there's that whole "TV is full of ads for things in Auckland" thing - look we have to put up with that inane Auckland Glass ad with the jarring smashing window in our living rooms every night - an ad for something we cannot buy - do we really want to know about another rug sale in Ponsonby, a car sales yard in Takapuna? again you probably don't notice it but you're daily flaunting your stuff in our living rooms - bunch of rich fucking capitalists showing off, not the kiwi way at all
(again please take this with the appropriate grain of salt, I'm really only mildly annoyed [except for the glass ad, that's really really annoying])
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Remind me where the roads of national significance were?
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London is one of the world's most intensified cities, yet the same problems of housing cost and housing supply are playing out here. Again, simply put: there is a shortage of "affordable" rental accommodation (<£1200 pcm) in the City and a disproportionate amount of new developments being built cater for the global super rich. As in Auckland, I suspect, these properties are marketed off-plan and are bought by investment consortia. In other words, they're not built to live in; they're built primarily to be financial assets. Many sit empty year round: there are whole apartment blocks, hell, whole streets in places like Chelsea, where there isn't a light on after dark.
This is "market failure" like that plaguing Auckland writ large. And it indicates what the problem actually is: especially since 2008, urban planning and politics are being conducted for the benefit of the global elite rather than local populations. This is what "foreign investment" in the housing market looks like: retail prices out of the reach of anybody living and earning locally and new properties essentially designed to sit vacant all year round, while the local political elite increasingly sees the global rich as their constituency, not local electors.
The idea that neoliberal policies like MUD are going to fix this is beyond laughable. This is the end-game of neoliberalism: this is the world they wanted. Those of us who have to live full-time in the cities now being run like theme parks for the global rich are not, how shall we say, the target market for mainstream political parties anymore.
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James Bremner, in reply to
I am all for some kind of tax on foreign non residents buying property. Pretty common in places like Hong Kong and Singapore.
LVRs seem to have backfired a bit, I think they should have been applied to purchases of existing houses only. That would work to direct demand to creating increased supply.
A CGT or financial transaction tax would only get added to the price of real estate, further screwing those who don't own property. There are plenty of cities with absurdly expensive real estate with CGTs, so it is very clear that CGTs don't work to restrain prices.
Again, if you want to un-plug NZ's real estate casino, which absolutely ought to be a critical national priority (without screwing things up), you have to change the factors that make real estate a one way bet. You cant blame people for behaving rationally. If you could sit down at a blackjack table, and you knew with 100% certainty, that you were going to win and make money, who wouldn't do that? So you can't blame people for jumping on the property bandwagon. You just have to make it less attractive going forward
And that gets back to supply. Things are so out of whack in Auckland's real estate market (and NZ in general) that I think you need an all of the above approach. Increasing density and more green field, I you have to have both. You have to change the risk calculus. If land bankers knew that someone could easily build a house on some new land for less than they think their land is worth, do you think that will change their behavior? You bet it would. Now they have downside risk, not a one way bet. You'd see a lot of land come onto the market, and fewer people wanting to buy land and sit on it. -
I think the right way to do a CGT is to provide an exemption for the "family home"- allow people to sell and trade up their primary residence (keeping the unpaid CGT accumulating) but allow a one life-time exemption on sales (usually taken at retirement or when you downsize when the kids move out)
(this was how the US did it prior to George-the-younger gaming it for the house flippers)
By "right way" I mean politically feasible - resulting in something that hits investors.speculators but not someone going through the normal life curve
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I'd say a large proportion of the people in Auckland can't afford a rug from Ponsonby either, Paul, because all their money is going on renting shitty uninsulated housing stock.
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Matthew Poole, in reply to
more green field
As has been observed, that's all that Auckland has been doing for quite a few decades. We don't need more green field outside the current boundaries, we need more intensification within. We need to tell the selfish gits in the leafy suburbs that, no, sorry, you don't get to tell people trying to get onto the property ladder that they're only allowed to buy on the urban fringe because you don't want your neighbourhood sullied by the presence of medium-density housing.
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BenWilson, in reply to
A CGT or financial transaction tax would only get added to the price of real estate, further screwing those who don’t own property.
That's not the only reason for a CGT. The other is because it is actually real income that goes completely untaxed. Whether it is fueling speculation is a sidebar. I think it is, certainly it discourages other forms of investment, certainly has for me.
LVRs seem to have backfired a bit, I think they should have been applied to purchases of existing houses only. That would work to direct demand to creating increased supply.
Well it's done a sterling job of blocking out first home buyers immediately. But it's hard to be sure what the long term effect is yet. It's a requirement that could easily take a long time to bite, but people being unable to apply massive leverage multipliers to their property profits should make speculation less.
If land bankers knew that someone could easily build a house on some new land for less than they think their land is worth, do you think that will change their behavior? You bet it would.
Yes, they'd buy that land too. In fact, they already have. All of the land is owned by someone already, and of course they'd love to sell it for heaps more than it's worth with cattle on it.
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Swan,
I thought the whole government grant thing was bizarre and rather unprincipled. I don't really like the idea of MUDs myself. The way I see it, the problem is: the price for infrastructure use is too low, so the council sees it as a burben to provide more. Watercare in AKL for example is not allowed, legally, to make a profit. Which must make it very difficult to price in capital costs. And I don't think they do. Hence big capital projects, rather than being funded by users, end up getting funded by ratepayer. Similarly with roads, the council isn't allowed to introduce road pricing.
This is all in contrast to, say, the supermarket chains. When I new area is developed or intensified, they don't baulk at expanding their operations. On the contrary they relish the opportunity because capital costs are built into their prices.
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Swan,
^^ Apologies for the numerous typos. I hope you get the gist.
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