Hard News by Russell Brown

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Hard News: The Boom Crash

131 Responses

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  • Marc C, in reply to Sacha,

    The extra million bit is based on a high projection by Statistics NZ, which is not a projection used by CCO Watercare and others for future growth. It seems from the Auckland Plan, which is the plan the Unitary Plan has to comply with (besides of the RMA and so), that it was decided by the mayor and council by 2010 to grow the population at a higher rate, and to enable this. We may actually perhaps rather only have 700 to 800 thousand population increase, based on the medium projection that Watercare here used for their future planning.

    And it all also depends on what central government will decide to do in future years, in regards to regional development, to perhaps encourage economic activity and development in other centres, and in changed immigration policy.

    Clearly, this boils down to a degree of choice, what Aucklanders may decide for in future. Last local government elections, I think barely half of entitled voters in Auckland bothered to vote at all. Many do not even know what the Auckland Plan and Unitary Plan contain in detail, so once the implementations start, there may be a reaction not all that receptive.

    But in any case, there are areas that deserve more built up residential construction, and where it will be welcome and not so negatively impact. The Unitary Plan does not cover transport and such infrastructure planning, as that is dealt with separately, but without infrastructure and coordination, things can go very wrong. Look at the past in the CBD, the blocks of horror, the leaky building disaster and no wonder many are worried.

    Auckland • Since Oct 2012 • 437 posts Report Reply

  • Sacha, in reply to Marc C,

    The extra million bit is based on a high projection by Statistics NZ

    It has been less than the actual growth path over the last decade or two. Former govt statistician Len Cook gave an illuminating presentation on this last year - which is where I first heard the split for 'natural' internal population growth and migration.

    it was decided by the mayor and council by 2010 to grow the population at a higher rate

    Nope. Just responding to the data mentioned above.

    True that the infrastructure CCOs like Watercare use a lower projection, cos they can always increase provision later if they're wrong. Urban planning, not so much.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Sacha, in reply to Marc C,

    There does seem to be a need for more granular planning of which areas are prepared for intensification over each decade, rather than the current 30-year Plan that treats them as if it's all at once (encouraging landbanking, etc).

    Ak • Since May 2008 • 19745 posts Report Reply

  • Marc C, in reply to Sacha,

    This is going to be hammered out in more detail next year, I understand, when zoning and so may be part of the hearings for the AUP. That is where residents, property owners, community groups, Council and developers will have input, and afterwards it will become clearer, what changes may yet take place, and where intensification will actually take place. Council already made amendments after looking at earlier feedback, which were taken into consideration for the notified plan from September last year.

    I suspect that the Rural Urban Boundary and present zoning proposals are in part causes for some high level speculation, and land banking. Properties in some areas planned for apartment and terraced housing will have values go up, as the land section prices are likely to increase, because building many apartments will offer good returns, even for a high price paid.

    That may be behind some media stories about old dumps being bought in some parts of Auckland for over a million or even millions of dollars. The buyers, likely developers, may be more after the scarce land, and have no intention of using the structures on it, as they will be pulled down and replaced with multilevel housing, offering secure, good returns.

    Auckland • Since Oct 2012 • 437 posts Report Reply

  • Sacha, in reply to Marc C,

    Council already made amendments after looking at earlier feedback

    Unfortunately by weakening intensification. Still, guess that may get reversed in some areas in this round of feedback.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Sacha, in reply to Marc C,

    That may be behind some media stories about old dumps being bought in some parts of Auckland for over a million or even millions of dollars. The buyers, likely developers, may be more after the scarce land, and have no intention of using the structures on it, as they will be pulled down and replaced with multilevel housing, offering secure, good returns.

    Totally agree. Plans like this depend on that dynamic - council sets the framework, and private developers fill it in.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Jack Harrison,

    Churches need to realise that they are worshiping the same god and learn to pray together. The amount of land occupied by churches in Auckland would piss Jesus off. Too p.c to mention in politics I know.

    wellington • Since Aug 2014 • 296 posts Report Reply

  • Sacha, in reply to Jack Harrison,

    the amount of residential land owned by them is huge too.

    Ak • Since May 2008 • 19745 posts Report Reply

  • Joe Wylie, in reply to Sacha,

    the amount of residential land owned by them is huge too.

