Hard News: Make you crazy like datura
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Here it is. The really interesting part is the way the greens have held up over 2 polls
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Really interesting comment -- and I wonder if there's any empirical data out there to back up my instinct that the younger you are, the more comfortable you are with the notion of being a long-term renter. Is real estate really the national fetish the media would like us to believe, or is this another case of middle-aged, middle-class baby boomers turning the media into a funhouse mirror?
I wonder about that too. I am also saddled with a huge student loan that was gathering interest at an alarming rate for a long time (thankfully that has stopped) so home ownership is just not on my radar. The fact that a morgage is not happening for me anytime soon doesn't keep me awake at night. I am not sure how representative I am but I do wonder at the media obsession with this one issue at the expense of all of the other things that are happening in NZ (not to mention the rest of the world).
The conversation going on here, sparked by Simon Grigg and ably counterpointed by BenW was of far more interest to me than the endless banging on about house prices and yoof issues that the media seem to feel are the only issues that connect with large swathes of middle New Zealand. It does seem pretty middle-aged and middle-class, but who knows maybe I will have to eat my words one of these days.....
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I have noticed that on the Herald myviews site there was a lot of talk about capital gains tax, and I wonder whether that's where their interest is coming from
Well, there are two components when people talk about the badness of the housing market.
One is the developers. They are, you are quite correct, not the people pushing up prices as such. But it is very frustrating to go looking for a home and finding that you basically can't buy the home you want, if the home you want is a traditional New Zealand home with a bit of a section and a decent sized house and so on, because the people competing with you is some fucking wanker who's going to bulldoze it and throw up half a dozen shitpile townhouses on concrete slabs.
In that sense "affordability" is the extent to which you can't buy the home you want. That's about the fact that, say, a two-income family earning multiples of the average income in 1970 could quite likely have picked up a nice house on a quarter-acre section in a part of town they wanted to live, but will barely scrape into something a considerably less good match in 2008. To the extent quality of life is where you live matching what you want, developers have helped it plummet. And that's before we go to leaky homes and all the rest...
The capital gains tax is less, I think, about "bloody developers" and more about the feeling that there's a bunch of baby boomers out there soaking the bejeezus out of their kids and grandkids generations buy leveraging their homes they bought thirty years ago to pick up three or four heavily leveraged properites they expect to flick on at a big capital gain, hoovering up all the available housing for a tax-free income.
Now, that may or may not be a fair or accurate picture (the only boomers I know who own more than one house got that way by working their arses off with 2 - 4 jobs between them for 30 years, so not so much of the unearned wealth there), but it's certainly been the hype around boomer-focused property marketing, so one can hardly be surprised if "I can't afford a house because some fucking wanker is getting rich without even paying tax on their swathe of properties!" is a common sentiment.
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I wrote the above before reading rodgerd's comments.
I hear that too, it is fine for me to be blase about house prices because I don't have a family, but still.....
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Oh I was feeling rogerd's comments about 7 above, not so much the last comment.
a nice house on a quarter-acre section in a part of town they wanted to live
This may not be a realistic dream anymore. There are other ways to live.
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This may not be a realistic dream anymore. There are other ways to live.
If this is true, will people still be able to save/build sufficient assets to support them in a meaningful retirement? The mortgage free house has been a key part of generations' retirement plans; if your retirement includes having to pay rent, will people save accordingly?
I know in parts of Australia, and not just Sydney but other capital cities too, owning your own property is increasingly difficult. I know many 30-something couples with combined incomes of $200k who still face the prospect of 30 mortgages and having to borrow upwards of $500k.
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"affordability" is the extent to which you can't buy the home you want.
That's one definition, but there is another, crude but objective one, which is the ratio of median income to median house price. It is at a historical extreme in NZ right now, as we all know.
A question that arises then is, will affordability regress to the historical mean, as prices in most markets eventually do, or is this a permanent change? All I know is "it's different this time" is the classic slogan of the expanding bubble.
Having said that, I don't see that the 1/4 acre section can ever come back, since NZ's population shifted and grown. All sorts of things I recall from my 70s childhood, like the big suburban sections and the unpopulated Coromandel and the size and quantity of fish I catch are permanently out of reach now, thanks to the extra people and the drift north.
Affordability measures don't capture the quality of housing one way or the other; I certainly would rather have a small house on a big section than the other way around, and I can't see that being a real proposition near the CBD of anywhere I can get a job, ever again.
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I can't buy into developers being bad guys. How else do properties ever get built? OK, some developers make nasty stuff, but all the good stuff is also made by developers, and it costs waaaay too much for me. Not because of the developers being wankers, but because what they have developed is valuable. They have added value to what they purchased.