    Commercial properties too. You might recall a certain church missionary organisation suffering a brief embarrassment a couple of decades ago when The Pink Pussycat in K Road's landlady passed on and left them the property in her will.

    flat earth • Since Jan 2007 • 4593 posts Report Reply

  • BenWilson, in reply to Jim Cathcart,

    However, your narrative is based on an assumption of property price inflation every 10 years. Why has that not happened in the case of Japan considering the country’s productivity and “developed nation” status?

    Don't know. They operate in a very different way. It's quite a different economy. How do you even compare something of that magnitude with NZ? They reached a dizzying level of wealth and then pretty much flatlined. Flatlining sounds bad, but I'd be happy to flatline with that kind of wealth. Maybe affluence maxes out or something? I don't really know. We're a long way from being anything like Japan.

    we do not have a property bubble as house price inflation was less than 20% over a recent 12-month time frame. What is he trying to tell us? Surely he has a quantitative framework to make this claim

    I'd be amazed if he did. It's all vague bullshit - they pull on a bunch of strings and then make qualitative statements with some numbers to make them sound quantitative. A bubble can only really be clearly recognized in hindsight. If it doesn't burst, then in hindsight, he's right.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • BenWilson, in reply to Jim Cathcart,

    Money is essentially printed into existence by a borrower’s future income and repayments, not by an equivalent deposit within the financial system.

    Yup.

    It is indeed time to change the housing market, to create and provide affordable rental and owned homes, so that more investment goes into other activities, that produce stuff that earns a better, more secure living for the future. The state can play a major role in this, also able to afford lower credit interest rates, and in state housing take advantage of large buying power, to obtain cheaper building materials.

    I think we should at least try. I'm not, however, optimistic about the ability of the state to do anything fast. I doubt their ability to even dent house prices with concerted building activity, within anything like our current expenditure parameters. There are 1.5 million households in NZ. How many places do you have to build to drive prices down 1%? Does anyone even know the answer?

    All we get is the old chestnut that increased supply puts downwards pressure on price. But the pressure isn't quantified. It sounds meaningful, like it's analogue in physics. In physics it's force per unit area. Pick your force measure, pick your area measure. You get some choices - SI or imperial(ist), choose Pa or PSI. In prices it's what?

    I really want to know. Is there even a unit for this word that is constantly bandied about like they really know what it means. Because I don't and it's not leaping out from any searching on the net.

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • WH,

    The Reserve Bank has been talking about the need to change the structure of the housing market for at least fifteen years. As Graeme Wheeler implies in the article, discouraging residential property investment may be an important part of the solution to the housing crisis. Phil Twyford says that 45% of homes sold in Auckland are purchased by investors.

    I fully support the large scale homebuilding plans that have been proposed but wouldn't underestimate the challenge of achieving a high quality result. The last major intervention I remember was National's deregulation of the Building Code, which left the country in a mouldy ruin.

    Since Nov 2006 • 797 posts Report Reply

  • BenWilson, in reply to WH,

    As Graeme Wheeler implies in the article, discouraging residential property investment may be an important part of the solution to the housing crisis.

    Pity he won't give even a hint of what he thinks ought to be done. That would be committing to something and soothsayers are very careful about that. So long as he can talk about vague unquantified pressures, then he can't go wrong. You can explain everything with "but this pressure was too high, that too low".

    "We have been thinking quite deeply about whether we need to introduce measures to discourage some of those practices", he said.

    Thinking deeply huh? Who knew that you could just think the economy better. How many more decades will this Deep Thought go for?

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • Sofie Bribiesca, in reply to BenWilson,

    How many more decades will this Deep Thought go for?

    He's only thinking "quite" deeply so it could all be over by lunchtime. ;)
    As soon as you tell someone you sold the house they all start saying ,you could have got more than that now, meaning this week. Thing is we are happy that the person who gets it is going to have a warm dry home for her mum to have to help her with her 3rd child.. We are happy for them, we are happy to sell without real estate fees,the pressure to sell is over. That's all we needed. That's enough.

    here and there. • Since Nov 2007 • 6796 posts Report Reply

  • BenWilson, in reply to Sofie Bribiesca,

    As soon as you tell someone you sold the house they all start saying ,you could have got more than that now, meaning this week.