Of course it is not a realistic dream to live on a quarter acre section 'whereever I want'. My own quarter acre is at least 2 suburbs further away from where I wanted it. But it is actually a nicer suburb than the one that I grew up in, when I was growing up there and forming my opinions about where I wanted to live. Of course that area has gentrified hugely, and you wouldn't recognize it from when I lived there. It has actually been improved enormously. And by the time I reach my parents age this area will be a whole lot more valuable too, and my kids won't be able to afford it.
That's the nature of capital - it grows in value if looked after.
Put even more bluntly, the entire CBD area could probably have been purchased in the bad old days for a cache of small arms. Of course it's worth many, many billions now, all thanks to those bastard developers, and we have a city to enjoy because of it, rather than a mangrove swamp. A lot of people think it's ugly, cheap, unplanned, slipshod etc. But there's no denying it's a lot more valuable than it was for all that bastardly development.
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I know many 30-something couples with combined incomes of $200k who still face the prospect of 30 mortgages and having to borrow upwards of $500k.
If you can't pay a $500k mortgage out of $200k pa, you are managing your money very poorly, it seems to me. At 9.5% over 20 years, you would have monthly repayments of $4,660.66, which is about 40% of your after tax income and leaves plenty of money for gourmet food and stocking the wine cellar.
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Really interesting comment -- and I wonder if there's any empirical data out there to back up my instinct that the younger you are, the more comfortable you are with the notion of being a long-term renter. Is real estate really the national fetish the media would like us to believe, or is this another case of middle-aged, middle-class baby boomers turning the media into a funhouse mirror?
It'd be interesting to find out. I wouldn't be sure whether it was a change in how people felt about home ownership - having kids later in life, more likely to split with partners, less likely to marry young - or the student loan/debt issue. I suspect a mixture of both.
I know that buying a house wasn't an option for me with child support and a student loan, without outside help. My marginal tax rate made Muldoon's tax system look benign. The banks will ignore the fact that you have $30K in debt, but they can't ignore the fact that the government takes $2-$3K/year off you to pay it back. And rising house prices have lifted it out of the reach of 'blue collar' as well.
I think it's a real shame. Owning your own home is good wealth. It gives you security and ensures that everyone has something. Plus people that own houses make good neighbours and good communities. Anyone that cares enough to mow the lawn on the weekend is going to make a better neighbour than one who doesn't.
I spent three or four weeks in Auckland ........... My only gripe is the serious lack of good playgrounds.
My brief experience with Australia, which only really consisted of Perth, indicated they they really knew how to playground over there. There's a park on the hill there - King's Park I think? - where the playground alone is the size of a couple of rugby fields, fully fenced, umpteen sandpits and swings and slides and a fire engine. You could throw two hundred kids in it and it wouldn't have been full.
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It's the obsession with being able to see the sea from the house that baffles me. The sea is an inhospitable place.
It's also very beautiful to look at. Tell me if it was a free choice between a property at the top of a hill commanding a 180 sweep of coastline, or the one just down the hill inland with only a view of the valley, or no view at all, that you would opt out of the big view, if it cost you nothing more to have it.
Agreed that I'd be more than happy to just be close to good access to the sea, but that's not the same as saying that it would have equal value to the place with similar access but a kick arse view.
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gluttonous white sandy beach exclusivity
That is some pretty pretty word use there Steven.
I think you are touching on something with this:
But it's become allot more difficult, since people started putting so much extra emphasis on 'owning' the slice of paradise. There are actually some that share land but let's not start getting political here.
I think that for some people their dream may actually be to live in a city with an abundance of quality shared spaces. They may actually dream about dwelling in a well designed inner city apartment, it may also be better for the environment (urban and ecological) if people aspire to living this way rather than letting urban sprawl and a nostalgia for the quarter acre section limit our national conversation about how we want to live.
I don't want to minimise the importance of livable spaces for families but we don't all want to live on a quarter acre.
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A S,
<quote>The basic tenet remains. If you can't afford it, don't buy it.
If you can't afford and buy it anyway (regardless of motivation for doing so), then you really don't have anyone to blame but yourself if you suddenly find yourself in trouble.<quote>
Well, yes and no. "Somewhere to live" isn't a luxury good, and the scarcity isn't artificial. "Don't buy" is great advice until ownership drops to the point where the only defence against having your income rack-rented out of you is government legislation, with various attendant problems (see: New York).
Somewhere to live is indeed a necessity. Owning that somewhere isn't.
Most of this is moot. As the pundits are finally figuring out, we are looking down the barrel of a fairly long spell of house price decline/stagnation, which will go a reasonable way to dealing with the issue of affordability, as wages will eventually start to catch up with the house price spike.
The odds of rack-rents emerging in NZ are relatively minimal, and are now even less so because the market is looking so grim. Affordability will improve, and the middle-class couples feeling left behind will be able to buy a house (although as is the case now, they should given up any thought of kids or study, or anything else that might impact on their ability to service a debt that requires dual incomes).