    Yeah, never look at the prices just after you buy or sell. What's the point? And I'm sure the money will be nice to have - so you're retiring to the north?

    Auckland • Since Nov 2006 • 10657 posts Report Reply

  • WH, in reply to BenWilson,

    I take your point about the vagueness of the discussion, but the Reserve Bank is the institution most likely to act in respect of house prices while National is in government. The Governor's acknowledgement that residential property investment is a problem that may require formal intervention is an important reference point for anyone trying to make a case for wider reform.

    While I agree with those who would like to see this issue taken more seriously, we're going to have to shelve more progressive proposals until at least the next election.

    I think the fact that the RBNZ started talking about the problems in the housing market as far back as the late 1990s is a kind of commentary on the responsiveness and efficacy of our political system. Our political parties have had more than a decade to get their heads around the issues yet not a lot seems to have happened.

    Since Nov 2006 • 797 posts Report Reply

  • Kumara Republic, in reply to WH,

    The Governor’s acknowledgement that residential property investment is a problem that may require formal intervention is an important reference point for anyone trying to make a case for wider reform.

    I just hope he doesn't get the Adam Feeley treatment.

    The southernmost capital … • Since Nov 2006 • 5445 posts Report Reply

  • WH,

    I just hope he doesn't get the Adam Feeley treatment.

    My guess would be that it won't be a universally popular suggestion.

    Since Nov 2006 • 797 posts Report Reply

  • Hugh Wilson,

    Bit of a tangent, but on the sort of scenario which Auckland might want to avoid, lo and behold an excellent piece on Melbourne's Punt Road & its terrible traffic, prompted by the author being stuck in gridlock at 11 pm one night:

    "Punt Road's calcification has rendered families strangers to each other, left parents and children irrevocably alienated. Tell close friends "We're moving … to the other side" and you might as well say "adieu" forever. Each year the St Kilda Festival feels less like a celebration, more like a Korean peninsula family reunion when people separated by politics weep in each other's arms before being forced back to their respective sides."

    The above isn't simply dramatization, its pretty much reality ....

    http://www.theage.com.au/comment/punt-road-traffic-woes-simply-too-hard-to-stomach-20141112-11kxzk.html

    Melbourne • Since Feb 2013 • 168 posts Report Reply

  • Rich of Observationz, in reply to Hugh Wilson,

    What's wrong with the regular rail service that runs next to that impassible road?

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • Hugh Wilson, in reply to Rich of Observationz,

    The rail system is radial whereas Punt road is 'cross city' - there is no parallel line as such, but buses ply the route .... buses are seen as very much so the poor cousin in Melbourne, and after catching them daily in Sydney for years I found it was a solid 5 years plus of residing here before I actually caught one ...

    Melbourne • Since Feb 2013 • 168 posts Report Reply

  • Sofie Bribiesca, in reply to BenWilson,

    so you’re retiring to the north?

    Yes indeed. Always wanted to by 50. Guess 51 is ok. i now have time to be a bit more creative.

    here and there. • Since Nov 2007 • 6796 posts Report Reply

  • Jack Harrison,

    For some citizens it is going to cost a social fortune to retire Auckland. Families and friend networks are huge in that city. Very strong for the poorer Aucklander. That's their big part of their quality of life, not annual trips to Europe and school holiday ski vacations. Auckland is hard to quit for those who see the city as their natural place.

    wellington • Since Aug 2014 • 296 posts Report Reply

  • Sofie Bribiesca, in reply to Jack Harrison,

    For some citizens it is going to cost a social fortune to retire Auckland.

    For me ,it's 4 hours to get back to friends and family so I'll drive when needed but the reality is for us ,that in a couple of years we have made many new friends and friends who know other friends from here in Ak. It really is a very small village in NZ. My 3m dining table has already seen many occasions celebrated. We have no problem filling the chairs and it's quite nice that neighbours etc will travel 15 km to pop over . More than I can say for lots of Aucklanders I know.

    here and there. • Since Nov 2007 • 6796 posts Report Reply

  • Jack Harrison, in reply to Sofie Bribiesca,

    I hope you are happy Sofie, that's the pursuit. Of course you may just have a great fortune there in your social mobility.

    wellington • Since Aug 2014 • 296 posts Report Reply

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