As many have pointed out, land costs are indeed one part of the issue, but they are only one part. On top of that is tax regimes, migration patterns, an ageing population, coupled with declining fertility, and of course a lack of investment in decent transport infrastructure that means living outside cities is not an option.
In addition to looking at all of those, hopefully someone will also look at how to deal with the compliance side of the equation as well, which quite a few people in the construction sector are suggesting has played a big part in the massive increases in construction costs in the last ten years or so. With costs running ever closer to $2k per square metre, it doesn't take a very big house to wipe out most peoples options around building.
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Has anyone noticed the tucked away little par in the Herald about Labour going up in the polls and National down? It would be on the front page if it was the other way round....
Not so sure about that -- without wanting to waste a lot of time I don't really have tomorrow going through bound copies of the Herald, I don't really recall them giving that much prominence to any polling except the one they commission.
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If you can't pay a $500k mortgage out of $200k pa, you are managing your money very poorly, it seems to me. At 9.5% over 20 years, you would have monthly repayments of $4,660.66, which is about 40% of your after tax income and leaves plenty of money for gourmet food and stocking the wine cellar.
40 per cent of after tax income is a fair whack but it was over 30 years, not 20 and Australian rates are around 2 per cent lower - 8 per cent is possibly what you'd be offered today (on that size borrowing). However, the equation requires you to maintain that level of income for the duration which excludes time where you only earn one income i.e. if you start a family. Not what everyone wants hey?
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Check it out: the amazing NYT rent vs buy calculator.
On mentioning this to my darling fiancé she exclaimed "Who would want to rent a calculator?"
And that's why I love her.
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steven, ah well, each to their own preferences. You're not wrong, but it wouldn't be my choice to give up the view - surely a veggie garden is not totally incompatible with outlook.
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This may not be a realistic dream anymore. There are other ways to live.
Politics is one way of making dreams realistic. markets are not laws of nature, they are human institutions, and so can be changed. And that is what people are demanding now with housing.
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Politics is one way of making dreams realistic. markets are not laws of nature, they are human institutions, and so can be changed. And that is what people are demanding now with housing.
Crazy talk! Thanks I/S.
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Well I'm sure we all have our horrible London rent stories but currently I pay about 500 quid for a small room in Earls Court. Its not a bad flat really (has an ensuite), and its in a good location, but I have to constantly remind myself not to think what that money would get me back in Wellington
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My brief experience with Australia, which only really consisted of Perth, indicated they they really knew how to playground over there.
There's a <a href="http://inastrangeland.wordpress.com/2007/10/10/the-best-playground-in-the-world/">fantastic playground in Wanganui</a>, of all places.
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D'oh! Must remember PA formatting. And that preview really is my friend.
Try again....
My brief experience with Australia, which only really consisted of Perth, indicated they they really knew how to playground over there.
There's a fantastic playground in Wanganui, of all places.
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Is it me, or has The Herald become very tabloid in the last year or so? Yesterday I went thru my Reader page, deleting all the NZH feeds and (wince) replaced them with Stuff.
The headlines are what got to me in the end:
"Poisoned Berries blah blah" when what it turned out to be was "Poisonous berries..." - very different meanings.
"Ear flicking man in court" when what the meant was "Man charged with assault on two children" (and his defence is that he flicked ears).
Clearly they are simply tweaking words for headlines, which all papers do, but they just seem to have crossed a line from "finessing" to "blatant bullshit".
Has some strine done one of those "we need edge, pazazz, SEX" type of speaches so beautifully parodied in so many satirical shows and movies?
Looking forward to electronic paper so I can subscribe to The Guardian (and I NEVER thought I'd ever type those words).
Maybe I'm just getting old. The grammar is winding me up nowadays too (it's 15 items or FEWER, not LESS you semi educated half-wits ;-) ... is there a pill I can take to stave off Grumpy Old Sod syndrome?
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If you can't pay a $500k mortgage out of $200k pa, you are managing your money very poorly, it seems to me.
you're also looking at a typically kiwi crisis of expectations.
why so many people default to "the biggest house we can afford" instead of the "smallest place we can tolerate" is beyond me.
the smaller option means a smaller mortgage, less stress, and more discretionary spending (i.e. holidays in vietnam). the banks are the enemy, but everyone seems to think they're your best friend...
on $200k pa you could easily pay off a $350k house, and save a huge sum of money in other investments. something beyond the abilities of the actual average couples income of <$90k.
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we did that..not the save-a-huge-sum-of-money part (much more modest because of being one of '__actual__ average couples' )...but the get-the-smallest-you-can-tolerate part. We absolutely dont regret the extra breathing financial space, especially now the doom merchants and interest rises have arrived, and the house is great now that we are settled in. We apparently didnt need all that stuff that is still sitting untouched in storage. thinking seriously about a monster garage sale.
the bank wanted to loan a lot more than we borrowed. temptation was there...
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